The most important meeting of the Obama presidency?

From the AP wire:

WASHINGTON (AP) — President Barack Obama is meeting at the White House Wednesday afternoon with Federal Reserve chairman Ben Bernanke.

The meeting comes a day after the Fed announced it would offer super-low interest rates for two more years. The move was an unprecedented step to stem an economic free fall that dragged the stock market down earlier this week.

President Obama better be well prepared:

1.  He needs to remind Bernanke that a policy expected to produce sub-2% core inflation at a time of 9.1% unemployment is not fulfilling the Fed’s dual mandate.

2.  He needs to ask Bernanke whether he thinks we’d be better off right now if the expected growth rate of NGDP was 6% rather than 4%, and if so what the Fed plans to do about it.

3.  He needs to remind Bernanke that both conservatives like Mankiw and liberals like Woodford think level targeting is needed at zero rates, and that Bernanke himself once argued that level targeting is appropriate at zero rates.  Then he needs to ask Bernanke why the Fed didn’t make a commitment to make up for price level shortfalls once interest rates hit zero in late 2008.

4.  If Bernanke says the economy faces structural problems, remind him of what he said about Japan in 1999:

I do not deny that important structural problems, in the financial system and elsewhere, are helping to constrain Japanese growth. But I also believe that there is compelling evidence that the Japanese economy is also suffering today from an aggregate demand deficiency. If monetary policy could deliver increased nominal spending, some of the difficult structural problems that Japan faces would no longer seem so difficult.  (Italics added.)

5.  If Bernanke repeats his claim that “no one can accuse the Fed of not being aggressive,” then throw this quotation back in his face:

The argument that current monetary policy in Japan is in fact quite accommodative rests largely on the observation that interest rates are at a very low level. I do hope that readers who have gotten this far will be sufficiently familiar with monetary history not to take seriously any such claim based on the level of the nominal interest rate. One need only recall that nominal interest rates remained close to zero in many countries throughout the Great Depression, a period of massive monetary contraction and deflationary pressure. In short, low nominal interest rates may just as well be a sign of expected deflation and monetary tightness as of monetary ease.  (Italics added.)

6.  If he says the Fed can’t be explicit about inflation, remind him of this quotation:

With respect to the issue of inflation targets and BOJ credibility, I do not see how credibility can be harmed by straightforward and honest dialogue of policymakers with the public.  In stating an inflation target of, say, 3-4%, the BOJ would be giving the public information about its objectives, and hence the direction in which it will attempt to move the economy.

7.  And how about this little gem:

Japan is not in a Great Depression by any means, but its economy has operated below potential for nearly a decade. Nor is it by any means clear that recovery is imminent. Policy options exist that could greatly reduce these losses. Why isn’t more happening? To this outsider, at least, Japanese monetary policy seems paralyzed, with a paralysis that is largely self-induced. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn’t absolutely guaranteed to work. Perhaps it’s time for some Rooseveltian resolve in Japan.

Indeed.

8. And there’s lots more ammo in this post and this post.

PS.   It wouldn’t hurt to remind Bernanke of the unemployment rate in the African-American community.


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44 Responses to “The most important meeting of the Obama presidency?”

  1. Gravatar of Philo Philo
    10. August 2011 at 12:09

    Mightn’t Obama also question the policy of paying interest on reserves? Ending that policy would be politically palatable–our opinion leaders in the media seem hardly to realize that the policy exists. But ending it would have an expansionary effect. (I suspect the magnitude would be substantial. Does anyone have a good estimate?)

  2. Gravatar of Benjamin Cole Benjamin Cole
    10. August 2011 at 12:19

    I hope Obama points out that the CPI-U was at 225.722 in June and at 219.964 in July 2008. That is a 2.62 percent increase in three years. About 0.8 percent a year. Come July CPI figures that rate of inflation will probably drop, as headline inflation is going down. July will likely be the second month in a row that headline inflation drops.

    If we have inflation, we are real estate prices going down in many markets, such as Miami? Why are office buildings selling for less than replacement costs nationwide?

    Why is the S&P 500 trading for less than in 1999, in nominal terms?

    Where has this obsession with minute rates of inflation come from?

    Why is there an unhealthy attachment to the symbols of wealth–gold, the value of currency–rather the real sources of wealth, which is innovation, business formation and investing, and labor?

    Can we make Volcker the Fed Chief? People forget that Volcker was appointed by Carter–and he did what he had to do, and that was cut inflation down with a monetary hatchet.

