Former Fed chair shows him as the puppet he is
Fed officials have been busy lately spreading the view that incessantly low interest rates are symptomatic of a still-dim economic reality rather than a result of their own monetary experimentation.
Indeed they are full of self-praise for not having been hasty to raise rates given the overwhelming evidence that the natural or neutral level is indeed very low. They even weep for the plight of the small saver.
But the tears are crocodile tears so long as the designers and implementers of the wildest monetary experiment in contemporary US history continue to deny in this way their lead role in creating the interest income famine. Ben Bernanke in his first blog piece for the Brookings Institution has joined the campaign to exonerate the Fed of any responsibility for the famine. This is an exercise in great deception.
Is This Time Different?
The ex-Fed chief claims that his “great monetary experiment” has been successful despite the non-appearance of strong economic expansion. Small savers suffering income famine right now is not due to monetary policy failure, we’re told, but is due to a harshness of the economic environment which has turned out to be greater than what anyone could imagine. Bernanke told a reporter at his first press conference (April 2011) that “this time would be different.”
What Bernanke meant then by “different” was that “this time” economic recovery would be vigorous due to his deploying “non-conventional” tools of monetary policy. This Fed-induced vigor would be in contrast to a history of US economic upturns following great recessions which are slow and fitful, he claimed.