Ben Bernanke is serving his last week as the Chair of the Federal Reserve and will be replaced by Janet Yellen on February 1st, which makes this a good time to consider his track record.
I agree with Kevin Grier (aka Angus), who praises Bernanke for avoiding both financial catastrophe and inflation. Ben considers the monetary authority to be limited in its ability to manage the macroeconomy. He sees the Fed's power as limited to two functions:
- Controlling inflation
- Providing ample money in times of crisis
The data shows that Bernanke was successful in both endeavors.
First, inflation averaged just 2.2% during Bernanke's tenure (see figure below), lower than any of his predecessors since the 1970s. Ben is probably not unhappy with this result.
Second, Bernanke made sure there was plenty of liquidity in markets during the darkest days of the Great Recession and the recovery, even when this involved creating a new tool (quantitative easing) and figuring out how to use it, all without causing inflation. Tough job.