    Now we need a Volcker to kill deflation and recession.

  3. Gravatar of dwb dwb
    10. August 2011 at 12:20

    I hope someone nominates you for one of those empty posts. seriously, were your ears ringing when they met?

  4. Gravatar of W. Peden W. Peden
    10. August 2011 at 12:26

    Philo,

    As I understand it, ending IOR would get us back to something like the old “money multiplier” relationship between the monetary base and broad money. Given the way the monetary base exploded in the near past, that suggests explosive monetary policy. The Fed would have a very good reason to bump up interest rates to stop NGDP exploding, which would please those of an Austrian persuasion, I imagine.

    Ending IOR would be the first port of call for me if I was president, either Republican or Democratic. One could get a lot of traction about talking about it “choking demand” (if Democratic) or “subsidising banks for refusing to lend to the private sector” (if Republican).

    I’m actually also starting to like dtoh’s idea of flexible capital requirements. It’s a travesty that capital requirements have been running pro-cyclically recently.

  5. Gravatar of Liberal Roman Liberal Roman
    10. August 2011 at 12:32

    Yea…I am going to guess Obama points out nothing and Bernanke lectures him about ‘policy uncertainty’ and ‘structural problems’.

    I want to say “I would love to be a fly on the wall at that meeting…”

    But honestly, I’d rather not. Their conversation would depress me too much.

  6. Gravatar of Gabe Gabe
    10. August 2011 at 12:33

    I love watching this. You still think Obama, Geithner and Bernanke are trying to help us have a better economy!

    They told us TARP met their objectives…save the big banks that matter! They didn’t care about mortgaged home owners or people trying to pay tuition…they care about the most powerful banks in the world.

    They are interested in crashing the economy and blaming it on a small minority of republicans who don’t want higher taxes. The big bankers, the elite republicans and the elite democrats want more taxes…they want to own us.

  7. Gravatar of W. Peden W. Peden
    10. August 2011 at 12:35

    Here’s a few graphs showing how the MB and M1+ diverged in the US as IOR was introduced-

    http://www.shadowstats.com/charts/monetary-base-money-supply

  8. Gravatar of Gabe Gabe
    10. August 2011 at 12:36

    NGDP-level targeting would be better than current policy, but they want to squeeze the population first…creating crisis is good for them, it allows them to push through unpopular legislation. Just like the Paulson Plan, the Patriot Act, etc. You can tell that the elite republicans and Democrats are in agreement ont hese issues because the actual worst wars and policies of Shrub are also supported and reinforced by Obama.

  9. Gravatar of Liberal Roman Liberal Roman
    10. August 2011 at 12:37

    The problem with ending IOR is not the politics of it. Its that the policymakers honestly and with full conviction believe in their tight money policies, which they don’t realize is tight.

  10. Gravatar of Morgan Warstler Morgan Warstler
    10. August 2011 at 12:48

    ROFL.

    Obama says, “Ok Ben, I give up… what regulatory changes, what cuts do I gotta make, what do I gotta do to convince you guys I’m frigging SORRY?”

    Obama must apologize and recant. The market must believe that he is a changed man. Otherwise he is done.

  11. Gravatar of StatsGuy StatsGuy
    10. August 2011 at 13:15

    @Morgan

    “Obama must apologize and recant. The market must believe that he is a changed man. Otherwise he is done.”

    Dude, do you even bother to read anything, or just spout out factless opinions? (wait, I already know the answer) He gave wall street exactly what they wanted in the debate with Boehner. Exactly. EXACTLY.

    http://www.businessinsider.com/wall-street-responsible-for-one-third-of-obamas-campaign-funds-2011-7

    That’s right. Wall street’s share of his campaign fund INCREASED from 20% in 2008 to a third in 2011. INCREASED. They’re unhappy? Junior, do you believe in something called revealed preference?

    I have another option: Obama is a fool, and an uninspiring speaker too (for the record, I voted for him, but always hated listening to him – I preferred Biden, even with his own idiocies). Weak willed, uninformed, unable to think by himself, dependent on advisors who like ineffective and massively overcomplicated solutions, eager to compromise, etc. The US electorate will vote him out NOT because they dislike his policies, but because they prefer someone who can force something through the gridlock, anything – even if it’s the wrong solution.

  12. Gravatar of Bababooey Bababooey
    10. August 2011 at 13:22

    While your hopefulness is charming, Obama is far, far more likely to berate Bernanke for ramping up the Fed’s new consumer division (why did Dodd-Frank put it there?) too slowly, and urge him to reduce bank overdraft fees and save the black community from predatory pay-day lenders.

