Tag Archives: bernanke

Those who the gods wish to destroy: Bernanke’s Triumphal Pride

By William K. Black

Greetings form Guayaquil, Ecuador where I’m teaching a mini-course at ESPOL.  The course introduces students to the great economic debates of theory that shaped our dominant fiscal, monetary, and anti-regulatory policies in the decades before the financial crisis.  Memory can be a tricky and misleading guide, so I went back to what the key decision makers and theorists were saying in the years before the crisis.  My focus is on Ben Bernanke and Alan Greenspan, but I also discuss extensively John Williamson, who coined the phrase “the Washington Consensus.”  (My readers know that I attribute many of the most damaging anti-regulatory policies to the Clinton-Gore administration and its evisceration of effective regulation through its “Reinventing Government” program.)  I wanted readers to see what was being said by the Fed’s leadership (which would soon transition from Greenspan to Bernanke) as the financial world was exploding into an orgy of “accounting control fraud” (the most destructive in history) that was hyper-inflating the largest financial bubble in history, and about to cause a global financial crisis that produced the Great Recession and (if Bernanke is to be believed) would have produced another Great Depression but for the largest financial bailout in history.

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What if Bernanke Had the Character to be Candid?

By William K. Black

David Wessel has just published a fantasy piece in the Wall Street Journal that asks the question “what if Bernanke could be blunt” in his Congressional testimony later this week.  Here are the first two things that Wessel envisions a blunt Bernanke as telling Congress:

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Marshall Appears on Fox Business

NEP’s Marshall Auerback appears on Fox Business News weighing in on QE and Markets. You can view the segment here.

 

Where Did the Federal Reserve Get All that Money?

By Stephanie Kelton (h/t Matthew Berg)

Federal Reserve Chairman Ben Bernanke gave his fourth lecture at George Washington University yesterday. Buried in the lecture, beginning at about 19:18 in the video, Bernanke explained where the Fed got the money to “pay for” the assets it purchased as part of its Quantitative Easing (QE) policies.

I remember when the Fed announced the first round of QE. Those who don’t understand Fed operations – think most mainstream economists – went nuts. Many worried that the Fed would be unable to “unwind” its positions (i.e. divest itself of the assets – MBS, Treasuries, etc. – it had purchased) because banks would refuse to swap their nice safe cash for riskier instruments when the economy recovered. Others insisted that QE was “stuffing the market full” of too many dollars and that this, inevitably, would result in hyperinflation.

John Carney just wrote a very nice piece, showing that not only was the Fed able to find buyers for its assets but that markets actually bought them back at a premium. Bernanke addresses the second objection in his remarks below – idle balances don’t chase any goods – but it’s the financing of the asset purchases that I want readers to understand, because this is fundamental to understanding Modern Monetary Theory (MMT).

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Bernanke’s 29 Trillion Dollar Fog of Deceit

By L. Randall Wray

As I reported over at Great Leap Forward,a new study by two UMKC PhD students, Nicola Matthews and James Felkerson,provides the most comprehensive examination yet of the Fed’s bail-out of WallStreet. They found that the true total cumulative amount lent and spent onasset purchases was $29 trillion. That is $29,000,000,000,000. Lots of zeros.The number is quite a bit bigger than previous estimates. You can read the first of what will be a series of reports on their study here: I want to be clear that this is a cumulative total—and for reasons I willdiscuss in this post it is the best measure if we want to understand themonumental Fed effort to restore Wall Street to its pre-crisis 2007 glory.
 
It is certain that no government anywhere, ever, hascommitted so much to benefit so few. Wall Street owes the Fed a big fat wetkiss. That’s a kiss Chairman Bernanke apparently does not want.
Last week he extended the Fed’s veil of secrecy over itsbail-out of Wall Street by trying to counter a recent Bloomberg analysis of theextent of the Fed’s largess with a fog of deceit. Apparently the Chairmanforgot the lesson we learned from Watergate: the cover-up is always worse thanthe original indiscretion.