This is going to be a Ben Bernanke week. The lovable Bernanke is giving his regular Jackson Hole speech later this week. Without a known case of the chairman being right, the world is anxiously waiting hear his wisdom.
So what is the source of Bernanke’s policy recommendations? Well, he is said to be a total authority on how to correct the things that go wrong in an economy experiencing an economic downturn. Who would know better?
What the Fed chairman does might be based on simpler considerations. The theories on which he is an expert never had a ghost of a chance of working to begin with. They are completely full of holes and disregard incentives that are present and relevant in the real world. After initial failures, Bernanke’s recommendations are of the face saving variety.
Still, his audience will be anxious to hear what he says and will hang on every word.

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