Bernanke Boasts Monetary Policy in WSJ Piece
How’s the economy doing? According to Ben Bernanke, pretty well… and it’s because of him. Writing in The Wall Street Journal, the Federal Reserve Chairman explains ever-so-humbly how “the Fed saved the economy.” In the piece (which comes on the heels of his book release), Bernanke points to the decreasing unemployment rate and a moderate inflation rate as signs that our economy is reasonably healthy again.
On unemployment, Bernanke says that the 5.1% rate implies that the labor market is “close to normal” even if there is still some distance to go. Meanwhile, he jabs critics who insisted that his Fed policy would lead to hyperinflation by noting that the current inflation rate (which is hovering around 1.5%) is actually under the Fed’s goal of 2%.
Bernake also compares the seeming success of his policies to those of struggling Europe and suggests that others are now coming around to his way of thinking. Once again he enjoys taking shots as his doubters saying, “In November 2010, when the Fed undertook its second round of quantitative easing, German Finance Minister Wolfgang Schäuble reportedly called the action ‘clueless.’ At the time, the unemployment rates in Europe and the U.S. were 10.2% and 9.4%, respectively. Today the U.S. jobless rate is close to 5%, while the European rate has risen to 10.9%.”
Aside from boasting and I-told-you-sos, Bernake’s article reflects on the role of the Federal Reserve, saying “What the Fed can do is two things: First, by mitigating recessions, monetary policy can try to ensure that the economy makes full use of its resources, especially the workforce.” With that, Bernake essentially hands the ball off to Congress and others since “monetary policy can no longer be the only game in town. ” He adds, “As a country, we need to do more to improve worker skills, foster capital investment and support research and development… New efforts both inside and outside government will be essential to sustaining U.S. growth.”
While few would argue that the U.S. economy isn’t in a better place than it was in recent years, it’s interesting to hear Bernanke’s point of view on what’s been done and what still needs to be done. His article really highlights how no one agency, act, or policy can fully fix the problems the economy was/is facing. Perhaps Bernanke’s Fed did “save the economy” but it will take the work of many others to fully resuscitate it.