Both in the stratospherically cerebral worlds of economists and central-bankers as well as in the worldwide social-media (Twitter , WhatsApp and Private email-groups), there’s a lot of trolling, snide Monday-morning quarter-backing and bitchy-sniping going on about Ben Bernanke being awarded the Nobel Prize for Economics, 2022.
Below are 2 examples – one in social media and the other in discussions within some very knowledgeable private group-circles where there is no course trolling, of course, but … let’s say … er… only studious assessments of Bernanke-era policies in the cozy comfort of at least eight years’ hindsight:
(1)
???
https://twitter.com/5forty3/status/1579436496171732992?s=48&t=yKzU9vwDJ-ZAiUlsxUfKww
(2). Ben got his Nobel for flooding the US and the world with printed money. Today the world is reaping the harvest in terms of rising inflation.Bernanke’s Dollars flooded EM economies raising their stock prices. Currencies across the world are hit by the dollar. RBI is committing a mistake in trying to strengthen the rupee by entering the market using its dollars. Those who borrowed in Dollars to finance projects here are going to suffer with huge problems of debt servicing.RBI should look at this scene.
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I am not a pundit in economics or central banking . I am an ex-corporate finance management executive with 35+ years experience internationally. I held down CFO jobs in the private sector which twice got severely jolted by global financial crises that came like bolts out of the blue to strike me. So here is my own narrow perspective on this subject:
What Bernanke did was following classical Keynesian monetarism, wasn’t it? At that time it was said to be the right prescription.
In hindsight it does look what he did was bad …. But at that time when he was chairman of the Federal Reserve from 2006 to 2014 … when the global financial system lurched from one crisis to another (subprime mortgage loan crisis , mass corporate bankruptcies, recession, debt spiralling, sinking banks etc.) , Bernanke was the toast of financial pundits worldwide , wasn’t he?
Even our ex-PM in India the notable “world economist” Manmohan Singh and his alter-ego lieutenants, Montek Singh Ahluwalia and the brilliant PChidambaram played willing choir-boys roles in support of the US Fed policies then … (Maybe Pranab Mukherjee was the only guy who didn’t play ball?) ..
India’s External debt stock stood at US$ 440.6 billion at end-March 2014 up from $123 billion back in 2004 when UPA came to power. Look at the trend-table below that shows how external debt of India grew during the Bernanke era (the last column shows % change over previous year) :
Cheap money suited everyone then, didn’t it? Everyone made merry.
Everyone was merrily singing along in the Ben Bernanke party ! Oh what fun, we had !
Banks in US , EU and Uk were saved thanks to the waves of QE announcements that Bernanke kept making every other month; the bond-markets thrived (and how!); the stock-markets too revived like they were steroid-junkies; investment levels climbed back … Really everyone was having a whale of a time enjoying the party !
I think the party would very well have continued even until today if only the world hadn’t been hit by Covid in 2020 and now in 2022 by the Ukraine war … two black-swan events which have completely overturned the global financial order in less than a span of 3 years . The world would still be enjoying animal spirits at the party thrown by Ben Bernanke back in 2007-8 …. And no one would have really any complaints at all !
But now that the economic weather has turned foul and stagflationary, it seems that the financial pundits of the world have pulled out their knives and are happy to stick it into Bernanke’s back … who, poor fellow, only wants to otherwise quietly retire in glory with a Nobel Prize 🏆 hung as a mantelpiece at home! Why grudge a man a small honour like a Nobel Prize considering that never in the history of central banking have so many owed so much to … one man !
Sudarshan Madabushi