Bernanke's History Lesson

The Fed chief's study of the 1930s, when central bankers mistakenly kept money tight, may mean he'll dismiss inflation and keep slashing rates
Mark Wilson/Getty Images

Federal Reserve Chairman Ben S. Bernanke went to Capitol Hill on Feb. 27 as if he were a general called from the battlefield to report on the progress of a losing war. The problem, as he explained to the House Financial Services Committee in his semi-annual monetary policy report, is the economy is fighting enemies on two fronts: a financial crisis and an economic slowdown on one side; inflation on the other. The more the Federal Reserve does to fight the financial crisis and potential recession, the worse inflation threatens to be. And vice versa.

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