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October 24, 2005



Here is a comment on Bernanke from "mds" following Brad DeLong's suggestion that Bernanke would be "very good choice." mds comment:

Here is Dr. Bernanke bouncing up and down, because the economy is great right now:

"When thinking about where the economy is now and where it is heading, it is useful to keep in mind just how far the U.S. economy has come in recent years."

Here is Dr. Bernanke's enthusiastic take on the Bush tax cuts...every single one of them:

"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."

Here is Dr. Bernanke's delight in the awesome growth in the job market:

"Since the labor market bottomed out in May 2003, more than 4 million net new payroll jobs have been added."

Here is Dr. Bernanke's optimism about the interest rate outlook:

"However, the stability in core inflation and inflation expectations does suggest that overall inflation is likely to return to levels consistent with price stability in coming quarters."

Here is Dr. Bernanke waving off any possibility of a housing price bubble:

"Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas."

Now, to be fair, here is Dr. Bernanke boldly raising a note of caution about deficits:

"The current account deficit presents some economic challenges. At 6.3 percent, the ratio of the current account deficit to GDP is now at its highest recorded level. Gradually reducing the current account deficit over a period of time would be desirable."

Then again, we have such big deficits because our economy is so terrific:

"While the current-account imbalance partly reflects the strong growth of the U.S. economy and its attractiveness to foreign investors, low U.S. national saving also contributes to the deficit."

All the above was from Dr. Bernanke's testimony before the Joint Economic Committee last Thursday.

So given that it was inevitable that "Bush selection" would equal "whore" by definition, I suppose we can consider this a "very good choice." Of course, once he's Fed chair and no longer required to quaff Kool Aid by the gallon, he can go back to being an honest, responsible economist. Just like Dr. Mankiw.

Posted by: mds | October 24, 2005 at 09:59 AM

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