Busted: Bankers and The Global Economy

February 16, 2008

Cracks Show in Fed Leadership

Filed under: banking, central bank, federal reserve, money — Tags: , , , , , , , , — digitaleconomy @ 12:00 am

Philadelphia Fed President Charles Plosser stated, “There are those who have expressed the view that in times of economic weakness, the Fed must not worry about inflation and should focus its entire effort on restoring economic growth by dramatically driving interest rates down as far and as rapidly as possible.” He called this a “damn the torpedoes, full speed ahead” approach to policy.

Marketwatch Article

It becomes more and more evident as time passes that not all the Fed leadership agrees with the policy decisions of Ben Bernanke. Plosser stated that ignoring inflation during times of economic weakness stunts long-term growth. I am glad that someone has the lights turned on upstairs regarding inflation and devaluation. However, the Fed’s role at this time is not one of doing the right thing over the long-term. The customer, Uncle Sam, is only interested in mitigating the short-term by avoiding bank crashes and artificially stimulating the economy. Bernanke is interested in keeping his customer happy and Bernanke’s bosses have not told him otherwise.

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