    (Or, since he famously trips up over govt architecture, maybe Obama will ask Bernanke to raise taxes on all those millionaires making $200,000 a year.)

  13. Gravatar of Benjamin Cole Benjamin Cole
    10. August 2011 at 13:34

    It just gets more depressing.

    The lead editorial in the WSJ today conflates monetary activists with fiscal-deficit champions.

    You see, Krugman=Sumner.

    It is hard to have a debate, when the microphones are garbled, and the nameplates switched around, and the topic is, “Which is Worse: Permanent Recession or a Depression?”

  14. Gravatar of JimP JimP
    10. August 2011 at 13:42

    One can always dream. Dreaming is nice in this horrid world.

    I am hoping (dreaming) that it will be Bernanke who does the talking in the meeting.

    As Scott has shown from those quotes from Bernanke, Bernanke does know exactly what he should do. No-one needs to tell him anything.

    But he needs a Roosevelt as a President to back him. To quote from Scott’s quotes:

    “Perhaps it’s time for some Rooseveltian resolve in Japan”

    – and also in the United States.

    I am hoping that is what Bernanke will say to Obama.

    Because this must come from Obama. Its Obama who must grow some backbone here.

    Any bets as to whether he will or not?

  15. Gravatar of StatsGuy StatsGuy
    10. August 2011 at 13:44

    JimP, the market already made its bets – it surged briefly when the news broke, then it did a double take and laughed.

  16. Gravatar of JimP JimP
    10. August 2011 at 13:46

    Stats

    Yes – laughed and then barfed up the bank stocks.

    GS did a good imitation of a corpse in the last half-hour.

  17. Gravatar of Morgan Warstler Morgan Warstler
    10. August 2011 at 13:49

    Statsguy,

    Donations from Wall Street prove nothing. You will see the same kind of % from whoever runs on the GOP side.

    There is amongst the investor class a FIRM BELIEF that Obama is anti-business….

    Rick Santelli / Daniel Loeb / any CEO not doing business with government is the mentality of the business community.

    What I meant was Obama does like Clinton in 1993 with Greenspan.

    He comes out of meeting and announces he will be investing in nothing.

    He says the EPA will stand down on enforcement actions, and I will cut their budget by 33%.

    He says tax holidays from bring in $ from overseas.

    He says he is FULLY COMMITTED to REVENUE NEUTRAL TAX REFORM.

    ——

    Be responds by saying, NOW we think we can afford some more QE!!!

  18. Gravatar of Cameron Cameron
    10. August 2011 at 13:51

    Interestingly inflation expectations rose today by 5-10 basis points. A related post.

    http://econlog.econlib.org/archives/2011/08/real_and_nomina.html

  19. Gravatar of JimP JimP
    10. August 2011 at 13:56

    http://econlog.econlib.org/archives/2011/08/real_and_nomina.html

    Good for Arnold! He seems to be on board.

  20. Gravatar of MikeDC MikeDC
    10. August 2011 at 13:56

    He used his backbone passing a crappy health-care law and a useless stimulus package.

    Perhaps Bernanke needs to tell Obama he should have nominated Fed members Bernanke could work with. And that it’s unreasonable (and harmful to the Fed, which draws its power from its credibility) to expect Bernanke to strong arm his unwilling associates.

    Perhaps Bernanke needs to tell Obama that monetary stimulus is a temporary fix unless structural problems are addressed. Yes, we can keep doing it, and we should, but we’ll be back in six months or a year doing it again. And eventually, we’ll lose our ability to do temporary fixes this way.

  21. Gravatar of Morgan Warstler Morgan Warstler
    10. August 2011 at 13:57

    Benji, I’ve been warning you…

    “You see, Krugman=Sumner.”

    The only way around this is for Sumner to BASH GOVERNMENT as aggressively as Friedman.

    He can’t agree with DeKrugman EVER – when DeKrugman happens to agree with Sumner, Sumner needs to say, “Blind squirrel finds a nut!” and then explain how we can only do QE if and only if all progressive fiscal policies are burned to the ground.

    Look, the WSJ KNOWS that sometimes money policy is too tight, it depends on WHO GETS THE CREDIT and WHO GAINS POWER.

    Printing money is a tax, so when we do it, we make sure first and foremost benefits those being taxed politically.

    It must look like growth from cutting government. See Clinton.

