The Obama-Bernanke “Great Monetary Experiment” Was Designed to Drive Up Asset Prices and to Stop Price Deflation

The “Great Monetary Experiment” (GME) launched under the Obama Administration by its chosen Federal Reserve Chief Ben Bernanke was not the first in contemporary history. Indeed, since the Federal Reserve opened its doors, there has been a perpetual rolling out of monetary experiments, albeit the main officials in charge would never have agreed with that description. At most, they would have conceded that circumstances had forced them into monetary innovation, but this had not been their choice.

Those responsible for designing and implementing the GME had no such reticence. As we shall see in this volume, they were ready to gamble US and global prosperity on a set of theoretical propositions and innovatory tools as pioneered under their own chosen brand of neo-Keynesian economics. The justification for doing so was the darkness of the economic landscape in the immediate aftermath of the Great Panic (Autumn 2008) and their promise of an early dawn.

The big new idea in the Great Experiment was to  “drive up asset prices” whilst simultaneously striving to prevent any whiff of price deflation appearing.  “Quantitative Easing” was brandished as the magical tool. In fact, the experiment and the tool were not so new, and any transitory apparent effectiveness depended on a real life replay of the Emperor's New Clothes fable. As the real world theatre performance continued, many practical business decision makers remained anxious.

--Brendan Brown, introduction to A Global Monetary Plague: Asset Price Inflation and Federal Reserve Quantitative Easing (Houndmills, UK: Palgrave Macmillan, 2015), Kobo e-book.