Perhaps the Atlantic has suddenly become a humor magazine or perhaps they are revealing their ignorance of all things economic. Or perhaps the adulation of Bernanke is an attempt to convince readers that the worst is over and an economic recovery is underway. All are potentially valid hypotheses for such an absurd cover.
Magazine covers like this one often are looked back on as markers signifying turning points. History is filled with such examples. In the sporting world, Sports Illustrated covers regularly proclaim the invincibility of various teams or individuals only to have them collapse shortly thereafter. In the business world, proclamations of a forever bull market usually precede a collapse. Likewise, proclamations like “the end of stocks” usually precede a massive bull market.
The covers are not causal; i.e. reporting does not influence subsequent events. They reflect the euphoria of the time and the common mistake of assuming a trend can be extrapolated forever. The media, generally late to pick up on trends, jumps on the bandwagon at the (then unknown) end of the trend. This rather consistent behavior of recognizing reality late is used by some as a contra-indicator. That is, when something is hailed in the media, it is a sign that the trend is old and about to be reversed. Contrarians often place bets just the opposite of what the media proclaims.
This Atlantic cover is so outrageous that it is likely to be just such a marker. It is likely to be viewed as the watershed of media folly and ignorance that preceded the coming massive economic disruption. This particular cover may be viewed as the signal for the end for the following:
- Ben Bernanke, his monetary policies and the Keynesian paradigm upon which they were based.
- The deathblow to what remains of the mainstream media’s credibility.
Regarding the two, I am more confident of the first than the second. There are existential economic and mathematical laws that cannot be avoided. Absolutely nothing has been solved by Mr. Bernanke or government fiscal policy other than a shift in the occurrence of events. In all other respects, matters have been made substantially worse!
An unbearable debt problem was addressed by making it bigger and more threatening. Government spending was out of control and unsustainable. That problem was “solved” by increasing spending massively. Problems that were intractable were transformed into impossible. Nothing has been solved on the economic front. Everything has been made worse!
Claiming that Mr. Bernanke is a hero is akin to claiming that an arsonist is a hero because he reported the fire. Bernanke will eventually be viewed in history not as a hero but as a goat. His legacy will be that of a well-meaning, but pathetic, man who was in over his head and co-opted by political forces. He will be seen to have inherited a very difficult situation and fought it with an incorrect paradigm which made it worse.
Ultimately he will be faulted for the worldwide economic tragedy ahead. His name, rightly or wrongly, will rank with the likes of John Law and other monetary cranks. In short, he will be blamed for the demise of the US as a first-world economic power and possibly held responsible for the collapse of the worldwide financial system.
The second point above is less certain. The motivation behind the Atlantic’s praise of Bernanke is probably an attempt to convey that an economic recovery is underway in advance of the election. While an economic recovery is nonsensical to those who understand economics, the public’s acceptance or rejection of such a claim cannot be determined. Credibility of the mainstream media is a function of perception rather than reality. The “dumbing-down” of our citizenry, plus the dependence of almost 50% of the public on government support in some form, strongly biases them toward the Statist propaganda spewed by the mainstream media. Eventually this propaganda will be dispelled, although it may not happen until after the economic tragedy.
Regarding Mr. Bernanke’s expertise, there is no evidence that it exists or ever did. To demonstrate his faulty understanding of events and his ability to forecast, one need view this collection of his prior pronouncements:
A hat tip to Mish who first reported on this nonsense and who is less kind than me in his assessment of Bernanke. He had another critical article entitled Ben Bernanke: Inflationist Jackass, Devoid of Common Sense, and Clueless About Trade, Debt, History, and Gold that was especially damning. Both articles are worth reading and the video is worth watching (again — I think I may have posted it twice prior to this posting!).
If you view this material and do not question Bernanke’s abilities, then you and the author of the Atlantic article may be the only two literate people in the country dumber than the new “Maestro.”