Ben Bernanke: On The Way From Hero To Zero?

Bernanke Keeps Cashing In – PIMCO Finds Some Use for the Ex-Fed Chairman too

We recently wrote about Ben Bernanke’s deft moves to make some coin from his former position as the US chief central economic planner by getting a job as a consultant for highly leveraged hedge fund Citadel (see “The Courage to Cash In” for details). As we have pointed out on this occasion, it is a virtual certainty that contrary to the press releases on the matter, Citadel didn’t hire Bernanke for his revolutionary economic insights or his forecasting prowess. If that were indeed the reason for employing him, Citadel might as well shoot itself in the head.

Two years ago the Atlantic celebrated Bernanke as the “hero who saved the economy” by the expedient of printing truckloads of money and suppressing interest rates to zero. Today the WSJ is telling him to “stop blaming others for his mistakes”.

The reason why large financial companies are prepared to pay big bucks for the advice of formerly high-ranking monetary bureaucrats are the latter’s contacts to and insights into the bureaucratic apparatus and its workings. This revolving door syndrome it is a well-known feature of modern-day corporatism and as such certainly worth criticizing. As we have pointed out, we are not begrudging Bernanke that he is finally getting a real job outside of the ivory tower and the bureaucracy. It is however clear that the only “expertise” his new employers want to tap is directly connected to his former role as an interventionist. In short, his free market value is a subsidiary function of the government’s interventionist policies.

However, it is difficult to fault the companies hiring him for trying to gain a small advantage in this manner. To some extent this applies actually to a great many instances of revolving door cronyism and corporate lobbying. Given the fact that government does intervene in the economy and thus represents a grave threat to the private sector at all times, companies are not merely trying to purchase political influence in order to gain privileges and competitive advantages. Often they are simply trying to take out insurance against becoming a target or victim of government intervention, and in most cases this is certainly at least an additional motivation. The lines between purchasing undue influence and trying to protect one’s very existence are definitely blurry.