This past weekend's New York Times Sunday Magazine had an excellent piece on Fed Chair Ben Bernanke ("The Education of Ben Bernanke") . At times insightful, apologetic, and presented like a serial whose ending has yet to be written. Wow. Batten down the financial hatches, folks.
What's missing in the interview is Bernanke's view of the effect of our current "technonomic" society and how it factors into this "new economy downturn". It was alluded to when the dot-com bubble was blamed as the event that portended the current crisis. Our country is not about manufacturing anymore, or a military-industrial complex; the products that many Americans work on today are intangible. Most importantly we do it on the internet, and just as the internet may be a factor in the rule changes for economic tinkering, it also exacerbates economic trends with rumors, innuendo, financial trading and fingertip information access. Today's blog is tomorrow’s rumor-based market crash. Yesterday's easy on-line loan is today's credit crisis. One person (like Osama Bin Laden) can wield world changing power on the net and challenge governments, or financial markets.
I hope Mr. Bernanke's Princeton background has prepared him for on-the-job training because, if not, it could be worse than we think.
What's clear to me is that economics has become the science of knowing what you don't know, and being unsure of what you thought you knew...