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George Magnus interview pt 3: Ben Bernanke, printing money in the US and Greenspan’s legacy

First published,, 29/01/2014

Interview by Jay Elwes

The Prospector had an in-depth chat with leading economist and author George Magnus on a wide range of domestic and global economic issues. This is the third of four parts of the interview which will be published here in the coming days.

Jay Elwes: In the US, Ben Bernanke is stepping down as Chair of the Federal Reserve at the end of this month. He has had to deal with the most extraordinary of circumstances—do you think he did well?

George Magnus: Yes. Well it’s always a balance sheet approach: on this side of the ledger on the other side of the ledger. All things considered, he was the right man in the right position at the time that wasn’t of his choosing.

However, I think we can fault Bernanke in a couple of ways. The first was he was one of the people that articulated the wonderfulness of the period called the “Great Moderation” which we now know was a complete figment of everyone’s imagination. It was just a temporary period of economic stability which was doomed to fail. He wasn’t the only one that didn’t see the crash coming—but if history is going to be a judge, it will be judged that he didn’t see it coming and he was in a very prominent position as the Chairman of the Federal Reserve and was certainly aware of problems in the banking industry and in mortgage lending, sub prime loans and structured credit. But he didn’t join the dots. So in that sense he probably gets marked down on his performance pre-2008-9….“more:”