Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Thursday, June 08, 2006

Daniel Gross Writes About the Fed

He writes about how the markets, and the financial press, seem puzzled by the fact that Ben Bernanke can think about more than one thing at a time:

Daniel Gross: June 04, 2006 - June 10, 2006 Archives: HELICOPTER MAN: Federal Reserve Chairman Ben Bernanke earned his reputation for being more concerned about deflation than inflation in part because of this 2002 speech where he approvingly quoted a Milton Friedman phrase about the utility of a "helicopter drop" of money. Now that Bernanke is suggesting that inflation is, indeed, a problem, the stock markets are getting somewhat antsy. Traders apparently didn't realize that Bernanke's helicopter comes equipped with a high-powered, super-duper liquidity vacuum. And it looks like he might have to turn it on.

Ben Bernanke is smart enough to worry about all future possibilities--and both accelerating inflation and dangerous deflation are possibilities. It shouldn't take long before the markets realize this, even though the press corps doesn't.

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