NationStates Jolt Archive

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Ben Bernanke is Bush's favorite to become the next Fed Chairman after the Maestro departs us. From what I've he's another economist in favor of a discretionary monetary policy ( :( ). He believes that a inflation should be targeted at around 5% to give the Fed something to use if ever there was a crisis. He seems scared to death of inflation, even more than the average economist. I just hopes he doesn't ignore deflation in his quest against inflation.

What do you think and what would your monetary policy be?

I wonder if he'll continue to raise interest rates so as to keep the housing bubble from popping.

I think he's an excellent choice. He's well qualified and experienced for this position.

Personally, I think there is a growing risk of deflation, at least in this quarter as the economy slows from the hurricanes and energy prices recede (and swiftly) from their highs. However, the possibility for a huge upswing in Q1 2006/Q2 2006 in terms of jobs, wages, and other inflationary pressures will still require tightening by the Fed at least until it hits 4.5 to 5%, depending on how oil goes.

Outside of energy, inflation is very tame. This could be worrisome because a huge drop in prices (as is bound to occur when the energy bubble totally bursts) would create a massive decline in inflation and could swing in to deflation if not carefully maintained. A collapse of the housing bubbles could also do this.

We cannot, however risk overtightening and push the economy in to recession like the Fed did in 2000 when they raised the funds rate to 6.5% despite the collapse of the dot-com bubble.

Overall, the jobs market is doing very well and will continue its excellent performance in to next year. Personally, I see unemployment at 4.5% by June, or even lower as hurricane rebuilding kicks in to gear. If oil falls to $40-50, things will get even better.

I agree with you, Vetalia. My only concern is that he will be to concerned about inflation. Other than that, I would say that he is a sound choice.

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg
"...So I slapped the bitch, BAM! Five across the eyes. Never even saw it coming...."


Sorry.

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg
"...So I slapped the bitch, BAM! Five across the eyes. Never even saw it coming...."


Sorry.

Hahaha, it looks like he really might be saying that!

Ben Bernanke is Bush's favorite to become the next Fed Chairman after the Maestro departs us.
He wrote my first year textbook...oh, happy times that were.

From what I've he's another economist in favor of a discretionary monetary policy ( :( ). He believes that a inflation should be targeted at around 5% to give the Fed something to use if ever there was a crisis. He seems scared to death of inflation, even more than the average economist. I just hopes he doesn't ignore deflation in his quest against inflation.
No economist on this planet will ever ignore deflation.
5% is already pretty high, so you really won't have to worry about too low inflation.

What do you think and what would your monetary policy be?
Same as his. Simple rules that the Fed would have to adhere to:
- keeps it from double-crossing the market to lower unemployment for a while
- if it's done over the cycle, it's plenty flexible enough
- anything else gives sub-optimal outcomes.

I wonder if he'll continue to raise interest rates so as to keep the housing bubble from popping.
He'll raise it whenever the Fed reckons inflation will rise to levels considered too high.
High house prices mean that people have more wealth, and they spend more money, but nothing extra is actually being produced. The money is not actually physically earned with anything. So it does put pressure on inflation.
Mortgages are irrelevant really, and the Fed should not at all be concerned with popping bubbles. That's outside its scope.

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg

Caption contest!

"I sat there entranced as I listened to these heavenly sounds coming from that crude pup Mozart, and I decided, then and there, that I, Salieri, would curse God's name from then on."

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg

"And that, THAT's when it hit me... That slut gave me herpes."

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg

Ben Bernanke unveils his plan to cut the deficit by giving it one heck of a karate chop.

http://i.esmas.com/image/0/000/004/164/ben_NT.jpg

"Seriously, it's this BIG"

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"Pull my hand. :)"

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"dont make me give you the MONEY SHOT!"

He wrote my first year textbook...oh, happy times that were.


Nice.. :p Mankiw wrote mine.. but Bush dismissed him as his top econ. adviser after only a few years.. I had such high hopes. :(

After the fiasco with Bush's lady friend being totally underqualified for anything, I wouldn't trust him to appoint anyone.

After the fiasco with Bush's lady friend being totally underqualified for anything, I wouldn't trust him to appoint anyone.
This once actually has experience in his field.

This once actually has experience in his field.

Do you think he'd like to be a supreme court justice in his spare time?