Bernanke and his Critics
Bloomberg correctly reports today that “Bernanke Economy Proves Critics Clueless on Fed.” As I noted in an earlier post, inflation remains historically low and inflation expectations are suggesting more of the same – just what we would expect in an economy with high unemployment rates and slowly rising unit labor costs. From the Bloomberg article:
The criticism about the Fed being inflationary is not fact-based,” saidMark Gertler, an economics professor at New York University who has co-written research with Bernanke. “In terms of an inflation record, the facts are the Fed has been as close to impeccable as you can possibly get.
During Bernanke’s tenure, the U.S. consumer price index has risen an average of 2.4 percent, lower than the 3.1 percent average for Alan Greenspan and 6.3 percent for Paul Volcker. Greenspan was chairman from 1987 to 2006; Volcker was Fed chief from 1979 to 1987.
“There’s been an extraordinary amount of misinformation about inflation circulating,” Gertler said. “We have not had any sign of sustained inflation.”
In January, Fed officials lowered their projections for price acceleration, with inflation ranging from 1.4 percent to 1.8 percent this year, and 1.4 percent to 2 percent in 2013. In November, they predicted inflation of 1.4 percent to 2 percent in 2012, and 1.5 percent to 2 percent next year.