Bernanke's Latest Blog Post Takes a Brutal Shot at the Wall Street Journal Editorial Page

Direct hit

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Former Federal Reserve Chairman Ben Bernanke started a blog at the Brookings Institution late last month, and he has shown a penchant for calling out those with whom he disagrees. 

The first prominent fight was with Larry Summers over secular stagnation, and today he took issue with a recent piece by the Wall Street Journal's editorial page.

The WSJ piece argues that the Fed has been consistently over-optimistic about economic growth, and that given weak Q1 GDP it's perhaps time to change course on monetary policy, since the current regime isn't working.

Bernanke disagrees with the WSJ's policy suggestion and delivered this brutal line regarding economic forecasting:

It's generous of the WSJ writers to note, as they do, that "economic forecasting isn't easy." They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent.

It doesn't end there:

...the right inference is not that we should stop using monetary policy, but rather that we should bring to bear other policy tools as well. I am waiting for the WSJ to argue for a well-structured program of public infrastructure development, which would support growth in the near term by creating jobs and in the longer term by making our economy more productive. We shouldn't be giving up on monetary policy, which for the past few years has been pretty much the only game in town as far as economic policy goes. Instead, we should be looking for a better balance between monetary and other growth-promoting policies, including fiscal policy.. 

Read the full post here.

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