Moonage Political Webdream

The word is out that Ben Bernanke is set to replace Alan Greenspan in January.  So far, the only thing I’ve seen to any detail on Ben Bernanke is from redstate.org:

Ben Bernanke was an unsurprising choice by the President. Let’s take a look at the man who will replace The Economist. Mr. Bernanke is distinguished as a well regarded Professor at a top university (Princeton), a former Federal Reserve Governor, and most recently as the Chair of the Council of Economic Advisors for President George W. Bush……

Finally, it should be noted that Mr. Bernanke is eminently qualified for the position. This is a man who has worked in a myriad of high level academic and public policy positions, including as a Governor at the Federal Reserve Board. This is an appointment that should be confirmed easily and bipartisanly.

Congratulations, Mr. Bernanke.

redstate.org was one of the first to bemoan the choice of Harriet Miers.  They seem more than happy with Bernanke.  That’s a good sign.  If you want to feel Bernanke out yourself, here’s some of his thoughts on the current state of the economy.

Some bytes:

Yet, in the face of all these shocks, together with new challenges such as the recent sharp rise in energy prices, the American economy has rebounded strongly. Policy actions taken by the President and the Congress were important in helping to get the economy back on track. Notably, beginning with the President€™s 2001 tax cuts, multiple rounds of tax relief increased disposable income for all taxpayers, supporting consumer confidence and spending while increasing incentives for work and entrepreneurship. Additional tax legislation passed in 2002 and 2003 provided incentives for businesses to expand their capital investments and reduced the cost of capital by lowering tax rates on dividends and capital gains.

Together with appropriate monetary policies, these policy actions helped spur economic growth in both the short-run and the long-run. Today the U.S. economy is in the midst of a strong and sustainable economic expansion. Over the past four quarters real GDP has grown at a 3.6 percent rate, and over the past eight quarters real growth has been at a 4.1 percent annual rate. Prior to Katrina, the near-term forecasts of both CEA and private-sector economists had called for continued solid growth. The destruction wrought by Katrina and Rita may reduce growth somewhat in the short run, but the longer-term growth trajectory remains in place.

Sounds like he’s going to support Bush’s economic policies.  Regardless of the rhetoric, it’s obvious they have worked.

Finally, high energy prices notwithstanding, inflation remains well-controlled. Core inflation (as measured by the consumer price index excluding volatile food and energy prices) has averaged 2.1 percent over the past twelve months, and recent readings continue to be low. The favorable inflation environment is widely expected to persist. For example, expected inflation over the next ten years as inferred from inflation-indexed Treasury bonds stands at about 2.5 percent per year, down from earlier this year.

My main criticism of Greenspan has been his almost knee jerk reaction to inflation pressures.  Although usually appropriate, they were often ill-timed in the face of other events.  From the sounds of the previous quote, Bernanke feels inflation is not quite the all-important issue Greenspan did.  We don’t need to raise the fed rate any more.  My fear is Greenspan is doing now what he did in the late 90’s:

Things were looking too good to be true, and a lot of people knew it.  When the bubble started to burst, Greenspan started hiking the fed rates.  That turned the burst bubble into a flat-out recession.  In the face of the recession, he lowered rates dramatically.  What I want to see is someone who will look at the entire picture, not just the indices, and anticipate what extinuating events will do to the economy and how the fed should react in light of those events.  In the article linked above, Bernanke goes into great detail the impact of Katrina and how it might affect the economy.  I would think when considering fed rates, he’ll have Katrina or whatever might happen in the future, in mind.

From what I’ve read so far, I am very impressed with Bernanke. Bush might have nailed this one.  Volokh seems fairly comfortable as well, pointing out the markets are up on the news. Two out of three ain’t bad.

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