24 Jun 2009

Tempted by the Ring of Power

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Robert Wenzel sent me the below email, in reference to his hard-hitting financial P.I. site. (He sends me a candy bar every time I use that description.)

This came up as a search today:

“”bob murphy” “council of economic advisors”

The search was done by:

national archives and records administration

Are they setting up for some plans we don’t know about?

I knew this would eventually happen. See, what the clever elite do is, they identify all the really really ambitious and talented people.

And then they buy their silence.

Now I can’t prove the following, of course, but it seems entirely plausible to me: Suppose that Ben Bernanke knows beforehand what his policy decision is going to be; that it is “exogenous” to the central banker, if you want to adopt the terminology of the fancy model builders. And then Bernanke’s actual job is to come up with a big production (and he has many employees, remember) to justify what he’s doing.

Here’s a pop quiz, and hopefully we’ll get some big gun like Scott Sumner to chime in. (Scott is at that awkward state in his blogosphere career where he has to “participate” in podunk sites like mine, just to keep trying to bump his name recognition beyond the tipping point. In that regard, everyone wants to be the next Tyler Cowen. And we hate ourselves for it.)

Anyway here’s the quiz: Is there any school of thought right now that claims Ben Bernanke is doing the right thing? The Austrians think his 0% interest rate is insane, and if I’m not mistaken, there are just as many Friedmanites who think Bernanke is inexplicably failing to use the “ammunition” at his disposal. So if the economy is stuck in a rut for 5 more years, both the Austrians and the monetarists will say, “Duh, we told you this would happen if you ignored us.”

So is Bernanke following any academic blueprint to success? If not, doesn’t that make my hypothesis above more plausible?

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