How best to assess Ben Bernanke´s tenure as head of the Fed? Consider these these facts from the past eight years:
- Total Fed assets increased by 400%.
- The Fed increased its holdings of U.S. Treasury debt by almost $2 trillion, or over 200%.
- The Fed now owns over $1.5 trillion of mortgage-backed securities that the private banking system wants nothing to do with.
- The Fed is perilously close to balance sheet insolvency. When he took over in 2006 the Fed would need to suffer a loss of 3.5% on its assets to force it to throw in the towel (or force it to going crawling to Congress with its tail between its legs and beg for a bailout.) On the day Bernanke left office that loss was reduced to only a hair over 1%.
- Unemployment is 6.6% today, compared with 4.8% on the day he took office in 2006. Not only that, labor force participation is down, meaning that not only are fewer people working who would like to work, many more have given up on the prospect of ever having job.
Janet Yellen has her work cut out to better these figures. In my recent daily at Mises Canada I explain why she´s in a pretty good position. Bernanke has left the economy so destabilized that it is hard to see how much worse it could get. Read more here.