Who your enemies are says a lot about you. And the more I see of Ben Bernanke’s foes, the more I like the guy.
A student of the Great Depression, Bernanke’s leadership during the dark fall of 2008 is a key reason that, as tough as things are right now, we are not stuck in a repeat of the 1930s. Confronted with the worst economic crisis in generations, Bernanke ripped up the rule book, pumped desperately needed dollars into a tottering global financial system, and stopped what would surely have been a catastrophic collapse.
But Bernanke now finds himself branded as some sort of modern day economic Benedict Arnold, not only by the Tea Party rock heads on the right, but also by the eggheads on the left.
In the view of his foes – one group too dumb for its own good, the other too smart – Bernanke orchestrated some sort of national scam, fleecing Main Street to enrich Wall Street. It’s the kind of hogwash that has come to pollute or political system and now threatens our economy, as the recent fiasco in Congress over the debt default illustrated so richly.
“Although the economic consequences of the financial crisis have been painfully severe, the world was spared an even worse cataclysm that could have rivaled or surpassed the Great Depression,” Bernanke noted in speech this past spring at the Center for the Study of the Presidency and Congress in Washington.
Treason…
In case you missed it, we now know that Bernanke and the Fed issued an amazing $1.2 trillion in emergency loans to banks during the fall of 2008 when the global financial system teetered on the edge.
For Bernanke’s critics, however, this is likely just the latest damning evidence that the Fed chief was giving away the store to Wall Street – and the Tea Party gang has by far led the way with the increasingly absurd Bernanke bashing.
Republican presidential contender Rick Perry, the Tea Party favorite, hit a new low when he hinted that it would be “almost treasonous” if Bernanke were to “print more money” before the next election.
It’s not exactly clear what Perry is trying to get at here – the economics are pretty muddled. After all, the sagging global economy could use a little inflating right now. But the idea that a Bush appointee is going to start using the Fed as a campaign organ for President Barack Obama is incredibly illogical.
It’s just the latest in an escalating series of attacks from the Tea Party right stemming from Bernanke’s original sin for helping push through the $700 billion bank bailout bill – TARP – back in 2008.
As we know now, that was just the tip of the iceberg when it comes to what the Fed has done to keep the world economy from de-railing, from the $1.2 million in emergency loans to the purchase of untold hundreds of billions in bonds as a way of pumping more money into a sagging economy.
But from the start, Bernanke’s critics, especially of the Tea Party variety, have gotten so hopelessly lost in the details that they have been unable – or simply unwilling – to see the big picture.
And, of course, there were “outrages” along the way – the hundreds of millions in bonuses that went to top executives at bailed out AIG helped fueled some self righteous fury on both sides of the political aisle.
Or Treachery?
The latest anti-Bernanke argument is that the sluggish economy is now final proof that all of the Fed chief’s fancy financial maneuvering has been for naught.
Sorry, but I will take today’s slow/no growth economy any day over the kind of mass unemployment – 20 to 30 percent – that comes with a full-scale depression.
It’s always hard to get credit for disaster averted, especially when you are in the public sphere, but this should be an exception to the rule. The bailout wasn’t pretty, that’s for sure, and the big banks, as well as big business in this country, are too often coddled.
But the epic financial crisis that erupted in the fall of 2008 was not the time to stick it to Wall Street, and thankfully, Bernanke understood this probably better than any other leader on the global stage at that point.
Back in the 1980s, Bernanke, then a Princeton University economist, crafted a cutting-edge theory on how the financial sector plays a crucial swing role in the economy, not only fueling booms but accelerating busts as well. He used his “financial accelerator” theory to help explain why the Great Depression both hit such depths and dragged on so long
Sure, we have seen some big banks totter and some banks go under. But the Great Depression saw thousands of banks go under each year from 1929 right into 1933. By the time Franklin Roosevelt took office, the international banking system, the lifeblood of capitalism, was a smoldering ruin.
That left Roosevelt with little choice to but try and revive the nation’s economy through government intervention. And we all know how successful government-run economies are.
It’s not clear, though, that the Tea Party types are even aware of this basic story line, or, even if they are, if they can see beyond their rigid ideological blinders.
Instead, Bernanke’s Tea Party critics appear determined to run down an honorable, brave and arguably brilliant man in favor of their own, crackpot economic theories.
I’ll refrain from pulling a Rick Perry here and invoking treason. But it sure looks downright treacherous to me.
