Bernanke Amazes Me

I was watching the "fally" fall apart today on CNBC. They panned to a speech Bernanke was giving at an economic conference. I tuned in just in time for the question and answer period. I could not believe my ears but I thought I heard Bernanke, a self-proclaimed "expert" on the Great Depression say that, "there is no comparison" between the situation we are now facing and the Great Depression he has so avidly studied. Now, I want to know, what exactly has he been studying? No, seriously, I am not being sarcastic. I know I am nowhere near as smart as Bernanke. But, I have been fascinated with the Great Depression for years, and I have read at least three academic books, two of them were very dry and technical, but full of good information nonetheless. The third, I am still reading. It is by far the best of the three. ('The Forgotten Man' by Amity Shlaes) I would recommend it for everyone.

Now, I know I am no Bernanke. I am, however, smart enough to realize that THIS PERIOD IS VERY SIMILAR TO THE GREAT DEPRESSION ERA in more ways than one. We are facing:

1) The unwinding of a very large asset bubble. (Housing was the trigger in this case.)
2) A period of steep deflation in the value of many hard assets.
3) A global recession.
4) A dramatic decline in stock prices.
(part of the asset deflation)
5) Government intervention on a massive scale. (New Deal type policies on the horizon)
6) Massive failures in the financial services sector. (Leman, AIG, Citi, Etc.)

So, what exactly does Bernanke mean when he says the era's are not comparable? I might just be cynical enough to think he is trying to prevent being replaced by OBAMA.

Bernanke says we will be better off this time because the FRB is going to hold interest rates very low and the government won't be protectionist. He also says the economy is so much bigger now that the consequences of a global slowdown won't be as severe as they were back then.

What am I missing here? Am I to read in to his comments that he intends to inflate the money supply to such a degree that a depression is impossible? Is he just so brilliant that he an his board of governors can stop a very large interconnected global economy from faltering? Can he single-handedly create a new asset bubble to replace the old one? Are federal reserve governors just inherently SMARTER now because of evolution than they were in the 1930's? Oh, that's probably true. What an arrogant.......OK, I'll stop now. I think you get the picture.

Needless to say I would love it if someone out there, economist or not, could give me some hard evidence as to why the downturn we are facing is different than the Great Depression. I mean it, I really want to be wrong on this one.

Please read:
http://www.forbes.com/afxnewslimited/feeds/afx/2008/10/15/afx5559042.html
and
http://www.forbes.com/reuters/feeds/reuters/2008/12/01/2008-12-01T194048Z_01_WBT010190_RTRIDST_0_USA-FED-BERNANKE-DEPRESSION-URGENT.html