What's the Deal With Ben Bernanke?

Dr. Ben Bernanke's swearing-in as the chairman of the Council of Economic Advisors on June 21, 2005
photo: White House photo by Paul Morse

WASHINGTON, D.C.—Ben Bernanke, announced Monday as President Bush’s pick to be the new chair of the Federal Reserve, can be counted on to directly attack growing inflation. Consumer prices have been driven up in large part by the spiraling cost of energy. Expect Bernanke, who would succeed Alan Greenspan, to try to push inflation back with a set of price targets.

The world may be waiting for George Bush to walk the plank—his approval ratings have become abysmal after the federal response to Hurricane Katrina, and while his closest assoicates are being indicted or are at risk of indictment, and as the death toll continues to rise in Iraq—but he has continued on unperturbed, changing the nation’s most important institutions and giving them a more pronounced conservative cast. First it was the Supreme Court, with the nominations of John Roberts and Harriet Miers. Now it’s the chairmanship of the Federal Reserve, sometimes thought of as president in all but name. Whoever holds that chair directs the course of what amounts to our national bank.

Bernanke, a Princeton economics professor, currently chairs Bush’s Council of Economic Advisors. He came to the Council from his post as a member of the Federal Reserve Board and is sometimes referred to as a "maverick" or "free thinker." He is said to be someone who likes to throw "curves" and shake up the board.

He wants to curb inflation by establishing a system of target pricing—meaning the powerful Fed would essentially establish a suggested retail price for goods like gasoline. He claims that would provide public confidence in the economy, and give business a set of goals within which to build policies.

In a June 2004 interview with Minneapolis Federal Reserve research director Art Rolnick, Bernanke said:

“I think that announcing a target would strengthen our commitment to the price-stability objective and also give more emphasis to long-run considerations in policymaking.”

His first job will be to confront the Keynesian conservatives in Congress who, forsaking any notion of fiscal prudence, are busily putting the country deeper and deeper into debt. Efforts to stop them have gone for naught, and currently they are cutting the social welfare programs to ribbons to scare up the cash for hurricane victims. They adamantly refuse to touch the tax writeoffs Bush has been providing the very rich.

The new chair confronts enormous economic issues, which already many commentators suggest are putting the nation on a course ending in depression.

Among them:

  • Spiraling energy prices. Natural gas prices in Washington alone are expected to increase by at least 50 percent this year, a devastating blow to the many thousands of middle-class homeowners in the region who heat with gas.

  • The end of the housing boom, which stands to leave any number of small-time investors in the red.

  • The dollar’s perilous position vis a vis the euro

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