Ian
Macfarlane and Ben Bernanke share a lot of modern beliefs. They’re both
inflation targeters, and Bernanke has suggested that the US Fed adopt
an explicitly “Australian” inflation target. By “Australian” he means a
target that has softish edges and, more particularly, a floor that is
well above statistical zero. If adopted in the US, there will be
worries in the markets that an inflation target will limit the Fed’s
discretion.

Macfarlane and Bernanke are also believers in a
still more modern mysticism – that the gigantic current account
deficits being run by the US and Australia are neither a problem or,
more particularly, the fault of poor government policy.

More here.

And here’s whatBusinessWeek has to say about Ben Bernanke, an economist known for intellectual curiosity, who posed a
niggly question in The Wall Street Journal five years ago: “What Happens When
Greenspan is Gone?” He’s the man who “models his strategy on Goldilocks,” writes The Guardian‘s Ashley Seager, having coined the idea of fine-tuning inflation to a “Goldilocks” level: not too hot, nor too cold.

Now that Ben Bernanke has been tapped to succeed Alan Greenspan,
his public writings and commentary “take on the status of scripture for
those hoping to chart the future of monetary policy,” says Nat Worden
in The Street. “Broadly speaking, Bernanke is viewed as a straight-talking
economist who avoids ideological and political stances while stressing
the importance of containing inflation and making the Fed a transparent
and independent body. An admirer of Greenspan, Bernanke has shared many
of the current chairman’s views on monetary policy, although not
blindly.

Meanwhile, Bernake’s got the nod from Wall Street, where shares leapt as
financial markets “gave an enthusiastic initial response to President
Bush’s choice.”

Peter Fray

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