Jury still out on Bernanke's legacy

Ben Bernanke did not hesitate when asked whether he was confident that his response to "the Great Recession" would work.

"Well, the problem with quantitative easing is that it works in practice but it doesn't work in theory," he joked earlier this month at his last public appearance as chairman of the US Federal Reserve Board.

He was referring to his decision during the darkest days of the financial crisis to launch an unprecedented programme of massive bond purchases, known as quantitative easing. The aim was to push long-term interest rates lower at a time when the overnight rates, the Fed's main economic lever, were already near zero.

The purchases Bernanke kicked off in late 2008 have continued, off and on, to this day. They have already led to a quadrupling of the Fed's balance sheet to $4-trillion.

On Wednesday, Bernanke, 60, quietly adjourned his final policy-setting meeting after a tumultuous eight-year stint running the world's most influential central bank.

When he steps down today, the Fed's bloated balance sheet will hang over his legacy. Critics have warned that it could lead to inflation or asset price bubbles.

But most of the early assessments have been positive.

The former Princeton professor has been praised as the steady hand that helped steer the US and world economies clear of a far more painful recession.

He flooded financial markets with liquidity from an alphabet soup of programmes set up on the fly; he printed trillions of dollars through three rounds of easing; and he promised to keep stimulus measures in place for years to come, tying low interest rates to specific economic outcomes in an approach emulated by other central banks.

But, as with his predecessor, Alan Greenspan - who was showered with accolades when he stepped down in 2006 only later to be labelled a main architect of the subsequent crisis - the worth of Bernanke's legacy will become clear only over time.