Bernanke's Inflation Record Sucks

A blog about business and economics.
Feb. 27 2013 3:14 PM

Ben Bernanke Has a Terrible Record on Inflation

Federal Reserve Board Chairman Ben Bernanke arrives at a House Financial Services Committee hearing on Capitol Hill, Feb. 27, 2013.
Federal Reserve Board Chairman Ben Bernanke arrives at a House Financial Services Committee hearing on Capitol Hill, Feb. 27, 2013.

Photo by Mark Wilson/Getty Images

Testifying before Congress recently, Ben Bernanke bragged, "my inflation record is the best of any Federal Reserve chairman in the postwar period, or at least one of the best, about 2 percent average inflation."

Catherine Rampell's numbers show that Bernanke has, in fact, delivered the lowest inflation of any postwar Fed chair, coming in at an average of 2 percent. On the other hand, Floyd Norris notes that unemployment under Bernanke has been second-highest of any postwar Federal Reserve chairman. Now if you ignore the "postwar" qualifier, the picture looks different. Several Depression-era Fed chairs had less inflation and more unemployment than Bernanke. And putting those Depression-era bankers into the mix serves to highlight how absurd Bernanke's boast is. No sensible person would look at America's economic performance in the 1929-1933 period and say "man, they did a great job of fighting inflation."

It is true that inflation was very low—indeed, negative—for most of this period, but that simply goes to show they were doing a terrible job.

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Suppose Ben Bernanke resolved to deliver enough aggregate demand to get the inflation rate up to its Greenspan-era average of 2.6 percent. Unless you believe there is literally zero slack or excess capacity in the economy, that would create some extra jobs and real growth. And was inflation so terrible in the Greenspan years? Nope. At the time, Greenspan-level inflation was considered a historic victory in the war on inflation.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.