  22. Gravatar of Cliff Cliff
    10. August 2011 at 13:57

    Scott, the saving rate is about 5% and current gdp is what the remaining 95% can purchase (keeping it simple). So if we inflate can we purchase more or less goods? I understand that perhaps people could save less but the saving rate is not very high so I really don’t see very much upside.

    Do you see any risks that real gpd might contract if real income does not keep pace with the nominal gdp growth? My feeling is that given the glut of workers the odds of income keeping pace are slight.

    Thanks, Cliff

  23. Gravatar of Max Max
    10. August 2011 at 13:59

    Presumably, Ben knows all this already. Why doesn’t the Fed act according to his criticisms of Japan just a few years ago? My guess is that Fed actions are more politically motivated than we would like, and this meeting won’t result in any kind of real change.

  24. Gravatar of Contemplationist Contemplationist
    10. August 2011 at 14:04

    Lol Morgan confirms the worst suspicions of Proggies and leftists – that the Fed and Republicans are keeping the economy down to defeat the left.

  25. Gravatar of flow5 flow5
    10. August 2011 at 14:07

    Given that any expansion of commercial bank credit involving loans to, or purchases of securities from, the nonbank public, results initially in the creation of an equal volume of new money in the banking system:

    A significant part of the growth in the money stock since Sept. 2008 is not due to an expansion of commercial bank credit, but merely reflects the shifting of the savings/investment deposit type accounts at commercial banks (i.e., esp. small time deposits & retail money market accounts from m2), & other depository institutions into those categories included in m1.

    In addition, a larger proportion of all commercial bank deposits were increasingly highly concentrated in “reserve bound” banks. I.e., the rates-of-change in applied vault cash have contracted.

    Nothing really has happened, except that a larger proportion, of a larger volume of money, is transaction-based (or largely non-interest bearing). I.e., all transaction-based accounts require a 10% reserve ratio requirement.

    However, this shift does represent a de facto TIGHTenING on the part of our monetary authorities. I.e., the FED did not “offset” the rise in required reserves vis a vis the stagnant growth in commercial bank credit.

    That plus the fact that velocity peaked 7/21/2011 doesn’t help.

  26. Gravatar of W. Peden W. Peden
    10. August 2011 at 14:16

    Meanwhile, Edinburgh youths descend into mindless, senseless and uncontrolled congregations-

    http://www.youtube.com/watch?v=QxJdaR_rFJw&feature=youtu.be

  27. Gravatar of Benjamin Cole Benjamin Cole
    10. August 2011 at 14:18

    You want to crap in your pants?

    Take a look at page c8 today in the WSJ. CMBS down to 60 from 90 cents on the dollar, USA average, from start of this year.

    Commercial loans going bust? Too? Now?

    Please oh Gods of Lucre, inflame the heart of Ben Bernanke-san with inflationary lust and carnal desires for prosperity!

  28. Gravatar of JTapp JTapp
    10. August 2011 at 14:22

    Interesting anecdote for today: Sister-in-law’s company orders goods from China. Today the factory notified them it would no longer accept USD, only RMB. Indeed, the RMB has been appreciating, now at a high in nominal terms. So, we are seeing some of the depreciation Krugman & Geithner have been gunning for.

  29. Gravatar of StatsGuy StatsGuy
    10. August 2011 at 14:35

    Morgan, son, you just make stuff up, don’t you?

    “He [Clinton] says he is FULLY COMMITTED to REVENUE NEUTRAL TAX REFORM.”

    Clinton RAISED TAXES IN 1993, and the economy grew.

    http://en.wikipedia.org/wiki/Omnibus_Budget_Reconciliation_Act_of_1993

    Do you ever get tired of embarrassing yourself?

  30. Gravatar of vinicius vinicius
    10. August 2011 at 14:38

    more monetary easing while targeting some inflation sounds ok, its quite intuitive one may say. the problem lies that so far it worked to inflate some classes of assets like stocks, bonds, commodities e etc, and causing inflation in countries like China, Brazil e others. not that the fed has to worry with the efects of its decisions abroad, but would more of the same finally hit the target (inflation in US)?

    any insights?

  31. Gravatar of Morgan Warstler Morgan Warstler
    10. August 2011 at 14:47

    StatsGuy, you have no grasp on what I’m saying. READ CAREFULLY.

    Clinton came out of first meeting with Greenspan in January 1993 and announced he would no longer be investing in ANYTHING.

