Oh Boy...
Mark Thoma:
Economist's View: "Federal Reserve Reflects on its History": Bernanke says he's not trying to create inflation as a means of stimulating the economy:
After its big move to boost economy, Federal Reserve reflects on its history, by Neil Irwin, Washington Post: ...Fed Chairman Ben S. Bernanke and a long list of past and present Fed officials gathered this weekend for a conference on the history of the central bank.... Speaking at the "Return to Jekyll Island" conference sponsored by the Atlanta Fed, Bernanke argued that the steps are not as revolutionary as many observers in the financial markets and the news media have suggested.
There's a sense out there that, quote, quantitative easing or asset purchases are some completely foreign, new, strange kind of thing and we have no idea what... is going to happen. Quite the contrary - this is just monetary policy.... It will work or not work in much the same way that ordinary, more conventional, familiar monetary policy works.... I have rejected any notion that we are going to try to raise inflation to a super-normal level in order to have effects on the economy.
"We're not in the business of trying to create inflation," Bernanke said. Rather, he said, the Fed is trying to avoid a further drop in inflation...
And Mark Thoma is upset:
Since an increase in inflationary expectations is one potential way to stimulate the economy, Bernanke is "blocking one of the main channels through which his policy might actually work."
Yep. This is not good at all. "Crying 'Fire! Fire!' in Noah's Flood" indeed...
Where is the Ben Bernanke who had such a willingness to do what economic stability required in the fall of 2008? What happened to him?
