Depends upon what you think the purpose of civilization is.
REH From: [email protected] [mailto:[email protected]] On Behalf Of Keith Hudson Sent: Thursday, April 26, 2012 2:34 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION Subject: [Futurework] Trouble in the family M'mm . . . . A bit of a spat in the Keynesian house! I was also amused by Bernanke's latest buzzterm -- "accommodative monetary policy". Last month it was "macroprudential measures". I can't wait for his report next month. What about "jobs recovery program"? Or would that be going too far? Hostage to fortune and all that. In truth, Bernanke is as desperate as Krugman is reckless. Keith <<<< Bernanke Takes On Krugman's Criticism Ignoring Own Advice By Jeff Kearns and Craig Torres - Apr 26, 2012 Federal Reserve Chairman Ben S. Bernanke <http://topics.bloomberg.com/ben-s.-bernanke/> took on Nobel prize-winning economist Paul Krugman yesterday and called his advice to reduce unemployment by boosting inflation "reckless." "The question is, does it make sense to actively seek a higher inflation rate in order to achieve" a slightly faster reduction in the unemployment rate <http://topics.bloomberg.com/unemployment-rate/> , Bernanke said yesterday to reporters after a Federal Open Market Committee meeting. "The view of the committee is that that would be very reckless." April 25 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke offers his views on the outlook for central bank monetary policy and the U.S. economy. Fed policy makers say they expect growth to accelerate, while refraining from new actions to lower borrowing costs. Bernanke says the central bank stands ready to add to its stimulus if necessary. (Excerpts. Source: Bloomberg) Krugman, whom Bernanke hired at Princeton University <http://topics.bloomberg.com/princeton-university/> in 2000 when he was chairman of the economics department, said in a New York Times Magazine article that the Fed should raise its 2 percent inflation target to cut unemployment. Such a policy shift would align with Bernanke's comment in 2000 that the Bank of Japan (8301) <http://www.bloomberg.com/quote/8301:JP> should pursue faster inflation to escape deflation, he said. Japan's consumer prices fell 0.2 percent that year. "While the Fed went to great lengths to rescue the financial system, it has done far less to rescue workers," Krugman wrote. "Higher expected inflation would aid an economy" because it would persuade investors and businesses "that sitting on cash is a bad idea," Krugman said. Bernanke, during yesterday's press conference in Washington, denied that the FOMC's policy contradicts his prior academic work. The chairman spoke in response to a reporter's question referring to Krugman's story, titled "Earth to Ben Bernanke <http://topics.bloomberg.com/ben-bernanke/> ," published April 24. The article cited "the divergence between what Professor Bernanke advocated and what Chairman Bernanke has actually done." 'Absolutely Incorrect' "So there's this view circulating that the views I expressed about 15 years ago on the Bank of Japan <http://topics.bloomberg.com/japan/> are somehow inconsistent with our current policies," Bernanke said. "That is absolutely incorrect. My views and our policies today are completely consistent with the views that I held at that time." Krugman didn't respond to telephone and email messages to his publicist, Sarah Fogarty. Bernanke said the main difference between Japan's economic slump 15 years ago and the U.S. today is that Japan was in deflation and the world's largest economy isn't, with an inflation rate that's close to the Fed's objective. The U.S. today doesn't face a deflation threat, in part because the Fed expanded its balance sheet to $2.88 trillion <http://www.bloomberg.com/news/2012-04-25/quote/FARBAST:IND> through $2.3 trillion in bond purchases, Bernanke said. The FOMC today raised its estimate for the personal consumption expenditures price index for this year to 1.9 percent to 2 percent versus 1.4 percent to 1.8 percent in January. Inflation, Deflation Bernanke said pushing the increase in prices above the Fed's 2 percent goal would risk undermining inflation expectations and erode the central bank's credibility as a force for stable prices. As a result, "we would in fact have less rather than more flexibility to use accommodative monetary policy to achieve our employment goals," he said. "We, the Federal Reserve <http://topics.bloomberg.com/federal-reserve/> , have spent 30 years building up credibility for low and stable inflation, which has proved extremely valuable in that we've been able to take strong accommodative actions in the last four, five years," Bernanke told reporters. "To risk that asset for what I think would be quite tentative and perhaps doubtful gains on the real side would be, I think, an unwise thing to do." Krugman, who won the 2008 Nobel Prize <http://topics.bloomberg.com/nobel-prize/> in Economics, said in a blog posting <http://krugman.blogs.nytimes.com/2012/04/25/bernanke-responds/> on the New York Times' opinion page yesterday that Bernanke's response was "disappointing stuff." Krugman, 59, has previously proposed higher inflation to boost employment and criticized Bernanke in a Bloomberg News interview last year for not taking more aggressive action. Professor Bernanke Bernanke, 58, joined Princeton, in New Jersey <http://topics.bloomberg.com/new-jersey/> , as a professor in 1985, according to the central bank's website. He was a member of the Fed's Board of Governors from 2002 to 2005 and chairman of President George W. Bush <http://topics.bloomberg.com/george-w.-bush/> 's Council of Economic Advisers <http://topics.bloomberg.com/council-of-economic-advisers/> from 2005 to 2006, when he took office as Fed Chairman. "Krugman's views are not closely related to the reality in which Bernanke is forced to operate," said Anthony Karydakis, an adjunct professor of economics at New York University's Leonard N. Stern School of Business and former chief U.S. economist at JPMorgan Asset Management. "One of them has the responsibility of steering the economy through treacherous waters and the other has the luxury of sitting in his office and sending articles to the New York Times," Karydakis said. To contact the reporters on this story: Jeff Kearns in Washington <http://topics.bloomberg.com/washington/> at [email protected]; Craig Torres in Washington at [email protected] Keith Hudson, Saltford, England http://allisstatus.wordpress.com <http://allisstatus.wordpress.com/>
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