Hummel Not So Keen on Bernanke
Readers of this blog know that I disagree with Jeff Hummel’s praise for Alan Greenspan. However, the two of us agree that Bernanke doesn’t know what he’s doing. In this blog post, Hummel discusses the Fed’s decision to start paying interest on reserves. He says:
I predict that future economic historians will look back on this change as a major blunder during the current credit tightening, making traditional monetary policy less effective….[I]rrespective of whether the long run brings deflation, inflation, or neither, paying interest on reserves has certainly applied deflationary pressure in the short run. It may eventually rank with the Fed’s doubling of reserve requirements in the 1930s and bringing on the recession of 1937 within the midst of the Great Depression.
Also, Hummel’s article made the Hollies song pop into my head. If you care to listen to it, just pretend that Bernanke is singing the lyrics. It’s surprisingly apt. Last thing: I have no idea who the woman featured in this YouTube is. Was she on Hollies’ covers or something?
