If Bernanke told Obama and Geithner how he viewed the world before they renominated him, we have a major malpractice case here:
Bernanke's Shift: Note - and I think this is important - when Bernanke's Fed took the opportunity to shift down the path of inflation by sanctifying the 2 percent target, they were comfortable with the subsequent shift in the distribution of outcomes. And consider that shift. At a time when households were overwhelmed with excessive debt, the Fed deliberately chose to increase the real burden of the debt by changing the inflation trajectory.
Why one would use a balance sheet recession to shift downward the path of prices is certainly something of a mystery. But it does imply that the Fed wanted to induce a new distibution of outcomes, even knowing that the beneficiaries would not be households.
Bottom Line: Bernanke is being disingenous in his defence. Despite his claims that his earlier views only applied to deflation, his writings still appear at odds with his willingness to embrace a new price and aggregate demand paths. Moreover, the Fed's own forecasts clearly do not support his contention that the target is symmetric, but indeed a hard ceiling. The Fed must also know that the by reducing the path of inflation they have knowing altered the distribution of outcomes in a way that is likely to slow the pace of recovery. Finally, with inflation near 2 percent, I suspect the bar toward another round of QE is higher than many believe.