Friday Roundup, July 26th

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  • Our Books section this week features an incredibly insightful review from Alex Pollock on Fed Chairman Ben Bernanke’s collection of speeches entitled The Federal Reserve and the Financial Crisis. Pollock notes the size and potential legacies of Bernanke’s big bet:

How future histories characterize the author will reflect something they will know, which we cannot: what the outcome of the Bernanke Fed’s massive manipulation of the government debt and mortgage markets will have been. This is something that we, and the Federal Reserve itself, now can only guess about. We do know that this has taken the Bernanke Fed’s assets to $3.5 trillion, including $1.2 trillion of real estate mortgages. The then-dominant personality in the Fed, Benjamin Strong, famously decided in 1927 to give the stock market a “little coup de whiskey.” Ben Bernanke decided to give the bond market a barrel or so of whiskey, in a way which would have astonished previous generations of Federal Reserve Governors, and have been utterly unimaginable to the authors of the Federal Reserve Act. The ultimate outcome of this manipulation will probably render Chairman Bernanke in future histories as either a great hero or a great bum. An intriguing personal gamble.