{"id":13925,"date":"2015-10-29T06:34:03","date_gmt":"2015-10-29T11:34:03","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13925"},"modified":"2015-10-29T06:34:03","modified_gmt":"2015-10-29T11:34:03","slug":"professor-bernankes-bogus-contra-factual-part-2-why-the-friedmanbernanke-thesis-about-the-great-depression-was-dead-wrong","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13925","title":{"rendered":"Professor Bernanke\u2019s Bogus Contra-factual, Part 2: Why The Friedman\/Bernanke Thesis About The Great Depression Was Dead Wrong"},"content":{"rendered":"

Professor Bernanke\u2019s Bogus Contra-factual, Part 2: Why The Friedman\/Bernanke Thesis About The Great Depression Was Dead Wrong<\/a><\/h3>\n

In explaining to the\u00a0FT\u2019s\u00a0<\/strong><\/em>Martin Wolf\u00a0why he bailed out the\u00a0Wall Street gamblers at Goldman Sachs and Morgan Stanley while crushing millions of\u00a0ordinary American\u00a0savers and retirees, Bernanke typically repaired to his go to argument. It had nothing to do with the mild excesses of inventories and labor that had built up in the main street economy owing to the Greenspan\u00a0housing and credit boom, as explained in Part 1.<\/p>\n

That\u2019s because Bernanke was not aiming to ameliorate the mild economic\u00a0liquidation that ensued after the Lehman event; and which,\u00a0as previously demonstrated, would have runs its course and self-corrected without any help from the Fed in any event.<\/p>\n

No, Ben S. Bernanke will\u00a0be someday remembered as\u00a0the world\u2019s most destructive battleship admiral. Not only was he fighting the last war, but his whole multi-trillion money printing\u00a0campaign after September 15, 2008 was aimed at\u00a0avoiding an historical Fed\u00a0mistake that had never even happened!<\/strong><\/p>\n

As Bernanke\u00a0explained it:<\/p>\n

I should have done more (to mitigate anti-Fed sentiments). But I was very much engaged in trying to put out the fire. So I don\u2019t know what to say. It was kind of predictable.\u00a0The Federal Reserved failed in the 1930s. I think we did much better than in the 1930s.<\/strong><\/em><\/p><\/blockquote>\n

The claim that the Fed resorted to \u201cextraordinary policies\u201d\u00a0of ZIRP and QE\u00a0because it was fighting a recurrence of Great Depression 2.0 is completely, profoundly, unequivocally and destructively wrong.<\/p>\n

It is the giant fig leaf that obscures what really happened during and after the crisis. Namely, that the main street economy recovered on its own, and that the flood of money generated by Bernanke never left the canyons of Wall Street, thereby causing the destruction of honest\u00a0price discovery in the financial markets once and for all.<\/p>\n

So doing,\u00a0the Fed and other central banks have\u00a0turned financial markets\u00a0into dangerous, unstable casinos.\u00a0In the name of precluding the contra-factual\u2014\u2014that is, Great Depression 2.0\u2014-they have\u00a0generated\u00a0the mother of all financial bubbles<\/em>.<\/strong><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Professor Bernanke\u2019s Bogus Contra-factual, Part 2: Why The Friedman\/Bernanke Thesis About The Great Depression Was Dead Wrong In explaining to the\u00a0FT\u2019s\u00a0Martin Wolf\u00a0why he bailed out the\u00a0Wall Street gamblers at Goldman Sachs and Morgan Stanley while crushing millions of\u00a0ordinary American\u00a0savers and retirees, Bernanke typically repaired to his go to argument. It had nothing to do with […]<\/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":[68,124,5979,7783,2120,303,3920,383,534,538,661,1939],"class_list":["post-13925","post","type-post","status-publish","format-standard","hentry","category-economics","tag-ben-bernanke","tag-central-banks","tag-contracorner","tag-credit-expansion","tag-david-stockman","tag-fed","tag-financial-bubble","tag-great-depression","tag-monetary-policy","tag-money-printing","tag-qe","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13925","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=13925"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13925\/revisions"}],"predecessor-version":[{"id":13926,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13925\/revisions\/13926"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}