Nope it's not a recipe, its a gang of 3 Ok with Cheney Gang of 4- and here's the deal- he will not commit to any plan or opinion he can be held accountable to (neither would I)-and as for Greenspan's support of the tax cuts in 2001 (was this the same time we were escalating Afghan territories?) it was what always worked for the stock market, and it was no big deal-Reagan played that song for 8 years-well 4 atleast) It didn't work this time- this is a reaction that we as Americans should make note of...yep...what to do with our fiscal policy-? It's too late to stop writing bad checks- China owns our debt, and Japan...I don't have the answer...either Amen
Date: 11/16/2005 12:14:38 PM ( 16 y ) ... viewed 1634 times
WASHINGTON, Nov. 15 - Ben S. Bernanke, the nominee to succeed Alan Greenspan as chairman of the Federal Reserve, told lawmakers on Tuesday that it was a "false dichotomy" to assume that low inflation was at odds with rising wages and greater income equality.
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Doug Mills/The New York Times
Ben S. Bernanke giving his testimony before the Senate Banking Committe.
"Middle-income living standards, and poverty for that matter, are best addressed through employment growth," Mr. Bernanke said during his confirmation hearing before the Senate Banking, Housing and Urban Affairs Committee. "By maintaining low inflation and low expectations of inflation, you can create new employment."
In his first extended public appearance since President Bush nominated him to lead the Fed, Mr. Bernanke stoutly defended his proposal to base monetary policy on an explicit target for inflation and asserted that he would not weaken the central bank's "dual mandate" of promoting full employment as well as stable prices.
But he said he would proceed cautiously and seek consensus within the Fed before moving toward setting an inflation target, one of the few areas of policy where Mr. Bernanke differs from Mr. Greenspan.
And in describing his approach, he sharply distanced it from those of some central banks that focus almost exclusively on an inflation target and not at all on promoting growth. "I don't agree with that," Mr. Bernanke declared flatly.
Members of the committee made it clear that Mr. Bernanke enjoys overwhelming support in the Senate and is all but certain to be confirmed soon. But they also warned him to maintain independence from the White House, where he was President Bush's chief economic adviser.
"I assure this committee that, if I am confirmed, I will be strictly independent of all political influences," Mr. Bernanke said in his opening statement.
Mr. Bernanke also strongly implied that the Federal Reserve did not necessarily need to raise interest rates in response to soaring energy prices, noting that long-term inflation expectations remain "well anchored."
In so doing, he sought to smooth over the one topic that has made his nomination even slightly controversial: a concern among lawmakers, particularly Democrats, that he would be so fixated on preventing inflation and so wedded to mechanistic formulas that the Fed might arbitrarily choke off job creation.
"I am not proposing any major change in policy or in the way policy is conducted," he declared. He repeatedly asserted a need to preserve the flexibility that became the hallmark of Mr. Greenspan's 18-year tenure. "I do not subscribe to rigid or mechanistic rules in policy making," he said.
Lawmakers appeared reassured. Senator Richard C. Shelby, a Republican from Alabama and the chairman of the committee, said Mr. Bernanke "may well be the finest monetary economist of his generation."
Democrats praised his academic credentials and spent most of their time coaxing assurances from Mr. Bernanke about his support for employment and about his political independence.
But in asserting his flexibility, Mr. Bernanke raised almost as many questions as he answered on how his proposal for a clear inflation objective would increase the Fed's credibility in financial markets.
He said that there would be times when inflation climbed faster than the Fed's long-term goal and yet did not constitute a long-term threat, largely because investors and consumers today expect inflation to remain low in the long run.
Senator Christopher J. Dodd, a Democrat from Connecticut, asked Mr. Bernanke how he would react if natural gas prices rose sharply this winter.
"The contrast between the 1970's and today is very marked," Mr. Bernanke said. "Back then, we had high inflation expectations." He added that the Fed might have waited too long and then overreacted to higher oil prices, helping push the economy into recession.
Today, by contrast, "inflationary expectations remain well anchored" and the Fed could respond gently as long as those expectations remained low, he said.
Mr. Bernanke did not imply that he would stop the Fed's policy of gradually raising short-term interest rates from their low point last year. The Fed has raised overnight rates on loans between banks 12 times since June 2004, to 4 percent from 1 percent, and Mr. Bernanke said nothing to dissuade investors from their view that he would probably nudge rates slightly higher at least once or twice in his first few months in office.
In sharp contrast to Mr. Greenspan, Mr. Bernanke immediately made it clear that he did not want to comment on fiscal policy. Where Mr. Greenspan supported President Bush's tax cuts in 2001, a move that many lawmakers say set the stage for the huge deficits that followed, Mr. Bernanke said he would not comment on any tax or budget proposals.
"I'm going to begin now to avoid making specific recommendations," he said in response to questioning from Senator Dodd.
When confronted with passages from a textbook he had written, in which he asserted that budget deficits tend to push up interest rates and "crowd out" private investments, he conceded that "it's possible" that tax cuts could cause more problems than they solve.
But even as he sought to put some distance between himself and Mr. Greenspan on that issue, he repeatedly stated his respect for Mr. Greenspan and his determination to build on the monetary policies in place.
"One may aspire to succeed Chairman Greenspan," he said, "but it will not be possible to replace him."
Jennifer Bayot contributed reporting from New York for this article
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