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Friday, October 28, 2005

New Fed Chairman

I'm looking forward to Ben Bernanke to succeed Greenspan as Federal Reserve chairman. He has been shown to support tax cuts in the past with out regard to deficits. For example, in 2003, with Japan's total debt being well over double ours (relative to GDP), significantly larger deficits on average, and a even more rapidly aging population than ours (with the associated problems of Social Security for the elderly), Bernanke recommended tax cuts financed by yet more government debt to the Japanese government:
Consider for example a tax cut for households and businesses that is explicitly coupled with incremental BOJ [Bank of Japan] purchases of government debt ... Isn't it irresponsible to recommend a tax cut, given the poor state of Japanese public finances? To the contrary... nothing would help reduce Japan's fiscal woes more than healthy growth in nominal GDP.
He is also one of the few Fed Governor's to regularly muse about the dangers of deflation, which I think could be an issue some time late this decade or next.

On the other hand, according to Don Luskin, Paul Krugman (a significantly left of center economist) likes him, so I figure Bernanke should be popular with just about everybody.

Category: cat_useconomy

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