    After the word “change” in his 1992 campaign, the main word he uttered was “invest.”

    And after one meeting – NO NEW SPENDING PERIOD.

    His first act of DADT was because it was the only free thing.

    Dude, Robert Reich and Carville went apeshit.

    TAXES

    Dude, NO ONE CARES about a little bit in taxes here or there – the point is before there can be any new taxes…

    Obama has to give up everything he snatched up in 2008. The growth of government, the pay for public employees, Obamacare.

    “NO new taxes” is the lid you place on revenues, so that debt can’t grow, so that HARD DEEP CUTS actually come.

    Do you get what I’m arguing?

  32. Gravatar of Aaron W Aaron W
    10. August 2011 at 16:09

    Sort of related to the topic at hand, but I thought the ad that came up with this post was pretty funny considering the views on this blog:

    “Economist Warns: 100% Annual Inflation. Prepare Now!”

  33. Gravatar of flow5 flow5
    10. August 2011 at 16:17

    The 5 1/2 percent increase in REG Q celings on December 6, 1965 (for just the commercial banks), is analogous to the .25% remuneration rate on excess reserves today.

    It is a tipping point which forces the FED to offset the resulting contractionary economic forces.

    IOeRs alter the construction of a normal yield curve, they INVERT the short-end segment of the YIELD CURVE -known as the money market.

    IOeRs are contractionary; inducing debt deflation & dis-intermediation (an outflow of funds from the non-banks/financial intermediaries). IOeRs stop (or retard), the flow of savings into real-investment.

    The non-banks are the most important lending sector in our economy — or pre-Great Recession, 82% of the lending market (Z.1 release, sectors, e.g., MMMFs, commercial paper, GSEs, etc.).

    Every effort should be made to encourage the flow of monetary savings thru the non-banks (the customers of the commercial banks).

    Re-directing monetary savings won’t reduce the size of the CBs , won’t reduce the volume of CB earning assets, & won’t reduce the income received by the system. Money flowing to the non-banks actually never leaves the CB system in the first place. I.e. from a system’s standpoint (& unlike the underpinnings of the DIDMCA), the non-banks are not in competition with the CBs.

    THE ECONOMY WON’T RECOVER UNTIL THE FED ENDS THE PAYMENT OF INTEREST ON EXCESS RESERVES.

  34. Gravatar of Scott Sumner Scott Sumner
    10. August 2011 at 16:44

    Philo and Ben, Those are good suggestions.

    Thanks dwb.

    W. Peden, Good point. But recall that the base is large in Japan–it’s possible that negative IOR might be needed (assuming the Fed doesn’t set a higher nominal target.)

    Liberal Roman. Me too.

    Gabe, Call me naive, but I think Obama wants to get re-elected.

    Morgan, I’ve met Bernanke, and I assure you that’s not his personality. He’s not exactly an alpha male. THAT’S YOUR PERSONALITY.

    Statsguy, I thought he got 50% of Wall Street money in 2008? Or was it 50% of Hedge fund money?

    bababooey, Don’t depress me even more!

    Ben, And the irony is that the tight money policy is the biggest cause of the budget deficit.

    Cameron, Yes, I saw that too. Small changes can be driven by oil prices, due to a flaw (lag) in the TIPS indexing procedure. I’m confident the last few weeks have been disinflationary.

    JimP, Yes, Bernanke knows what to do. And yes, that’s a good Kling post.

    MikeDC, Yes, we need to address structural problems.

    Morgan, I bash government frequently.

    Cliff, Sorry, I don’t follow. What does the saving rate have to do with what we can purchase?

    Max, I don’t know.

    Flow5, Yes, excess reserves are a big issue.

    JTapp, Yes, the Chinese are smart to appreciate their currency–but Krugman’s wrong in assuming that it will help the US.

    vinicius, We haven’t really even tried monetary easing, so I wouldn’t assume we’ve observed its effects.

    Aaron, Yes, I may get new ads soon.

  35. Gravatar of StatsGuy StatsGuy
    10. August 2011 at 19:03

    Scott, of the money wall street gave, Obama got half (or a bit more, I recall). This accounted for about 20% of his total funding. In 2011 so far, it’s accounting for over 30% of his funding. These data are not inconsistent.

  36. Gravatar of Morgan Warstler Morgan Warstler
    10. August 2011 at 19:45

    StatsGuy, I want you to admit you now understand my point, and your previous blather came from you not thinking.

