The reason for repeating the obvious is that David Ignatius in the Washington Post is trying to rewrite history on this topic. He belittles people who hold the Fed responsible for the economic downturn: "With unemployment above 10 percent, the public is angry about last year's financial crunch -- and looking for people to blame. The Fed is just elitist enough, and Bernanke is just enough of a professorial egghead, to make them targets for popular anger." This absurd condescending comment has no place in a serious newspaper. It would be like writing that "the public is angry about the September 11th attacks and Al Queda and Osama Bin Laden are just Muslim enough to make them proper targets for popular anger." There may well be an anti-elitist strain to the anger against the Fed and Bernanke, but serious people do not dispute their responsibility for the economic crisis. There was an enormous housing bubble that was easy for competent economists to recognize. It was inevitable that it would collapse and that its collapse would lead to a serious downturn. Bernanke and the Fed allowed the bubble to just continue to expand until it collapsed of its own weight instead of using the powers of the Fed to rein it in before it grew to dangerous levels. All of this is entirely clear to those who know the history, even if the facts may be confused in the minds of the Post's columnists. (Just to be clear, the Fed did not plan the collapse of the bubble and the downturn in the way Al Queda planned for thousands of people to die in the September 11th attacks.)
Dean Baker
