On Tuesday President Obama made remarks upon nominating Ben Bernanke for a second term as Fed Chairman. The remarks can be found here:
I would like to comment on some of the phrases President Obama used in these remarks.
President Obama says, “The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation and the world has ever faced.”
“Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall.”
“But taken together, this “bold, persistent experimentation” has brought our economy back from the brink.”
In the second phrase, I found the use of the word “approached” to be odd.
However, the greater significance in the above phrases is the reference to “bold action and out-of-the-box thinking” and “‘bold, persistent experimentation.'” I was surprised to see the word “experimentation” mentioned; one would usually not think of an economy being “experimented” upon. However, the description is probably accurate given what has transpired. Perhaps the bigger question is whether the “experiment” has ended? Has it been a success?
With regard to this “out-of-the-box thinking” and “‘bold, persistent experimentation'” I would like to refer to a speech Janet Yellen (President and CEO, Federal Reserve Bank of San Francisco) gave on January 4, 2009. In it she said that with regard to the Federal Reserve actions: ““Furthermore, many of the interventions are novel, so no straightforward methods are available to quantify their effectiveness. There are also no clear guidelines for the Fed to gauge the appropriate size of its interventions and few precedents for the Fed to use in communicating its policy stance to the public beyond announcing new programs and describing their terms in detail.”
SPX at 1030.98 as this post is written