Saturday, April 7, 2012

Is Bernanke the Most Inflationary Fed Chair?

Republican presidential candidates want his head. Inflation hawks on the Federal Reserve board think his policies go too far, and advocates for the unemployed think they stop too short. Fed chair Ben Bernanke seems to be ticking off economy-watchers at every turn. But while some of Bernanke’s policies have certainly been unconventional, are the critics right about them being ‘inflationary’?

Take Newt Gingrich. He has called Bernanke “the most inflationary, dangerous and power-centered” Fed chairman in history and said he would sack Bernanke pronto. Texas Governor Rick Perry called Bernanke’s “money printing” (in other words, monetary easing through bond-buying schemes like quantitative easing) “treasonous.” And GOP presidential candidate Mitt Romney thinks Bernanke has “over-inflated the amount of currency he’s created.”

These attacks get at several issues, none well explained. One is the idea that we are experiencing higher inflation than under any other Fed chairman in history. According to this chart by Jodi Beggs (care of WonkBlog’s Brad Plumer), that allegation appears to be false. The average annual inflation rate during Bernanke’s term is lower than any Fed chair since 1970. Read more......

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