Thursday, December 07, 2006

Bernanke and the Democratic Congress

Bloomberg has an interesting piece today about the sort of questions and discussion that Ben Bernanke may get at his next appearance on Capitol Hill:
Dec. 7 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke may be heading for a showdown with congressional Democrats over his warning that wage gains risk causing a jump in inflation.

Fed policy makers are threatening to raise interest rates should inflation remain elevated, even as the housing slump slows the economy. Democrats, led by incoming House Financial Services Committee Chairman Barney Frank, vow to grill Bernanke over borrowing costs and wage increases that have lagged behind profit growth under President George W. Bush's administration.
Personally, I'm all for more intense - and even critical - questioning of Bernanke on Capitol Hill. I think that Bernanke is a fantastic economist, and in ten years I expect to be able to describe him as a first-rate central banker. But that's exactly why I think it would be a very good thing for him to have to explain his understanding of the economy - including the dangers of wage inflation, the effects of the minimum wage, the phenomenon of widening income inequality, the US-China financial relationship - to the rest of us.

There are a lot of difficult and important economic issues out there right now. Who better than Bernanke to help stimulate discussion and contribute to the public debate about them?

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