The View From 1776
Tuesday, June 23, 2009
Wall Street Journal: 10; Fed Chairman Bernanke: 0
Federal Reserve Board chairman Ben Bernanke is an ardent believer in Keynesian economics, which means that he is far out in left field when his expectations are matched against reality.
Read Bernanke at the Creation: What the Fed Chairman said at the onset of the credit bubble, and the lesson for today.
Particularly dangerous is Chairman Bernanke’s expressed belief that inflation is a cost-push phenomenon, i.e., that shortages in one economic sector which raise those prices (wages, or oil prices, for example) cause inflation. For more on that subject, see Inflation vs Demand.
This means that he ignores the real cause of inflation: the Fed’s flooding the economy with too much fiat money. Taxpayers and retirees on fixed income are in for a very punishing ride over the next couple of years.