What’s great about the US is that anyone can grow up to be president…or win a Nobel Prize.
Donald Trump proved the first point. Now, Ben Bernanke has proved the second.
Here’s Politico with the story:
‘Former U.S. Federal Reserve Chair Ben Bernanke, who put his academic expertise on the Great Depression to work reviving the American economy after the 2007-2008 financial crisis, won the Nobel Prize in economic sciences along with two other U.S.-based economists for their research into the fallout from bank failures.
‘Bernanke, 68, who was Fed chair from early 2006 to early 2014 and is now with the Brookings Institution in Washington, examined the Great Depression of the 1930s, showing the danger of bank runs — when panicked people withdraw their savings — and how bank collapses led to widespread economic devastation. Before Bernanke, economists saw bank failures as a consequence, not a cause, of economic downturns.’
In our book, Win-Win or Lose, recently updated and soon to be re-released by John Wiley & Sons…we explained how economies really work. While not officially on the short-list for a Nobel Prize, we nevertheless held out hope. Maybe one member of the Nobel committee would pick up a copy for 25 cents at a yard sale…its pages unbent, unread. And perhaps he would find it so compelling he would share it with the rest of the committee…
…and then, in an insult to mainstream, academic economists…
…we would get a call giving us the surprising, good news.
We stayed close to the phone on Sunday…but it didn’t ring. The place they weren’t calling from was Stockholm.
Maybe they couldn’t find our number. Or maybe they are as clueless as Ben Bernanke.
And earlier this week…first we thought it might be a joke…but there he was, Ben Bernanke, sharing the Nobel with two unknown academics. He was smiling…with a look that betrayed his soul — self-satisfied, witless, and dishonest.
Yes, the Nobel Committee laid its top award for economics onto someone who has no idea how economies work. It was as if they had awarded Vladimir Putin the Peace Prize.
But in the spirit of runaway generosity, we give our applause to Ben Shalom Bernanke. And herewith, we help him with his memoirs:
‘Twerp…dweeb…nerd. Yes, that’s what they called me in school. In Hebrew School they had even worse words for me — putz…schmuck…and so on.
‘But I showed them, didn’t I? They didn’t get the Nobel Prize. I did.
‘How did I do it?
‘That’s the interesting story. Even in Washington they took me for bupkis.
‘I followed Alan “Bubbles” Greenspan at the Fed. He understood how markets function. He had spent his time on Wall Street. He had studied the Austrian classics. He dated Barbara Walters and married Andrea Mitchell. He also knew what he wanted — power, fame, and status. He sold out and everybody knew it.
‘In Washington, you have to choose — power or honesty. Not both. Greenspan went with power. And me, I was a guy with no experience, neither on Wall Street nor Main Street. I was an “academic economist”, they said, with no knowledge of the real world.
‘But I played them all. I was the consummate technocrat, with a PhD, spouting BS like an overflowing toilet. The “neutral rate”…economic capacity…excess saving…dynamic stochastic models — all nonsense, of course. But if you really want to play the game in Washington, you need to play on both sides.
‘Old Greenspan was too clever by half. Everybody knew he was lying. And he didn’t get the Nobel Prize. But when I lied, they just thought I was stupid. That was my great achievement.
‘I did my academic work in the shadow of the great Milton Friedman. Friedman was “great” because he recognised that governments are fundamentally parasites and that the less government you have the better off you are.
‘He saw the money supply as the critical variant…and the collapse of banks in the 1930s as the main cause of the Great Depression. When the banks failed, depositors lost money, the money supply fell…and you had — a depression.
‘I knew perfectly well that the bank failures did not actually cause the Great Depression. Banks failed because they had lent too much money to too many people who couldn’t pay it back. Left alone, the bank failures would wipe out bad debt and the system could soon get back on its feet.
‘But I knew that view would never fly in Washington. So, when I was put on the spot on Friday, 3 October 2008, I pretended to be a moron.
‘If you don’t pass this legislation, I told Congress, you may not even have an economy by Monday.
‘This was pure claptrap. I was surprised the clowns went for it. Markets adjust to whatever news they get. The failure of a few over-stretched mortgage lenders was never going to stop the whole economy.
‘Markets don’t care who fails. And they don’t care about prices either. Or interest rates. They only care that they be true. I deliberately distorted them. First, by helping panic Congress into funding a huge Wall Street bailout. Then, by taking the Fed on a printing-spree…adding US$21 trillion to the national debt since 2008. This is what led to the Bubble Epoch — 2009 to 2021 — and made it almost impossible to return to “normal” without catastrophic losses.
‘By then I had fully realised how fraudulent the whole system had become…with the cretins in Congress pretending to carefully consider the issues…the mountebanks at the Fed pretending that they know what interest rates should be…and “The People” themselves pretending to have any idea of what is going on.
‘It was then I decided on the title for my book, The Courage to Act. It was a laugh I shared only with my wife. Courage? It didn’t take courage to print trillions of dollars and set the stage for today’s inflation. No, it didn’t take courage. It took cynicism.
‘I, Bernanke, mastered it. I did it. And I got the Nobel Prize for it.’
Do we begrudge Mr Bernanke his good fortune? Of course, we do. The little twerp deserves recognition — but for making things worse, not making them better.
And as for us…there’s always next year.
For The Daily Reckoning Australia