Farewell Mr. Bernanke... You Will Be Missed
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Today is Ben Bernanke's last day as the Federal Reserve Chairman. Janet Yellen will officially take the reins tomorrow, February 1, 2014.
This means that if something catastrophic in the financial market happens over the weekend --- ie: a major investment bank collapses, the world's largest banks come crawling on their knees, the world's largest insurer succumbs to toxic mortgages, the largest housing market players go belly up, the money market freezes, or anything else of the sort --- it won't be Mr. Bernanke pulling the trigger.
While the market seems to be taking this colossal change in stride, it is a little unsettling.
While many will be quick to paint Bernanke with the moniker "helicopter Ben," the fact is he single-handedly managed to bring the world's largest economy from the brink of collapse with interest rates zero bound. This was a feat of monumental proportion... and that is not overstating it.
Bernanke used untested plays from a playbook he laid out back in 2002 - the famous 'Helicopter Ben' speech. In it he hinted at the now infamous quantitative easing measures that would be accomplished through aggressively buying in the Treasury and mortgage markets.
Bernanke finished that speech with a sentence foreshadowing what he would do nearly a decade later: "I hope to have persuaded you that the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound." Yes, you have Mr. Bernanke... Yes, you have.
SIDENOTE: Yesterday, the staff at the Fed printed a special edition baseball card for Mr. Bernanke's for his going away party (per @Claudia_Sahm). The card came complete with stats like "MVP for most four-letter acronyms created' and 'Time Magazine Person of the Year'. We think what was missing is "Hall of Fame."
This means that if something catastrophic in the financial market happens over the weekend --- ie: a major investment bank collapses, the world's largest banks come crawling on their knees, the world's largest insurer succumbs to toxic mortgages, the largest housing market players go belly up, the money market freezes, or anything else of the sort --- it won't be Mr. Bernanke pulling the trigger.
While the market seems to be taking this colossal change in stride, it is a little unsettling.
While many will be quick to paint Bernanke with the moniker "helicopter Ben," the fact is he single-handedly managed to bring the world's largest economy from the brink of collapse with interest rates zero bound. This was a feat of monumental proportion... and that is not overstating it.
Bernanke used untested plays from a playbook he laid out back in 2002 - the famous 'Helicopter Ben' speech. In it he hinted at the now infamous quantitative easing measures that would be accomplished through aggressively buying in the Treasury and mortgage markets.
Bernanke finished that speech with a sentence foreshadowing what he would do nearly a decade later: "I hope to have persuaded you that the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound." Yes, you have Mr. Bernanke... Yes, you have.
SIDENOTE: Yesterday, the staff at the Fed printed a special edition baseball card for Mr. Bernanke's for his going away party (per @Claudia_Sahm). The card came complete with stats like "MVP for most four-letter acronyms created' and 'Time Magazine Person of the Year'. We think what was missing is "Hall of Fame."
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