Authored by Jeffrey Snider via Alhambra Investments,

Around the same time Lehman Brothers and AIG became headline news in the middle of September 2008, none of the mainstream econometric models thought it was possible for the US economy to suffer so severe a shock that it would induce monetary policymakers to unleash ZIRP. Worse, the models all predicted that it would be impossible for anything to force the Fed down to zero and keep the central bank there for two years.

The zero lower bound (ZLB) is a constant bogeyman for Economists, denoting not just difficulties nominal interest rate measures have surmounting it but more so the level of economic damage (and the implied dereliction of duty) it would take for this to happen.

While Ben Bernanke was crafting the narrative of his heroism and courage, hardly anyone dared to ask why he hadn't seen GFC1 coming. The very notion of a global monetary panic had been heartily dismissed, especially with this particular guy at the helm (who had made his academic reputation as some kind of Great Depression scholar; obviously not the right kind). Even after the crisis began showing signs, he most famously ignored them telling everyone subprime was contained.

In the (very) few cases when someone did openly wonder, his dissembling answer would always depend mostly upon the vague notion of "complexity." I'll supply one such example here gleaned from an interview then-Chairman Bernanke gave just two weeks before being forced down to the zero lower bound in December 2008:

I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.

But, damn it, that was your job! Not playing around with fancy equations on a blackboard.

He like every other Economist had fallen into a trap, one they had all set for themselves through econometrics. As Ronald Coase had warned whilst accepting his Nobel Prize, these academics only speak gibberish because they long ago gave up on trying to understand the real economy in pursuit of quantifying unicorns and windmills.