Ben Bernanke the Comedian

Of the debates I would most like to see, John Hussman vs. Ben Bernanke would be right near the top of the list.

Let’s kick off this hypothetical debate with a statement made by Ben Bernanke: “The problem with QE is it works in practice, but it doesn’t work in theory.”

Bernanke made that claim in response to a question if he was confident that QE (the policy of buying bonds to drive down long-term interest rates with short-term rates already at zero), would heal the economy.

Evidence In

Bernanke’s response proved he is a better comedian than economist.

The evidence is in. What do we have to show for QE other than one of the biggest asset bubbles in history?

Beauty of Truth vs. Beast of Dogma

Don’t take my word for it. Let’s tune into this week’s missive by John Hussman: Beauty of Truth vs. Beast of Dogma.

Hussman kicks off with a discussion only geeks can understand. But if you read far enough it quickly gets amusing. 

For example, Hussman posted the following chart of the Taylor Rule (a rule that supposedly will allow the Fed to automatically set interest rates) with this comment …

“It’s unfortunate that the Federal Reserve is actually allowed and even encouraged to impose massive distortions on the U.S. economy based on relationships that are indistinguishable from someone sneezing on a sheet of graph paper.“

Those who managed to get to that point were in for a nice down to earth set of comments and graphs that followed.