Based on the Republican presidential debates alone, one might assume that Ben Bernanke's tenure as chairman of the Federal Reserve has been an unmitigated disaster.
"I would fire him tomorrow," Newt Gingrich said at the Sept. 7 debate. Without explaining why, Gingrich insisted Bernanke's "dangerous" monetary policy has "deepened the depression, lengthened the problem, increased the cost of gasoline and been a disaster."
At the Sept 12. debate in Tampa, Fla., Texas Gov. Rick Perry stood by his earlier comments that Bernanke's quantitative easing program was "almost treasonous."
History is not a controlled experiment, so it's difficult for Bernanke to prove that things would have been worse without the Fed's controversial bond-buying program. But to call Bernanke's strategy of quantitative easing an utter failure is misleading.
Critics of the program feared the Fed risked runaway inflation. But according to the Bureau of Labor Statistics, the consumer price index actually fell for the first time in 54 years in 2009, when the first round of qualitative easing, or QE1, was in full swing.
Such policy entails the risk of inflation, but this risk has proven manageable. When prices jumped earlier this year during QE2, Bernanke predicted that the rise was temporary and due in part to poor harvests, rising gas prices and Middle East unrest. Monthly BLS figures since April show that inflation has slowed considerably.
Bernanke's critics often fail to acknowledge the risks of deflation and tightened credit. In his research on the Great Depression, Bernanke noted that banks faced with a downturn often cut back lending, which exacerbates the problem. And deflationary pressure on prices reduces profits, which forces wages and consumer demand down.
The Fed chairman controls only monetary policy, and has limited ability to stimulate the sluggish demand and weak consumer confidence at the root the economy's weakness. Contrary to what Rep. Michele Bachmann said at the Sept. 12 debate, Bernanke does not, in fact, have "almost unlimited power over the economy."
But for Republican candidates seeking to pin blame, Bernanke makes a nice scapegoat. Texas Rep. Ron Paul, a 2012 White House candidate and longtime libertarian tub-thumper, has found traction on the right with his blistering critique of the Fed, which he calls "a full-time counterfeiting operation."
And Bernanke also drew the ire of the party's base earlier this year when he warned, correctly, that Congressional brinkmanship over raising the nation's debt ceiling could cause a "self-inflicted wound" by tarnishing the U.S. credit rating.
"Not increasing the debt limit," Bernanke said in March, "is like saying you're going to solve your family's debt problems by not paying your credit card bills."