If any of you are in any doubt about just how wrong Ben Bernanke has been watch this youtube clip:
The future of the World’s reserve currency is in good hands. Hopefully the stopped watch being right twice a day phenomena will come into play on something significant.
The clip also raises questions about mainstream economics. Bernanke was a exponent of the thinking of the major school of economics. His failure is its failure. The discipline clearly lost touch with reality. They say all models are wrong (they simplify reality) but some are useful. Well the mental model Bernanke used to interpret reality was not useful.
I suspect much mainstream economics is not useful for explaining reality, as opposed to advancing the careers of its exponents. Basically it applies in such a limited set of circumstances that much of it is useless for understanding the real world. The real world has too many interconnections and complexity for the mainstream mental model. The same things that doomed the Communist Commissar to failure will undermine the actions of the likes of Bernanke.
While not subscribing wholeheartedly to any school of economics, there certainly seems to be much in the Austrian school that would have alerted him to the existence of a bubble. Alternatively the classical school contained insights that appear to have been forgotten since the adoption of Keynesian thought.
The question is whether Bernanke can overcome his cognitive biases and admit he was wrong? Can he accept that his errors reflect a profound disjoint between his conceptual framework and reality? Is he capable of accepting that much of his prior activity has been for ill rather than good?
Basically is Bernanke capable of looking at the world anew and forgetting his education/indoctrination? If he is and does then he will be a truly exceptional man. As they say, there is always hope.