Tuesday, January 13, 2009

One bubble for the road

US Federal Reserve chairman Ben Bernanke speaking at the London School of Economics today (the appetizer for Jonah Goldberg's visit in a couple of weeks) --

The Committee [of the Fed] takes its responsibility to ensure price stability extremely seriously, and throughout this period [since 2007] it remained closely attuned to developments in inflation and inflation expectations. However, the Committee also maintained the view that the rapid rise in commodity prices in 2008 primarily reflected sharply increased demand for raw materials in emerging market economies, in combination with constraints on the supply of these materials, rather than general inflationary pressures.

He needs to blame China and India for high oil and food prices, because the alternative explanation is that all the easy credit that the Fed and other central banks were creating financed a speculative frenzy in those commodities, drove them through the roof in the first half of 2008 -- and so made the subsequent recession worse.

Speaking of chairman of the Federal Reserve, is Gordon Brown still claiming that Alan Greenspan is one of his advisers? He hasn't mentioned him much recently.

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