Does Bernanke deserve the Bagehot Badge of Honor?
By Amy Willis
How much credit (or blame) should the Fed receive for its response to the 2008 financial crisis? What about former Fed chief Ben Bernanke? EconTalk host Russ Roberts sat down with George Selgin of Cato’s Center for Monetary and Financial Alternatives to discuss just that, and we think some of their answers might surprise you…
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1. Selgin and Roberts both seem to think that the Fed policy of paying interest on reserve held at the Fed neutralized any stimulative effects of monetary policy. What empirical evidence would you need before accepting this claim? How might Bernanke respond?2. In discussing the failure of Lehman Brothers, Selgin says that the failure was in itself a good thing, “but in the context it was quite harmful.” What does he mean by that, and what does his analysis suggest the Fed should have done?
3. Why is Selgin, who identifies as a market monetarist “fellow traveler,” ultimately against the Fed’s Quantitative Easing? How does his stance compare to that of EconLog’s Scott Sumner? (For more on Sumner’s thoughts, check his EconLog archive as well as this EconTalk episode from 2013.)
4. Roberts mentioned the possibility of having Bernanke as a guest on EconTalk? If that happened, what would you want Russ to ask him?