THE BASIS POINT

Ben Bernanke Era: Best or Worst In History?

Since the credit crunch hit emergency status in August 2007, Ben Bernanke has been put to the test. But the exam is nowhere near over. So what type of Fed chairman are we dealing with? This extensive Bernanke profile ran in the New York Times magazine last Sunday, and it’s a great education on Bernanke and Fed history in general. It doesn’t change our position that Bernanke is going to emerge as a great Fed leader. He presides over a volatile era in markets, and his “data dependent” approach perhaps brings even more volatility. We’re right in the middle of his first significant cut cycle after he took over mid-stream through Greenspan’s hike cycle, and continued on that path. Once he reaches stimulative lows on the Fed Funds and Discount rates, just don’t expect him to hold there like Greenspan did. He will hike off lows quickly, and volatility is here to stay.