Ben Bernanke returns to Capitol Hill Thursday for day two of Congressional testimony. While the debate continues over the timing of any Fed tapering, there seems to be unanimity of opinion on Wall Street, among lawmakers and the American people, that Bernanke’s easy money policies have generally failed and will lead America (or at least the dollar) to ruin.
But Jack Rivkin, former CIO of Neuberger Berman, says the conventional wisdom is wrong and the Monday Morning Fed quarterbacks are all wet.
“It’s very easy to criticize if you’re not the one having to pull the trigger [but] I think Bernanke’s done a fairly phenomenal job,” Rivkin says. “I think [Bernanke’s Fed] deserves more than 100% of the credit for what’s been happening here.”
The ‘happening’ Rivkin refers to is the slow but steady recovery the U.S. economy has mustered since the dark days of the financial crisis. And by “more than 100% of the credit,” he refers to the fact Bernanke & Co. have done a lot of heavy lifting vs. other global central bankers – notably the ECB – and despite a feckless U.S. Congress.
Bernanke referenced the lack of pro-growth fiscal policy and the “substantial drag on growth this year” from the sequester in his prepared remarks over and over, as has been the case several times in the past year.
“He’s saying ‘you guys are not doing your part and I’ve had to carry the ball,’” Rivkin notes.
As for the common critique – including from noted economists like Marty Feldstein – that Bernanke’s QE policies have generated very little bang for the Fed-bucks spent, Rivkin says the onus is on those folks to answer two questions: What would you have had him do? What would be going on in the economy if he’d done less?
Of course, you can’t prove a counter-factual but Rivkin is pretty convinced the unemployment rate would be much higher today, housing would’ve remained in bust-mode and the overall economy would’ve stayed mired in a deep recession if the Fed hadn’t acted so aggressively.
“I keep worrying about this sense ‘the Fed has messed this up’,” he says. “It just doesn’t fit with the numbers.”
Rivkin is such a fan of Bernanke’s that he thinks it will be “a shame if we’re not further along [and] he’s not going to be there.”
Check the above video to see Rivkin handicap the likely replacements for Bernanke, whose current term ends in January, and reveal his thoughts about an “out of the box” candidate.
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