  37. Gravatar of W. Peden W. Peden
    11. August 2011 at 06:07

    Prof Sumner,

    I wonder if the low multiplier in Japan is due to other issues e.g. asset price malaise, deflationary expectations and an aged cash-using demographic structure.

  38. Gravatar of Scott Sumner Scott Sumner
    11. August 2011 at 06:37

    Statsguy, OK, now I see.

    Morgan, Insulting statsguy won’t help your case.

    W. Peden, Yes, but don’t those operate via the nominal interest rate–which is the opportunity cost of holding cash? And that rate in Japan is almost the same as the US. I’ll concede that removing IOR might be very stimulative, and rates might actually rise in the near future. I’m just saying we can’t be sure, as it depends on future expected Fed policy.

  39. Gravatar of W. Peden W. Peden
    11. August 2011 at 06:41

    Prof. Sumner,

    Fair point. At any rate, I suspect that if IOR was removed then we might soon be talking about how best to tighten monetary policy.

  40. Gravatar of Russ Anderson Russ Anderson
    11. August 2011 at 07:23

    Reminds me of Lincoln’s line, “If General McClellan isn’t going to use his army, I’d like to borrow it for a time.”

    If Bernanke isn’t going to use the Fed’s tools Obama should use them for him. Or start replacing Fed governors until he finds a Grant (“He fights!”). The Minneapolis Fed would be a good place to start.

  41. Gravatar of Self-induced paralysis. « Probably Matters Self-induced paralysis. « Probably Matters
    11. August 2011 at 15:27

    […] Scott Sumner quotes a leading monetary economist on the tragic and unnecessary failure of monetary policy in the face of present circumstances: The argument that current monetary policy […] is in fact quite accommodative rests largely on the observation that interest rates are at a very low level. I do hope that readers who have gotten this far will be sufficiently familiar with monetary history not to take seriously any such claim based on the level of the nominal interest rate. One need only recall that nominal interest rates remained close to zero in many countries throughout the Great Depression, a period of massive monetary contraction and deflationary pressure. […]

  42. Gravatar of Scott Sumner Scott Sumner
    11. August 2011 at 18:27

    W. Peden, You may well be right.

    Russ, Good analogy.

  43. Gravatar of Manny C Manny C
    13. August 2011 at 00:39

    Scott,
    I’ve just had lunch with a senior rates strategist at a major IB. He looks at central bank speeches & monetary policy statements very carefully (that’s part of his job). He illuminated something which I think you might be missing something. He argued that Bernanke, unlike Volker & Greenspan, is a much more consultative chairman & greater public disagreement within the FOMC. Volker apparently was evil and made decisions without consultation; Greenspan similarly. Bernanke is different and sees his role differently. He sees his role as being a rep of the FOMC. So when you look at his speeches he represents the middle of the road of the FOMC view.

    We also now know what Bernanke & Obama talked about. They talked FOMC nominees.
    – Richard Clarida, FOMC nominee (http://marginalrevolution.com/marginalrevolution/2011/08/richard-clarida-fomc-nominee.html)
    – Jeremy Stein, a new FOMC nominee (http://marginalrevolution.com/marginalrevolution/2011/08/jeremy-stein-a-new-fomc-nominee.html)

    In light of this, I think Bernanke should get more credit. He’s playing the long game. He wants good nominees that have a strong grasp of and largely align with his view of monetary policy and that are acceptable to hawks in Congress. My guess is that he will let these two nominees speak their positions and use them to push a much more dovish view. Maybe you’re being too hard on the poor man. He’s not an alpha male (I think you said this elsewhere). But sometimes you wonder what he’s got in him:
    http://www.youtube.com/watch?v=K1aVets2eeI

  44. Gravatar of ssumner ssumner
    14. August 2011 at 08:11

    Manny, You said;

    “I’ve just had lunch with a senior rates strategist at a major IB. He looks at central bank speeches & monetary policy statements very carefully (that’s part of his job). He illuminated something which I think you might be missing something. He argued that Bernanke, unlike Volker & Greenspan, is a much more consultative chairman & greater public disagreement within the FOMC. Volker apparently was evil and made decisions without consultation; Greenspan similarly.”

    I’ve always assumed the same, so I’m not sure what I’m “missing.” I like Bernanke.

    I think you are right about the consultation, and this post got things exactly backward. I assumed Obama would be telling Bernanke what to do–it now looks like it might be the opposite. I’ve always supported Bernanke in his fight with the hawks, I just want him to push harder. With the three dissents, it looks like he might be moving in my direction.

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