Courtesy of Mish.
It’s pretty rare for Bernanke for former Fed chair Ben Bernanke to say much of anything that makes any sense. He recently he did, just not in context.
“I don’t see anything magical about targeting 2 percent inflation,” Bernanke told a conference in Washington sponsored by the International Monetary Fund.
Given that inflation targeting is quite stupid, that sentence in isolation may cause some to believe common sense seeped into Bernanke’s brain.
Alas, his brain actually went into reverse: Bernanke Open to Raising Inflation Target Fed Struggles to Meet.
Former Federal Reserve Chairman Ben S. Bernanke suggested that he would be open to an increase in the central bank’s 2 percent inflation target.
“I don’t see anything magical about targeting 2 percent inflation,” he told a conference in Washington sponsored by the International Monetary Fund.
His comments come as the Fed and other major central banks are struggling to prevent their economies from falling into a disinflationary trap of diminished expectations. IMF officials have proposed that the monetary authorities raise their inflation goals to help limit the danger of future deflation.
Some economists, such as professor Laurence Ball of Johns Hopkins University in Baltimore, have called on the Fed to raise its target to 4 percent. Others, such as Scott Sumner of Bentley University in Waltham, Massachusetts, argue that the Fed should adopt a goal for the growth of nominal gross domestic product, rather than focusing on a price index.
Bernanke pointed to a number of practical difficulties in making a change in the Fed’s objective. Such a switch could cause confusion among the public about the central bank’s intentions and undermine its credibility, he said.
[And pray tell, what credibility is that?]
Bernanke also made the case in his presentation for keeping the Fed’s balance sheet big in the aftermath of the financial crisis.
[Is that an indication he is clueless about how to unwind it?]
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