From recent Fleck. Rather shocking.
articles.moneycentral.msn.com
'Bernanke at his word'
So read the headline of a recent article by Jim Grant, in
which he reprised a speech that Ben Bernanke gave in Japan on
May 31, 2003, as a Federal Reserve governor, three years
before becoming Fed chairman. (You can find the article here;
subscription required.) The topic that day: deflation.
Posing his own question and answer, Grant writes: "And what
was deflation? Falling prices, pure and simple. Bernanke did
not bother to distinguish between prices that fall on account
of a banking or credit crisis vs. those that fall on account
of advances in productive technology or improvements in
economic organization. It was all the same to him -- and all
bad."
The word "deflation" brings fear to the hearts of Fed heads
and many other people, whereas I'd be willing to bet that
virtually all consumers worldwide would be happy to see the
price of most everything fall (though, of course, people are
always upset when their assets fall). In any case, "deflation"
has been tortured to the point that it's the evil that must be
prevented at all costs.
As Grant notes, the speech Bernanke gave on that particular
day in Tokyo was more radical than his musings had been in the
U.S., at that time or since. In Grant's words: "It isn't
enough, after prices have begun to fall, to stop the decline,
the chairman said. Rather, a central bank should push prices
up to where they would have been if they had never weakened in
the first place."
Reread that. It is rather shocking. |
