Ben Bernanke’s blog


For those of you who wonder what “self-recommending” means, now you ought to know…

Addendum: Modeled Behavior adds comment.  So does Paul Krugman.


And for those who wonder what Straussian means, now you ought to know!

And on twitter,

Bernanke's first post seems dishonest or deluded. At this stage of
his life, he is free to say, "Yes, the Fed did a lot of harm to savers,
but the policy options involved tradeoffs and we helped more people than we hurt." Why won't he say that?

Because the intern didn't think to include it.

+1 LOL you have to remember Bernanke is still in demand for his services. For him to say things like: "well, the evidence shows the Fed does not have as much power in the short term--never mind the long term--over the economy as people think" is not in his best financial interest. The magician must maintain his mystique.

Yes - I read his post about why interest rates are so low and he measures his words like a politician. Nevertheless, I found it interesting that he seems to indicate that the Fed has little control over real rates, but has to be careful that it keeps rates from being too low (risking overheating), or too high (which would lead to a slowdown). So the Fed has power and doesn't have power. I also found the thermodynamic metaphors for the economy (overheating) kind of primitive. And I was a bit puzzled by the following: "Many factors affect the equilibrium rate, which can and does change over time. In a rapidly growing, dynamic economy, we would expect the equilibrium interest rate to be high, all else equal, reflecting the high prospective return on capital investments. In a slowly growing or recessionary economy, the equilibrium real rate is likely to be low, since investment opportunities are limited and relatively unprofitable." There doesn't seem be any sense that the supply of investable funds might be greater in a dynamic economy and less in a slowing economy, tending to stabilize the real and nominal interest rates.

I don't get a very comfortable feeling that those in charge know what they are doing. I think the idea that the economy is some car with smart guys at the wheel (like BB) is a delusion.

Really Rich?

Bernanke says that the Fed controls short term rates but not long-term rates. Not a controversial statement.

And he says that real rates are low, but even at the short end, this mostly represents supply and demand, not Fed engineering. New normal. He's right, notwithstadning Ray Lopez's rants from some book he just read debunking Milton Friedman.

I was disappointed Bernanke didn't use the word demographics. Seems like the obvious common thread, with Japan and Europe delivering the lowest real rates.

"There doesn’t seem be any sense that the supply of investable funds might be greater in a dynamic economy and less in a slowing economy, tending to stabilize the real and nominal interest rates."

I guarantee that BB is well aware of this and other factors. The notion of automatic stabilizers is taught in every intermediate macroeconomics class in the country (or at least all of the decent ones). These days it's probably taught in intro macro.

There's plenty of stuff to worry about with the Fed, but the stuff you listed isn't it.

I know that BB is one of the Smartest of the Smart (TM), but I will persist in my ignorance. A quick check of 10-year Treasury rates versus inflation tells me that real rates persistently declined from the early 80's through the 90's, during a period when the economy was growing smartly (save for a few short down quarters). This seems inconsistent with BB's claims.

I got my BA in economics when the IBM 370 was state of the art and I was skeptical of macroeconomic wisdom then and remain skeptical.

Yes, the Fed did a lot of harm to savers

If you're saying tight money (which is what we've had since 2008) harms savers, then I'm 100% with you.

Recessions harm savers too, at least on average.

If anything the Fed was too sensitive to inflation concerns, they allowed NGDP to fall way off trend, and probably destroyed millions of jobs. thousands of companies, and percent or three of RGDP they didn't need to.

Bernanke writes very clearly but doesn't recommend that one should read his blog ( which would be silly, since that's exactly what the reader is just doing!)
So the blog is in no sense self-recommending.

I think Tyler is just referring to the initial post which announces the blog.

It is like Amalrik's fish. It is interesting.

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