So I have sympathy for what Bernanke inherited. His job is to clean up after the biggest financial disaster since the 1929 Wall Street crash. Yes, he also contributed to the problems, but that doesn't make the task less staggering. In fact, I'm nearly dumbfounded just contemplating how huge a task it is. Anyone who pretends they have the absolutely correct answer to this problem is an unmitigated egotist, and I wish I could give such people a withering stare that would instantly deflate such pomposity.
So Bernanke has to deal with an overextended banking system that has many questionable loans and debtors who are facing lower and uncertain income. Naturally, he wishes for a soft landing, but we're past the point where that's possible. Instead, we mostly hope to avoid a full-on crash where the banking system and all private employment just freeze up. That part of the mission was accomplished with the help of the TARP.
The clean-up remains, as does the rebuilding. This is still very tricky, because the banking system still has scads of questionable loans and not-so-solid debtors.
I think Bernanke's choice of quantitative easing might have been the right one. Our banking system was an overstretched balloon that became untethered, flew around spewing out (actually destroying) trillions of dollars of assets. Maybe to stabilize the banks you have to do some partial reinflation. A bank has a better chance if it receives 80 cents on the dollar than if it receives 40. The strong debtors, who are paying back in full, rather have values rise to that 80% level than stay in cellar.
So I don't really believe that Bernanke has been pouring trillions of new dollars into the economy. He's only been replacing some of the destroyed trillions. Is this really true? What are the consequences? Um, um, let me cogitate some more. Or maybe I should just be forthright and say that I don't know if it's the right course, but it looks sensible to me (for the reasons I stated), and I haven't heard any other positions that were stronger. We'll have to see how it works out. And, of course, PRAY.