Ben Bernanke’s Blog Sparks Twitter War with Larry Summers

Ex–Federal Reserve chair Bernanke has publicly disagreed with the secular stagnation argument put forward by former Treasury secretary Summers.


Like most academics, economists can be a feisty lot. The recent online dispute between former U.S. Federal Reserve Board chair Ben Bernanke (@benbernanke) and ex–Treasury secretary Larry Summers (@LHSummers) has been as spirited as when businessman Donald Trump and comedian Russell Brand lit up Twitter by calling each other a “major loser” and “bald,” respectively.

It all started when Bernanke launched a blog. Soon after leaving government in January 2014, he joined the Brookings Institution as a distinguished fellow in residence with the Washington-based think tank’s economics studies program. Last month, Bernanke, 61, who’s writing a memoir of his time at the Fed called The Courage to Act, announced his new blog. “Introducing my new blog on economics, finance, and sometimes baseball,” @benbernanke said in his first tweet. In the intro to his blog the Washington Nationals fan noted that whereas he had to watch his words as Fed chair, now he could be more open. “I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers,” Bernanke wrote. “I look forward to doing that — periodically, when the spirit moves me.” Comments, he added, are always welcome.

Bernanke’s first full blog post, published that same day, was a snooze fest on low interest rates, effectively defending his zero-rate policy while in office. In his second post, though, he got to the meat of the rate conversation by challenging Summers. Or, as @benbernanke tweeted, “In today’s new blog post, I take a critical look at Larry Summers’ secular stagnation hypothesis.”

Summers has argued that policy is getting in the way of the U.S. economy’s ability and willingness to reboot itself. Companies have no incentive to invest in growth. The economic recovery is too slow. Because rates can’t go any lower, the solution, in Summers’s view, is to spend.

Bernanke disagreed, writing that various headwinds preventing stronger growth are now dissipating. He also took Summers to task for being insufficiently global in his analysis. In a subsequent blog post, Bernanke contended that the problem with the economy is that people around the world are saving too much.

Not one to take things lying down, Summers responded with his own respectful post on the Brookings website in which he said that he and “Ben” agreed on many key points — just not the problem or the solution. On Twitter and CNBC, @LHSummers was less buttoned-up. “Call it secular stagnation as I do, call it a savings glut as @benbernanke does, call it a quacking duck,” he tweeted on April 9 after appearing on CNBC. Summers insists that he hopes Bernanke, who always comes across as a mild-mannered sort, is right but fears he is wrong. That’s why Summers thinks the best solution is for the government to worry less about debt and spend more.

While @benbernanke and @LHSummers debate, current Fed chair Janet Yellen is signaling the Fed’s willingness to raise rates at some point, a Republican Congress wants spending cuts and, yes, a presidential election looms. Oh, and the Major League Baseball season kicked off on April 5.