Piling On Bernanke: John Taylor

The Wall Street Journal – Bernanke Challenged on Rates’ Role in Bust

Federal Reserve Chairman Ben Bernanke says low interest rates engineered by the Fed in the early 2000s aren’t to blame for the housing boom and bust. But he hasn’t convinced fellow economists. Two surveys conducted by The Wall Street Journal this week found many economists believe low rates did contribute to the bubble. In a monthly survey of mainly Wall Street and other business economists, 42 said low interest rates were partly to blame for the housing boom while 12 sided with Mr. Bernanke and said they weren’t. Academic economists who specialize in monetary policy were split in a separate survey: 13 said low interest rates helped cause the housing bubble; 14 said they didn’t.

Bloomberg.com – Caroline Baum: Obama, Bernanke Need Miracles to Weather 2010

If 2009 was a year for massive government intervention in the private economy and a full-court press on health-care reform, 2010 will be a time for weaning the nation from life support and evaluating what worked and what didn’t, and hopefully doing less of the second. Specifically, it will be a time to test the validity of certain economic principles, such as the notion that government needs to spend money to save money. Already the Obama administration has been embarrassed, by shoddy data and sheer hubris, into rejiggering its measure of “jobs created or saved” as a result of the $787 billion fiscal stimulus. Now it’s even mushier. All jobs funded by the American Reinvestment and Recovery Act will be counted, even if they predated the cash infusion. Here are some other areas that bear watching.

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