Best Business Commentary
Surely Ben Bernanke and his colleagues remember the stagflation of the 1970s, says Allan H. Meltzer in The Wall Street Journal. Bernanke is probably looking a little farther back, to the 1930s, says Peter Coy in BusinessWeek.com.
What worries Bernanke?
Surely Ben Bernanke “and his colleagues remember what happened in the 1970s,” says Allan H. Meltzer in The Wall Street Journal. The Fed’s “mistaken behavior” in that period, spurred by political pressures, led to “inflation and stagnant growth: stagflation.” Although Fed officials “repeatedly promised themselves” they would work to lower inflation, those “promises were forgotten” when unemployment ticked up. Bernanke indicated to Congress he would similarly put recession concerns before inflation. If the ’70s taught us anything, it’s this: “A country that will not accept the possibility of a small recession will end up having a big one.”
Bernanke is probably looking a little farther back, to the 1930s, says Peter Coy in BusinessWeek.com. Before becoming Fed chairman, his academic work was on the Great Depression. “Oddly enough,” the Depression “posed a similar dilemma” between growth and inflation. The parallels are “inexact,” but when the newly formed Fed should have cut rates aggressively in 1929, it “kept them high and even raised them” in the “mistaken belief” that inflation was the bigger risk. Whatever Bernanke does now “won’t be completely satisfactory,” but if he follows his Depression-shaped “intuitions,” you’ll see more rate cuts ahead.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Create an account with the same email registered to your subscription to unlock access.
-
Netanyahu's Rafah attack vow snarls truce deal
Speed Read Hours before the truce deal was to be finalized, Netanyahu said Israel will invade Rafah regardless
By Peter Weber, The Week US Published
-
Today's political cartoons - May 1, 2024
Cartoons Wednesday's cartoons - beware of governor, biting debates, and more
By The Week US Published
-
Democrats defang GOP speaker ouster threat
Speed Read Rep. Marjorie Taylor Greene said she will force a vote to remove House Speaker Mike Johnson
By Peter Weber, The Week US Published