This is the Cato Daily Podcast for Thursday, August 27, 2009.

I'm Caleb Brown.

Ben Bernanke will likely be confirmed for a second term as Federal Reserve Chairman,

but his performance as Chairman won't really be known at least until

he's had to take hundreds of billions of dollars of new money back out of the economy,

balancing a fragile economic recovery with the specter of inflation.

Mark Calabria, Director of Financial Regulation Studies at the Cato Institute, comments.

President Obama praised Ben Bernanke for, quote, bold action and outside the box thinking that has helped

put the brakes on our economic free fall.

How fair of an assessment is that

the outside of the box part I guess is correct.

Certainly, you know, there's been a massive expansion of Federal Reserve

Power under Chairman Bernanke.

Whether it stopped us from a free fall, I think is a very power under German Bernanke.

Whether it stopped us from a free fall,

I think is a very different question.

My own view is that it did not.

I think some of the efforts, particularly

the bailouts of AIG and Bear likely soed as much panic as they might have avoided.

And certainly the interconnections were not such.

We heard Vice Chairman Kone of the Fed top Congress that all of the AIG counterparties if they had not been paid off

would have survived that.

...