Thanks for saving the world from a second Great Depression, Ben Bernanke! Now, what have you done for us lately?
It's actually a reasonable question. Bernanke was TIME's Person of the Year 2009, and at the time we urged Congress to put politics aside and confirm him to a second term as Federal Reserve chairman. Much of the opposition that's been building lately to Bernanke's confirmation consists of Republicans who want to obstruct anything President Obama wants and Democrats who want to obstruct anything Wall Street wants. But while Bernanke performed brilliantly during the worst financial panic in 75 years, it's fair to ask why he isn't doing more now to fight unemployment (the left's chief complaint) or inflation (the right's chief complaint).
I spent nearly six hours with Bernanke for TIME's Person of the Year story, and I asked versions of the "Now what?" question a dozen times. Bernanke always left wiggle room, but he made it clear that he basically intends to stay the course. After pouring unprecedented money into the financial system to try to revive the economy, he has no plans for additional monetary stimulus because he doubts it would create many jobs. He also made it clear that he's in no hurry to start pulling money out of the economy to try to fight inflation because he doesn't see any signs of inflation on the horizon.
I'll get back to his case for standing pat. But there are several other criticisms of Bernanke, most of them unfair:
He's a Wall Street guy. This is just wrong. Bernanke is a Main Street guy, a middle-class kid from small-town Dillon, S.C., whose father actually owned a pharmacy on Main Street. He has never worked on Wall Street. He's an academic who studied the Depression and learned how financial panic can lead to economic calamity. He bailed out bankers not to reward their bad behavior but to prevent that bad behavior from crippling the global economy. It's not his fault the markets like him.
He blew it before the crisis. This is true. Bernanke had no idea the financial system was in danger, and some of his comments look painfully ridiculous in retrospect. That said, he had a lot of company on the Clueless Express, and it's not clear how much his cluelessness drove the crisis. Bernanke makes a convincing case that the remarkably loose monetary policies he supported under his predecessor, Alan Greenspan, did not create the housing bubble; it's amusing to see longtime Greenspan fanboys like John McCain trashing Bernanke for insufficient foresight. And while the Fed should have provided stronger oversight, Bernanke is a much more aggressive regulator than Greenspan ever was; in any case, the Fed was never responsible for AIG, Bear Stearns, Lehman Brothers or most of the other firms that blew up the financial system.
He blew it during the crisis. This is nutty. It's easy to nitpick the AIG bailout or any of the Fed's other unpalatable decisions during the panic, but they have worked out better than anyone had any right to expect, preventing a catastrophe for a relatively paltry price. Bernanke has been pilloried for conjuring up trillions of dollars out of thin air and lending to unconventional borrowers who had never dreamed of getting their hands on Fed cash, but more than 80% of his emergency loans have been paid back, and the Fed is returning record profits to taxpayers. Bernanke used the Fed's jaws of life to rescue us from a brutal wreck; it's galling to hear politicians complain that the rescuer might have broken a window.
Now that Bernanke has gotten us past the crisis, inflation hawks and doves alike are trashing him for unbalancing the Fed's "dual mandate" to stabilize prices and maximize employment. The mostly right-leaning hawks rail about Helicopter Ben, Zimbabwe Ben and the Villain of the Year, whose cheap printed money is driving us to hyperinflation. It's true that Bernanke drove interest rates down to zero and tripled the Fed's balance sheet to avert a depression; he has also bought more than $1 trillion worth of mortgage-backed securities to lower mortgage rates, boost housing prices and pull us out of recession. Now that the recession seems to be over, hawks are badgering him to start tightening the money supply to avoid inflation and an overheated economy. Bernanke's response is simple: What inflation? There's little evidence in the data, and even a cursory review of the morning papers suggests that the economy is still underheated. Bernanke repeatedly stressed that the big problem today is high unemployment, that places like Dillon are suffering, that persistent joblessness can create ripple effects that damage families, communities and the nation for generations.