Ben Bernanke’s Big Lies

Back in 2010, Ben Bernanke offered a purely Keynesian justification for a second round of “Quantitative Easing”, which essentially became permanent thereafter. Namely, the proposition that “easy” financial conditions would provide an excellent transmission channel by which the Fed’s unprecedented money-pumping would levitate the main street economy and improve the lot of everyday Americans.

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose, and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”

No bigger lie has every been spoken by an American financial official. It wasn’t remotely plausible back then, and has been refuted in spades by the split screen economy that has ensued since then: To wit, a roaring boom on Wall Street and a tepid, worst-expansion in history slog on main street.

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