Ben Bernanke’s point in his recent memoir is that central banks can only do so much. At the end of the day, monetary policy is not social change, moral evolution, or political coalition building. These things happen outside the Central Banking system and are just as important for a functioning economy. I know this sounds controversial, but at this point quite frankly the deficit does not matter. There is so much debt…
Yeah and he is totally wrong in that. His own writing before the recession argued for that to be false.
Once in power of the central bank many other people were involved and they were not willing (in the beginning to use those tools). Eventually they figured it out but by that point it was way to late.
The problem was that people were so obsessed with inflation that the central bank flat out refused to go above 2% and that would clearly have been needed from a monetary perspective.
This was a clearly a flat out instiutional failure from the Fed and Bernanke tried his best in his book to shovel that under the table.
We know this because the meeting are public, they were debating about fear of to much inflation in late 2008 when all economic indicated were pointing to a major collapse.
> At the end of the day, monetary policy is not social change, moral evolution, or political coalition building. These things happen outside the Central Banking system and are just as important for a functioning economy.
But those things did not cause the economy to collapse. The economy collapsed because of a massive demand shortfall with NGDP going almost 9% below trend.
> I know this sounds controversial, but at this point quite frankly the deficit does not matter. There is so much debt in the world, we are likely heading towards a global debt write-off.
Easy to say. But the fact is that those things almost never happen and the only cases where it did was after major wars.
> It doesn’t help that China has essentially been spewing entirely fictitious accounting numbers for the last 20 years.
Whatever they claim go to China and see the growth.