Photo

In his interview with Martin Wolf, Ben Bernanke expresses exasperation with claims that quantitative easing is a giveaway to the rich (at the same time that it hurts savers — go figure):

This is the fourth or fifth argument against quantitative easing after all the other ones have been proven to be wrong.

It is, indeed, kind of amazing. In the eyes of critics, QE is the anti-Veg-O-Matic: it does everything bad, slicing and dicing and pureeing all good things. It’s inflationary; well, maybe not, but it undermines credibility; well, maybe not but it it causes excessive risk-taking; well, maybe not but it discourages business investment, which I think is a new one.

Brad DeLong spends what may be too much time on the latest; it’s an argument that doesn’t make any sense, deployed to explain something that isn’t happening (business investment isn’t any lower than you’d expect given the relatively slow recovery). I’m not surprised to see Kevin Warsh going down this road: he’s both a permahawk, who used to warn about inflation but simply changed arguments when the inflation failed to materialize. When Brad complains that there is no coherent argument offered in the article — not a bad argument, but no argument at all — it’s pretty much what one might have expected from Warsh. Back in 2010, I reacted to one of his speeches thus:

So what we’ve got here is an assertion that bad things will happen if you do certain things, without either any evidence to that effect or any explanation of why those things should happen. Yes, maybe bond markets will punish us if we don’t slash spending right now; also, maybe we’ll have bad luck if we step on cracks, or fail to turn aside when Basement Cat crosses our path. But why does this pass for judicious policy discussion?

What I don’t understand is why Mike Spence wants to associate himself with this sort of thing.

But let me say, as I have before, that this whole aversion to easy money, on grounds that keep shifting and don’t seem to have much to do with any coherent economic argument, evidently has deep roots in the conservative psyche — and it’s in the id, not the rational mind.