Well, it looks like Ben Bernanke has one foot out the door. At least that seems to be the consensus view after President Obama hinted at the end of the chairman’s tenure the other day and rumors have circled about who the next Fed Chief will be. I think this is probably correct. At heart, Ben Bernanke is just an economics professor who was thrust into one of the hardest jobs on the planet at one of the worst possible times. So it’s easy to understand why he might want out.
So, how will the world remember Ben Bernanke? It’s easy to be hard on him. It’s also easy to be easy on him. There will be two views in all likelihood. There will be those who remember him for missing the housing crisis entirely and stating that sub-prime was “contained” in 2007. And there will be those who remember the Fed Chief who helped piece together the rescue plan that brought the global economy away from the brink of disaster in 2009.
These two groups will battle over his legacy, but I think his legacy is far from having played out entirely. I think there is a potential third group of people who will wait to pass judgement on Dr. Bernanke. After all, some of us remember how Dr. Greenspan was lauded as a great Fed Chief when his tenure ended only to learn just years later that many of his ideas were, by his own admission, “flawed”.
Personally, I have a hard time believing that history will treat Dr. Bernanke all that well. After all, he works from the same basic set of economic beliefs that led his predecessor to believe that his approach was well grounded. We have suffered through 20 years of a boom bust business cycle that has been largely predicated on protecting financial institutions and targeting asset prices.
To me, there is very little in what Bernanke has done that hasn’t already been done before. In fact, you could argue that we’ve seen this movie and we all know how it ends. Of course, this movie isn’t over and no one really knows how it ends, but given the similarities in the approaches between that of Dr. Bernanke and Dr. Greenspan, I have a hard time seeing how history will treat Dr. Bernanke any differently than it treats Dr. Greenspan. But the legacy of Dr. Bernanke has yet to fully play out.