Up until this point, my hope was that Vice President Dick Cheney’s influence on the nomination process would tip the scales toward former Council of Economic Advisors chairman Glenn Hubbard, a pro-growth stalwart on fiscal policy. Bernanke, however, an academic with little Wall Street experience, was the favorite, and was probably viewed as the safest option for the administration … I preferred Hubbard to Bernanke only because I thought Bush’s former CEA chief would be more open to a price-rule approach to monetary policy, whereby the Fed would shadow sensitive forward-looking indicators of excess liquidity and incipient inflation: gold, commodities, the dollar, and the Treasury yield curve (and perhaps the TIPS spread and the real short rate). While I’m told that Bernanke is open to market indicators, he also seems overtly committed to an explicit target for the core inflation rate, which I view as problematic.
While Darda was trying to praise Glenn Hubbard, I suspect that Darda has no clue what Dr. Hubbard tells his students at Columbia about fiscal policy. Hubbard is pro-growth, which means he is not fond of the fiscal irresponsibility of this Administration. Yet, the National Review defends these massive deficits. But Mr. Darda is a little confused – the Federal Reserve sets monetary policy.
As far as the price-rule approach – is Darda reviewing to Kudlow’s commodity price-rule? Maybe I missed Dr. Hubbard’s endorsement of Kudlow economics? But if Dr. Bernanke is no fan of Kudlow economics, this is just another reason to applaud President Bush for a very good choice.