Without a doubt, this crisis is now Ben Bernanke’s war.
Bernanke has become the country’s economist in chief, the banker for the United States and perhaps the world, and has employed every weapon in the Federal Reserve’s arsenal. He has overseen the broadest use of the Fed’s powers since World War II, and the regulation proposals working their way through Congress seem likely to empower the institution even further. Although his actions may be justified under today’s circumstances, Bernanke’s willingness to pump money into the economy risks unleashing the most serious bout of U.S. inflation since the early 1980s, in a nation already battered by rising unemployment and negative growth.
If he succeeds in restarting growth while avoiding high inflation, Bernanke may well become the most revered economist in modern history. But for the moment, he is operating in uncharted territory.