Janet Yellen is likely to be confirmed by the Senate as the next Fed Chair on Monday, and Ben Bernanke delivered an initial version of his own personal history in an address to the American Economic Association on Friday.
Typically objective and analytic, it won him a standing ovation (watch it here ) that accurately reflects what the majority of the academic economics profession thinks of the man and the public servant. Despite the highly controversial nature of his actions, they view him as one of their own. He has risen to greater importance in public office than any previous member of the academic economics profession, including John Maynard Keynes.
The history books will no doubt focus on the Fed’s role in the great upheavals of the age. The outline verdict is already clear for some of this.
The Fed clearly underestimated the impact of the housing bubble on the economy, and failed in its regulatory duties from 2006-08; its reaction to the financial panic in 2008-09 was exemplary; its role in cleaning up the US banking system in 2009 was important and far-sighted; and its balance sheet expansion from 2010-13 was more aggressive than most other central banks, with both good and also some not-so-good effects. (See this blog for a lengthy assessment of QE.)
According to the “great person” view of history, Mr Bernanke will be the individual who gets most of the blame and plaudits for all these developments. The buck stopped on his desk. Yet he was only one actor among dozens in Washington. As a believer in the “great events” view of history, I have been trying to identify the areas in which Ben Bernanke personally made a difference that others might not have made. Read more