Today, Ben Bernanke acknowledged that the U.S. economic crisis is worse than the Japanese economic crisis of the 1990’s:
Credit spreads are much wider and credit markets more dysfunctional in the United States today than was the case during the Japanese experiment with quantitative easing.
However, the Fed will still use the failed Japanese playbook:
Bernanke commented for the first time on “quantitative easing (QE),” or increasing the money supply in a manner similar to the method used by the Bank of Japan in the 1990s.
But the US central bank chief said the Fed’s approach “is conceptually distinct from quantitative easing” and could be described as “credit easing.”
He said that both expand the central bank’s balance sheet but that the two are different.
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“In a pure QE regime, the focus of policy is the quantity of bank reserves, which are liabilities of the central bank (and) the composition of loans and securities on the asset side of the central bank’s balance sheet is incidental,” he said.
“In contrast, the Federal Reserve’s credit easing approach focuses on the mix of loans and securities that it holds … This difference does not reflect any doctrinal disagreement with the Japanese approach, but rather the differences in financial and economic conditions between the two episodes.”
In other words, he’s using the Japanese approach, but changing the name.