Catch of The Day: Tim Duy
Carpe diem, indeed:
Mr Bernanke’s own appointment in 2005 was a case in point. There were several candidates that year. According to people involved, then-President George W. Bush leaned towards Martin Feldstein, a former economic adviser to Ronald Reagan….
But Mr Feldstein was a director of the insurance company AIG, which restated five years of financial results that May after an accounting scandal.
Note—especially all you Hank Greenberg sycophants—that the AUG restatements were from 2005, long before anyone admitted the Emperor of AIGFP had no clothes.
Go read the whole thing, attending especially to:
So, no, Bernanke does not view quantitative easing as acting only through equity price and related wealth effects, and no, Feldstein shouldn’t either. But somehow he does, or wants to trick you into believing that Bernanke’s only objective is boosting equity prices. Either way, I don’t think this is the intellectual approach we should be looking for in a Fed chair.
Talking your own book as if it were your superior rivals. Feldstein and AIG were perfect for each other.
It’s obviously wrong that equity price inflation is the only result wanted or to be had by large scale open market operations but it is a direct first order result none the less. Bernake doesn’t think that is the only effect but he knows the effect is strong and he expects it and wants it and he has said so followed with the standard boilerplate about the wealth effect.
I carry no water for Feldstein but being skeptical about the many matters involved in central banks inducing inflation in asset prices is a positive thing.
To the extent the American political economy exists to inflate asset prices, which I believe has always been strong and is now overpowering, is the degree to which the economy will continue to serve well an ever smaller number of people.
I would ask Bernake et. al how hard top docile worked the last few months to see their assets increase at a double digit rate?