{"id":13849,"date":"2015-10-27T06:20:59","date_gmt":"2015-10-27T11:20:59","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13849"},"modified":"2015-10-27T06:20:59","modified_gmt":"2015-10-27T11:20:59","slug":"professor-bernankes-bogus-contra-factual-part-1-the-myth-of-great-depression-2-0","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13849","title":{"rendered":"Professor Bernanke\u2019s Bogus Contra-factual, Part 1: The Myth Of Great Depression 2.0"},"content":{"rendered":"

Professor Bernanke\u2019s Bogus Contra-factual, Part 1: The Myth Of Great Depression 2.0<\/a><\/h3>\n

It took no \u201ccourage\u201d whatsoever to\u00a0inflate the Fed\u2019s balance sheet from $900 billion to $2.3 trillion\u00a0during just\u00a017 weeks in September-December 2008. What it actually\u00a0took was an epochal con job by a na\u00efve Keynesian academic whose single idea about economics was primitive, self-serving,\u00a0borrowed and wrong.<\/p>\n

The claim that the Great Depression was caused by the\u00a0Fed\u2019s failure to go on a bond buying spree in 1930-1933 was Milton Friedman\u2019s monumental error. Professor Bernanke\u2019s scholarship amounted to little more than xeroxing Friedman\u2019s flawed work,\u00a0and then shouting loudly in the Eccles Building boardroom at the time of the Lehman bankruptcy that Great Depression 2.0 was lurking just around the corner.<\/p>\n

That was just plain hysterical malarkey. But at the time, it served the interests of the Wall Street\/Washington Corridor perfectly.<\/p>\n

As Wall Street\u2019s decade long spree of leveraged speculation was being liquidated in September 2008, Goldman Sachs, Morgan Stanley\u00a0and\u00a0their posse of hedge fund\u00a0speculators desperately needed rescue from their own reckless gambles\u2014\u2014especially their funding of giant balance sheets swollen by\u00a0long-dated, illiquid, risky\u00a0assets with cheap hot\u00a0funds in the wholesale\u00a0money market. So what better excuse to override every principle of free market economics, financial discipline and public\u00a0policy fairness than stopping a reenactment of the 1930s\u2014\u2013putative soup-lines and all?<\/p>\n

At the same time, beltway politicians and fiscal authorities were tickled pink. They would be able to\u00a0unleash a monumental $800 billion potpourri of\u00a0K-street pork and\u00a0tax and entitlement\u00a0giveaways to \u201cfight\u201d the recession, knowing that Bernanke &\u00a0Co would finance it with an eruption of public debt monetization that was theretofore unimaginable.<\/p>\n

In short, no public official has ever committed an economic\u00a0folly greater than the horrific misdeed of Ben S. Bernanke when he provided the Great Depression 2.0 cover story for the lunatic outbreak of central bank money printing shown below. It destroyed the last vestige of\u00a0Wall Street\u00a0discipline in a financialized\u00a0economy that had already been bloated and deformed by two decades\u00a0of Greenspan era Bubble Finance.<\/p>\n

\"\"<\/p>\n

\u2026click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Professor Bernanke\u2019s Bogus Contra-factual, Part 1: The Myth Of Great Depression 2.0 It took no \u201ccourage\u201d whatsoever to\u00a0inflate the Fed\u2019s balance sheet from $900 billion to $2.3 trillion\u00a0during just\u00a017 weeks in September-December 2008. What it actually\u00a0took was an epochal con job by a na\u00efve Keynesian academic whose single idea about economics was primitive, self-serving,\u00a0borrowed and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[49,68,122,5979,2120,303,305,383,661,662,860,865],"class_list":["post-13849","post","type-post","status-publish","format-standard","hentry","category-economics","tag-balance-sheet","tag-ben-bernanke","tag-central-bank","tag-contracorner","tag-david-stockman","tag-fed","tag-federal-reserve","tag-great-depression","tag-qe","tag-quantitative-easing","tag-wall-street","tag-washington"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13849","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13849"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13849\/revisions"}],"predecessor-version":[{"id":13850,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13849\/revisions\/13850"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13849"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13849"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13849"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}