Ben Bernanke's Street Creds

A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily. - Ben Bernanke, October 2000

Ben Bernanke says that a Wall Street bust does not necessarily hurt Main Street.

And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. - Ben Bernanke, November 2010

Ben Bernanke says that a Wall Street boom definitely helps Main Street.

Don't you see what this means? We have a way out of the mess we are in!

In order to maximize the help to Main Street all we need to do is continually create booms in the stock market and then allow them to bust. In other words, we will simply repeat what we've been doing for the past decade. Perfect!

Here's a chart to show the theory.



Note that each time Wall Street's health improves, Main Street's health is "boosted". Each time Wall Street's health declines, Main Street's health is "not necessarily" affected all that much.

Using Ben Bernanke's theoretical economic model, I estimate that it will take 4 serious Wall Street crashes in order to get Main Street to 100% health. We're halfway there. We just need more patience.

Sarcasm Disclaimer: This post is full of it.