Tadas continues with the financial blogger wisdom series today asking:

Think back to the last edition of this series a couple of years ago. Have you changed your mind about something (big or small) over that time period? If so, what and why?

My answer alluded to a rather substantial change of opinion:

Ben Bernanke would beat Paul Krugman in an arm wrestling competition. I used to think differently, but based purely on beard strength, Bernanke appears to have amassed a sizeable advantage over the years as his beard has sustained a certain perfection that most other men can only dream of.

Ben Bernanke has a great beard. It’s very hard for any man to compete with. But what I was really alluding to was all the criticism that Ben Bernanke and the Fed has gotten over the years. I know this isn’t a popular opinion, but I think people have been too hard on the Fed. They were given a limited toolkit to deal with the most devastating financial crisis in the last 75 years and Bernanke and his team did about the best they could. My general view of Central Banks is that they’re a lot less powerful than people often assume. So, we shouldn’t assume policies like QE are all that impactful and we also shouldn’t assume that the Fed is the cause of everything ranging from wealth inequality to asset bubbles.

There are a lot of myths out there about the Fed and I probably fed into them at times during the recovery. There were times in the last 7 years when I was harshly critical of Bernanke and the Fed. That was excessive. I think I was so invested in proving that QE didn’t really work (because that’s what my research showed) that I became a bit dogmatic about it. Had I been true to my own work I would have maintained the view that the Fed wasn’t equipped to handle the crisis alone and that their policies wouldn’t be enough, but also wouldn’t have a big impact on other facets of the economy (like the financial markets where they’ve been blamed repeatedly for blowing bubbles in places like high yield or in stocks).