NP but The Confidence Man: Bernanke

[David Morris]

http://talkingpointsmemo.com/archives/2012/09/whyd_ben_wait.php?ref=fpblg

For years before yesterday, monetary economists have been urging Ben
Bernanke to take unorthodox steps to boost the economy. Moreover they
found it puzzling that he kept not taking them. This was the same Ben
Bernanke who’d pushed Japanese central bankers to do the same thing
when their economy faced similar woes.

Specifically, for Japan, he endorsed an open-ended policy commitment
to keep interest rates low until inflation increased. Here’s a good
rundown, but the basic idea is that by raising expectations that
inflation is around the corner, people sitting on idle resources might
start investing them sooner rather than later, when prices will be
higher.

Last year a small but elite group of monetarists began clamoring for
the Fed to take similar steps. Now what the Fed did yesterday isn’t
that robust. It didn’t commit to higher inflation, but it did commit
to keeping interest rates low even after unemployment starts falling.
So what you heard yesterday was relief, but also frustration that it
took so long.


On Fri, Sep 14, 2012 at 7:43 AM, David Morris <fqmorris at gmail.com> wrote:
> You can't have it both ways.  Ben SHOULD have done this move two years ago, and his action now is an admission that he was wrong not to do so.  Period.  Any risk has not changed, so it is irrelevant in regard to this overdue action.
>
> David Morris