Former Federal Reserve Chairman Ben Bernanke predicted that the European Central Bank (ECB) would have a rough time implementing U.S-style monetary easing.
Speaking Wednesday at the Schwab IMPACT conference, the ex-central bank chief said the ECB faces political barriers to enacting such an aggressive program.
"The barriers to doing it are not really economic," he said. "The legal and political barriers being thrown up are going to make it very difficult to do that."
Bernanke also fired back at critics of the Fed's own easing programs, accusing them of "bad economics" for saying that QE, which has pushed the institution's balance sheet past the $4.5 trillion mark, would lead to inflation. The easing program began in 2009 and has had two additional versions since, the latest of which the Janet Yellen-led Open Market Committee terminated last week.
"There never was any risk of inflation. The economy was in great slack. If anything we were worried about deflation," Bernanke said of economic conditions when QE was first launched. "Four years later there's not a sign of inflation. The dollar is strengthening. They're saying, 'Wait another five years, it's going to happen.' It's not going to happen."
QE came into being after the economy fell into recession during the financial crisis.
Bernanke and a team that included then-Treasury Secretary Hank Paulson and his eventual successor, Timothy Geithner, who at the time headed the New York Fed, devised a series of alphabet-soup programs that helped stabilize the financial system.
Since the advent of the Troubled Asset Relief Program, QE and other initiatives, the stock market also has rebounded, gaining about 200 percent off its March 2009 lows.
At the Schwab event, Bernanke received three robust rounds of applause, including some attendees who stood, for those efforts.
He recounted the harrowing days of the weekend before the Sept. 15, 2008 Lehman Brothers bankruptcy, the seminal event that triggered the worst of the crisis.
"When Lehman happened, the fear—I'm sure you remember—the fear multiplied and panic got much worse," he said.
Bernanke said later in the speech that looking back, he feels satisfied that the extreme measures taken then were necessary to rescue the financial system, a responsibility that he said the Fed now considers of equal importance with monetary policy.
"On the whole people have been very nice. It was a very hard time I'm sure that we didn't do everything right," he said. "There was a lot of anger, a lot of people upset about the economy with good reason. But people have been very supportive. I'm very appreciate of that."
