This is a very interesting article from Gavyn Davies, the macro economist at the FT, in his weekly blog. The article provide a link to a paper by Professor Ball which I found really fascinating reading. Check them out!
Here is my response to Gavyn Davies blog:
Gavyn, Many thanks for a very interesting blog & sharing Professor Ball’s research. I have taken the time to read Professor Ball’s paper and am a bit surprised that he has concluded on the following two reasons for the radical change in Bernanke’s views: (1) “groupthink”; and #2# a shy reserved personality. The comparison’s with decision-making in the BoE MPC were interesting. In my experience, the role of a chairman is political, and I would be surprised if the chairman did not know the views/voting intentions prior to the meeting. I tend to agree with your conclusion that Bernanke did not press for the “nuclear ” options because the situation was not regarded as sufficiently critical.
Personally, I tend to agree with the economists who argue that the Fed has not been bold enough in addressing unemployment. Interventions in 2008 helped the wealthy and privileged from a thirties type crash which resulted in numerous suicides. In my view, there has been too little intervention to help the middle classes and the poor.