Piling On

Make no mistake about it; Bernanke is a student of the Great Depression. He wrote a paper in 1983 specifically about what the Fed should have done at the time.

“The financial crisis of 1930- 33 affected the macroeconomy by reducing the quality of certain financial services, primarily credit intermediation. It was reported that the extraordinary rate of default on residential mortgages forced banks and life insurance companies to ‘practically stop making mortgage loans, except for renewals.” Bernanke said, citing the work of the late economist A.G. Hart.

Oh Golly — does this sound familiar!!

Whether or not the Central Bank caused the Great Depression is another matter. However, Gentle Ben is following his well-documented playbook to a tee. He is pumping liquidity into the system at a massive rate. As much as many might disagree, he is still trying to get out in front of the fast moving calamity. Will he succeed is anybody’s guess. We need to step back and ask ourselves if we should be cursing Ben Bernanke’s name, or perhaps the previous Fed Chairman’s?

photo credit: aprilandrandy