Paul Krugman vs. Ben Bernanke: Is there a dangerous 'hive-mind' at the Fed?

The Nobel laureate accuses the Fed chairman of blindly following the rest of the Federal Reserve, and not being aggressive enough in fighting unemployment

Paul Krugman and Ben Bernanke, two of the nation's leading economists, may have to agree to disagree over how to use the Fed to create jobs.
(Image credit: Imaginechina/Corbis, Zhang Jun/Xinhua Press/Corbis)

The economy-focused corner of the web was enthralled this week by the "Battle of the Beards": Paul Krugman vs. Ben Bernanke, says Paul La Monica at CNNMoney. The first salvo came Sunday, when Nobel-winning economist Krugman took Federal Reserve chairman Bernanke to task in The New York Times Magazine for being more timid in juicing the economy as Fed chief than he'd advised as an academic, leading to unnecessarily high unemployment. Krugman then "geeked out," hypothesizing that his former Princeton colleague had been "assimilated by the Fed Borg, like Capt. Jean-Luc Picard in a famous Star Trek episode, converted into a half-robot servant of a hive-mind." In an unexpected rebuttal, Bernanke told reporters Wednesday that Krugman's advice, to temporarily increase inflation to try to lower unemployment, is "very reckless" and "unwise." Krugman shot back that the chairman's response proves his point about Bernanke and the Fed Borg. Who's right?

The Borg has changed Bernanke: I had chalked up the striking difference between Professor Bernanke's bold solutions and Chairman Bernanke's costly inaction to political pressures, says Noah Kristula-Green at The Daily Beast. But Krugman persuaded me that Bernanke started shifting toward the Fed's more hands-off approach soon after joining in 2002. And that "raises a frightening question: If this is what happens to someone who used to espouse aggressive monetary policy, what will happen to someone more timid?"

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