Sunday, January 20, 2008

Bernanke's views

--He championed ideas for improving communications between the Fed — whose previous chairman, Alan Greenspan, spoke in riddles — and the public, believing that clearer guidance about the Fed’s aims would help the economy run more smoothly. --To the extent that bank panics interfere with normal flows of credit, they may affect the performance of the real economy --The current crisis is a hangover from a half-decade of heady speculation in both housing and home mortgages and does not necessarily admit to a speedy fix. --Thus, in both of its main areas of responsibility — monetary and regulatory policy — Fed laxity has seemingly contributed to the current mess. Bernanke deflects such criticisms, partly because he maintains that the mortgage fiasco had many fathers and partly because he has a scholar’s disdain for perfect-hindsight-type judgments. --It was Martin who proclaimed that the chairman's job was to “take away the punch bowl just as the party gets going” --In the long term, neither the Fed nor anyone could spur an economy to grow faster than its “natural rate” — which is determined by all those other factors: productivity, population changes, technological advances, demand for exports and so forth. --Bernanke is also firmly opposed to the notion that central banks should raise rates to prick bubbles in the stock market or elsewhere. --Bernanke says he believes that the Fed’s actions to cool off stock-market speculation in 1929 contributed to the Depression and was a grievous error. --Bernanke has discovered that even standard communication with the public — not just off-the-cuff remarks — can be fraught with peril.

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