Through The Fly's Eyes: Ben Bernanke
Bernanke Begins To Act Like Greenspan
When Fed Chairman Bernanke took the helm of the Federal Reserve, it was refreshing to hear him say that the Fed would attempt to act more proactively. However, after hanging out with fellow board members, Bernanke is beginning to change his tune and sounds more and more like Alan Greenspan.
Yesterday, Bernanke said policymakers want to see inflation continue to recede, suggesting the Fed probably won't be cutting interest rates any time soon. This means any proactive policy making decisions that he suggested when he took charge of the Fed will not occur.
Today, with massive amounts of top-down and bottom-up data to base decisions on, basing your decisions on inflation which is a lagging economic datapoint is just plain silly.
There is little evidence to suggest inflation is out of control and will not be decelerating during the next twelve months. Housing prices, oil, automobiles and everything technology-related will be cheaper in twelve months. The Fed Funds futures and the 10-year bond are all ready saying to start lowering rates.
Mr Bernanke, let's not act like Mr. Greenspan and act more proactively.