Sometimes it’s possible to simplify something too much. More than a decade ago Ben Bernanke, then chair of the Federal Reserve’s Board of Governors, sat down for an interview with 60 Minutes, the television show that important Americans call when they have important things to say.
Bernanke was explaining how the Fed had responded to the financial crisis. When he got to the asset purchase programmes, the host asked whether the Fed was spending taxpayers’ money.
“It’s not tax money,” Bernanke said. “The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So to lend to a bank, we simply use the computer to mark up the size of the account that they have at the Fed.” The host asked him whether the Fed had been printing money. “Well,” said Bernanke, “effectively.”
He wasn’t wrong, of course. He’s Ben Bernanke. You might disagree with his policy choices, but he…