Economics July/August 2013

Central Bankers Are Superheroes

Ideas of the Year 2013
More
Draghi: Michael Probst/AP; Bernanke: Ted S. Warren/AP; Haruhiko Kuroda: Shizuo Kambayashi/AP

During the financial meltdown and ensuing global crisis, elected politicians squabbled over stimulus in the U.S. and about shared economic responsibility in the EU, struggling to pass the measures the slump required. But behind the political scenes, a small group of technocrats was plodding away, quietly saving the global economy.

Without Ben Bernanke’s creative and muscular monetary policy, the U.S. economy would not be growing again. Without Mario Draghi’s willingness to put the European Central Bank’s balance sheet behind the weaker euro-zone countries, the might no longer exist. Their heroics even inspired Japan, the rich world’s zombie economy, to try some turbocharged monetary policy. The stock market, at least, thinks these measures are working.

But if the ability to pump money into the economy is central bankers’ superpower, then weaning their economies off this nearly free money is their kryptonite. The obvious risk is that once this prop is gone, recession will return. A lot of major investors harbor a different fear: that easy money is muffling ordinary market signals and thus creating dangerous—and dangerously invisible—bubbles.

If you don’t happen to run a hedge fund, you should be even more worried about the political implications. Central bankers swooped to the rescue only once it became clear that the leaders we had elected were unwilling or unable to do the job. Technocracy trumped democracy—and probably saved it. But how many central political functions can democracies farm out to unelected superheroes while still remaining democratic?

Jump to comments
Presented by

Chrystia Freeland is the managing director and editor of consumer news at Thomson Reuters.

Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

More back issues, Sept 1995 to present.

Just In