Bernanke knows why ‘currency war’ is good news – US lawmakers don’t

I stole this from Scott Sumner:

Sen. Tom Coburn (R., Okla.) asks whether all the major central banks easing might diminish the benefits and lead to trade protectionism.

“We don’t view monetary policy aimed at domestic goals a currency war,” [Bernanke] says. Easing policy can be “mutually beneficial” to other countries such as China, which depends on domestic demand in the U.S.

It’s a “positive-sum game, not a zero-sum game,” Bernanke says.

I don’t think Bernanke is reading this blog, but I feel like quoting myself:

Monetary easing is not a negative or a zero sum game. In a quasi-deflationary world monetary easing is a positive sum game.

I have not always been impressed with Bernanke and he has certainly made his fair share of mistakes, but he certainly is more knowledgable about monetary policy than Republican lawmakers.

 

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7 Comments

  1. Lars, None of us has any doubt that Bernanke is knowledgeable. That´s not the point. What matters is his record, and given how knowlegeable he is, worse for him. And he´s very lucky that the GOP Senators have very bad economic advice, which makes his life easy!

    http://thefaintofheart.wordpress.com/2013/02/26/the-gop-is-making-bernankes-life-easy/

    Reply
  2. Ravi

     /  February 27, 2013

    Be grateful that the US has Bernanke and not the European central bankers.. here’s Draghi today: Draghi said there’s a limit to what the ECB can do and it’s up to governments to solve the region’s debt crisis.
    “It is important to stress that the ECB’s mandate only extends so far,” Draghi said. “There are clear limits to what monetary policy can and should aim to achieve. We cannot repair unsound budgets. We cannot clean up struggling banks. We cannot solve deep-rooted problems in the structure of Europe’s economies.”

    Reply
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