Home About Chat Users Issues Party Candidates Polling Firms Media News Polls Calendar Key Races United States President Senate House Governors International

New User Account
"A comprehensive, collaborative elections resource." 
Email: Password:

  The Education of Ben Bernanke
NEWS DETAILS
Parent(s) Container 
ContributorRP 
Last EditedRP  Jan 17, 2008 07:48pm
Logged 0
CategoryProfile
MediaNewspaper - New York Times
News DateMonday, January 21, 2008 01:45:00 AM UTC0:0
DescriptionPerhaps the last Fed chief to face such a difficult one-two punch of inflation and slowing growth was Arthur Burns, who was also the last academic to hold the job. President Richard Nixon, concerned that high unemployment could cost him re-election in 1972, told Burns to concentrate on revving up the economy. “No one ever lost an election on account of inflation,” Nixon confidently told him. Burns did as he was directed. An eventual result was runaway inflation and, for Burns, a legacy of failure.

A wage-and-price spiral similar to that in the 1970s would not only be a political nightmare for the Republicans, it would also be a crushing blow to Bernanke’s reputation as a Fed chief. And with oil and food prices going through the roof, inflation is already a worry. The consumer price index surged 4.3 percent over the past 12 months — more than twice the inflation rate that Bernanke has delineated as the upper bound of his comfort range. (The widely watched “core” rate of inflation, which does not include volatile food or energy prices, is not as high as the overall rate, but it, too, has edged higher than Bernanke would like.)

“I think Bernanke is in a very difficult situation,” Paul Volcker told me. Volcker was the Fed chief who preceded Greenspan and who conquered, painfully, the great inflation of the 1970s and early ’80s. (He was chairman from 1979 to 1987.) “Too many bubbles have been going on for too long,” Volcker added. “The Fed is not really in control of the situation.”
Share
ArticleRead Full Article

NEWS
Date Category Headline Article Contributor

DISCUSSION