He´s an inflation targeter through and through! And an inflation targeter wants, at all costs, to avoid deflation! That´s all folks! He has no understanding of the benefits from
stabilizing nominal spending growth along a target path. He only thinks in terms of inflation/deflation.
I (and others) have interpreted his famous paper from 1999 – Japanese Monetary Policy:
A case of self-induced paralysis – as a spirited defense of level targeting.
But no. From this very good Tim Duy post on FOMC Reaction the real Bernanke shows up clearly:
Bernanke made clear in his response to a Japanese reporter that he sees himself as exactly the Bernanke of a decade ago. His comments then meant that:
“…a determined central bank can always do something about deflation.”
In that same post we read:
So what happened to the Bernanke of a decade ago, when he chastised the Bank of Japan for inaction? Brad DeLong laments:
Those of us Democrats who were happy when Barack Obama reappointed Ben Bernanke as Fed Chair thought that we were getting the Ben Bernanke we knew–the student of the Great Depression and of Japan’s Lost Decade dedicated to doing whatever was necessary to stabilize the time path of nominal GDP, up to and including dropping bales of money out of helicopters.
Whatever happened to him?
Nothing happened to him. It was all in our imagination! We were all naïve because if Bernanke thought for a minute that macro stability was tied to nominal spending evolving
along a stable growth path he would never have allowed nominal spending to record the biggest drop since 1938! (see graph below once again):
Update: This Business Week article “wraps it up ironically”:
“If [Bernanke] says the little blip in inflation is temporary and it’s going to go back below target, and he says he’s very unhappy with the unemployment rate, then why isn’t he doing more?” Gagnon asks. “It’s really ironic. It’s a self-induced paralysis.”