Ben Bernanke and His Critics

The past two weeks have provided numerous pundits and corporate economists, not to mention various 'economics reporters,' to opine on Ben Bernanke and his Fed. Especially the FOMC.

I find this somewhat amusing. After allowing for a free press, and the general value of public discourse and exchange of ideas, I believe the current flow of opinions marks most of the sources as of limited acumen or experience.

Bernanke and his colleagues have very sensibly articulated two things. First, they are data-driven in their interest rate decisions for the US economy. Second, in today's circumstances, the current 2% inflation rate is at the upper end of their comfort zone.

You don't have to be a genius to understand their message. You could, with a little experience, quickly realize that Bernanke & Co. understand the long term damage that inflation will do to the US financial markets and economy. Thus, they are acting to slow the rise of inflation now. And they are competently using the data available to modern central bankers to do so. Further, they are behaving as a coordinated, smoothly-functioning team.

If anything, most of the pundits, aside from people like Brian Wesbury and John Rutledge, seem to be incapable of simply understanding current Fed behavior.

The way I look at it is thusly. There are roughly 100 million working Americans. I don't know the exact number, but this is close enough for purposes of my example. Of these people, only one can be chosen to be Fed Chairman. That means there must be at least 40 academic, corporate, and financial services economists who believe they, too, are in the "first rank" of their profession. Toss in a few consultants, some investment fund economists, and maybe you get to 60 people. Add another 5-10 media critics, and you are near 75.

But there's only one Chairman. And he's Ben Bernanke. The other 75 people are not. They may care about Bernanke's behavior and comments, but I really doubt he cares all that much about theirs. Nor should you.

This may be worth remembering in the months and years ahead. Bernanke and the Fed, to use a famous phrase, "stand on the shoulders of giants." Paul Volcker's and Alan Greenspan's Federal Reserves were perhaps the two best monetary policy leaders and administrations our country has had. The bar was pretty high when Bernanke was confirmed as Fed Chairman.

Rather than spend a lot of time worrying about the comments of 70+ also-ran economists, pundits and media reporters, I'm going to continue to focus on Bernanke's, and other Fed Presidents,' words and actions. Perhaps you should as well. It may make for more clarity and less wasted time and effort deciphering the comments of the people who didn't get Bernanke's job.