Bernanke & Goldilocks
By Larry Kudlow
So, Federal Reserve chairman Ben Bernanke, testifying before Congress this week, officially threw in with Goldilocks — moderate growth and declining inflation. And stock markets loved it, with shares soaring in all sectors around the world.
Just look at Bernanke's bullet points: Business is strong. U.S. exports to the rest of the world are rising. The consumer is healthy. Unemployment is low. Wages are on their best run in years. And inflation is in check.
Pure Goldilocks.
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Since taking the spot at the Fed last February, Bernanke has stopped inflationary fevers while laying the groundwork for what is virtually a runaway bull market.
The Dow, transports, utilities, the small-cap Russell 2000, the NYSE, the Wilshire 5000 — they're all moving toward all-time highs. Inside these indexes the story is the same: Commodities, cyclicals, defense, machinery, and construction are setting record after record. The depth, breadth, and resiliency of this rally is remarkable.
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And none of this is much of a surprise. Demand-side Wall Street bears fail to understand this, but President George W. Bush and his Fed appointee, Ben Bernanke, have restored the Ronald Reagan approach to non-inflationary growth economics: tight money and low tax rates.
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The recessionists are wrong. The bears are wrong. The pessimists are wrong. The doom-and-gloom crowd is wrong. The Democrats who rule the roost on Capitol Hill are wrong.
We are witnessing the Bush-Bernanke boom, and it's still the greatest story never told.
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