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Is Ben Bernanke a Villain or a Hero?

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FED UP WITH THE FED?
DailyFeed
Has Ben Bernanke hired a personal public relations manager? It seems like the formerly publicity-shy Federal Reserve chairman has embarked on a PR offensive recently to try to improve the public’s perception of him and his agency.
 
First, Bernanke initiated televised press conferences a year ago to clarify communication of the Fed’s monetary policies. Then, last week, the Federal Reserve Board announced that it was launching its official Twitter channel: @federalreserve. In less than a week, the Fed’s twitter account already has 16,338 (and counting) followers.
 
According to a Fed press release, “tweets will include items such as press releases, speeches, testimony, reports to the Congress, the Monthly Report on Credit and Liquidity Programs and the Balance Sheet, and the Federal Reserve’s weekly balance sheet (H.4.1).”
 
“Additionally, the Board will tweet about educational frequently asked questions (FAQs) and Board video links.”
 
The same day that the Fed launched its Twitter account, The Atlantic also published its April issue cover story -- titled “The Villain,” though the front cover says, “The Hero” -- in which Roger Lowenstein puts up a spirited defense of Bernanke’s tenure as chairman of the Fed. We also get insight into the 58 year old’s insight into the financial crisis and the Fed’s quantitative easing policies, among other things.
 
Here’s what we picked up from the article:
  • Bernanke stands by the bank bailouts, but he’s no fan of them. ”That must never happen again,” he says in reference to the Fed’s bailout of AIG (AIG).
  • Bernanke disagrees that loose monetary policies only help to artificially prop up the economy, that we will eventually feel the pain once the Fed stops printing cash. “I’m not a believer in the Old Testament theory of business cycles. I think that if we can help people, we need to help people,” he says.
“A massive decline in employment slows the rebalancing and deleveraging processes rather than speeds them; people don’t have the income to pay their debts. So the argument is: where you can, you try to short-circuit the process by urging banks to take losses and modifications, and recapitalize. Obviously, you need to get bank balance sheets healthy, and individual consumers healthy -- but subjecting the system to high unemployment and high rates of bankruptcy and foreclosure is a very inefficient way to get there,” he continues.

Lowenstein ends his article saying that “to a greater extent than he is credited with now, history may marvel that Bernanke has been a success.” Head to The Atlantic to read and see if you agree with his defense of Bernanke.
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