Roger Lowenstein has 7,995 words about Ben Bernanke in this weekend’s NY Times Magazine, which the paper has obligingly gone ahead and run for the rest of us today. It is really, really long, and I haven’t had time or energy to read it, so it’s time to bring out Microsoft Word and do a quick auto-summary.
Here is Roger on Ben in four paragraphs:
Bernanke has gotten close. Inflation has failed to fall as the Fed expected. Bernanke’s exam looks like a doozy.
As Bernanke notes, the public has high expectations for what the Fed can do. (Conversely, to tighten rates, the New York Fed borrows money.) Only the central banker, the Fed, can create new money.
So Greenspan switched the Fed’s methodology. Bernanke has also shown his academic bent in how he runs the Fed. (In Fed parlance, hawks want to tighten rates; doves favor easing them.) Volcker tightened the money supply so much that the fed funds rate soared to 20 percent. In 2002, President Bush asked Bernanke to become a Fed governor. Bernanke said, “Actually, I’m a Republican.” This meant that the Fed’s rate cut hadn’t worked: credit conditions had not really eased.
Bernanke invariably insists that the Fed is not concerned with investors per se. Bernanke’s education has just begun.
Ooooh, scary stuff. Better than the Perils of Pauline.
Somewhat more seriously, this article will fuel both prevailing views of Bernanke. The anti-Ben sorts will see in Lowenstein’s piece precisely the sort of consensus-driven, slow-moving overly academic sort that they "knew" was at the Fed’s helm; fans of Ben will like his empirical, thoughtful approach to monetary policy.
As for me, I generally liked the piece, but I am discomfited by how little understanding anyone seems to have for the past quarter-century has seen such moderation in recessionary cycles. Because I don’t do think it has very much to do with the supposed prowess of the Fed.