The Ben Bernanke victory tour rolls on.
According to a document filed Aug. 22 with the U.S. Court of Federal Claims, Bernanke said "September and October of 2008 was the worst financial crisis in global history, including the Great Depression."
Last week, NYT columnist Paul Krugman penned an ode to his former Princeton colleague. "And there but for the grace of Bernanke go we," Krugrman wrote, reflecting on Europe's economic morass.
Related: Did Ben Bernanke save the U.S. economy? Paul Krugman thinks so
On Monday, the tour rolled into Bloomberg, which determined that Bernanke's critics missed out on $1 trillion in potential gains in Treasuries since 2008. "The resilience of Treasuries represents a rebuke to the chorus of skeptics from Stanford University’s John Taylor to billionaire hedge fund manager Paul Singer and U.S. House Speaker John Boehner, who predicted the Fed’s unprecedented stimulus would lead to runaway inflation and spell doom for the bond market," Bloomberg's Cordell Eddings writes.
After the Fed launched Q2 in November 2010, a group including Niall Ferguson, Seth Klarman, Jim Chanos, Douglas-Holtz Eakin and the aforementioned Taylor and Singer published a open letter to Bernanke saying a second round of quantitative easing would “risk currency debasement and inflation” and do little to promote jobs growth.
Speaker John Boehner and other top Republicans followed up with a similar letter to Bernanke, warning that Fed policies could bring about “hard-to-control, long-term inflation.”
The list of people who didn't sign either letter but wholeheartedly agreed with its sentiment and forecast is too long to list here.
Related: Bernanke’s ‘humble brag’: 2008 crisis worse than Great Depression
Of course, it's impossible to know if Bernanke's critics have been actively shorting Treasuries or ever capitulated to the rally in bonds, but it's pretty clear to say they were dead wrong about the outlook for Treasuries, the dollar and inflation -- or at least so far ahead of the curve as to risk falling off.
As Lauren Lyster and I discuss the accompanying video, the inflation hawks and bond bears were wrong for a number of reasons; most notably, they failed to understand the deflationary forces already at work in the global economy, which the "Great Recession" only exacerbated. Furthermore, those forecasting doom for the dollar and Treasuries failed to adequately consider that finance is global and that U.S. Treasuries looked good relative to the competition -- and still do.
As the WSJ reports, 45% of all global government bonds yield less than 1% and the benchmark 10-year Treasury boasts higher yields than comparable securities from every other major developed economy, with the exception of the U.K. In other words, lending money to the U.S. for 10 years at 2.4% looks like a great deal relative to lending in to say, Spain at 2.05%.