major news from the Fed

Scott Sumner on the Bernanke press conference:

1. Bernanke emphasized that monetary stimulus is not like fiscal stimulus, it actually reduces the budget deficit. That’s right.

2. He said it was an 11 to 1 vote. The Fed is clearly behind him and hence the policy has credibility.

3. He kept talking jobs jobs jobs. And he emphasized that the Fed would do pretty much whatever it takes to get some progress on the employment front. Of course by itself that would be a bad policy. But when combined with the 2% inflation target (which he said had equal weight) it’s getting pretty close to NGDP targeting.

4. Speaking of NGDP targeting, Bernanke brought up the idea (without any prompting by reporters) and talked about Woodford’s plan for NGDP level targeting. He didn’t endorse it (how could he when the Fed only recently adopted a 2% inflation goal) but he certainly wasn’t critical of Woodford. I had the impression that if he wasn’t constrained by being head of the Fed right now, he’d be pretty sympathetic to Woodford’s proposal. And why do I have to call it “Woodford’s proposal?”

5. I’ve gotten a lot of criticism from people, even my friends in the blogosphere, for going too easy on Bernanke. Talking about how he’s well-intentioned, etc. I think this press conference shows that my comments were justified. A commenter named Mark C recently sent me a survey by Bloomberg that showed that the vast majority of economists did not think money was too tight, and only 1 out of 66 thought money was far too tight. Even though Bernanke is a Republican, he’s to the left of the mainstream of a profession that votes 70% Democratic. His call for doing whatever it takes to get more jobs was clearly sincere.

Thank God the Bernanke/Woodford policy has failed!
One down, two to go
I think Ben just did it
Is the Fed Really Causing the Sustained Drop in Interest Rates?
Federal Reserve Finally Working Expectations Channel with Open-Ended QE
Build That Apartment Building Now

The Great Recession: Market Failure or Monetary Disorder? by Robert Hetzel
Money Mischief: Episodes in Monetary History by Milton Friedman

Bernanke press conference

update:
Michael Woodford reacts
David Beckworth: Money Still Matters (Fed measure is wrong) - growth in Germany's M4 Divisia money supply compared to M4 Divisia growth in Eurozone & US

PRESS CONFERENCE: BEN BERNANKE DEFENDS UNLIMITED QE, AS MARKET GOES TOTALLY WILD by Joe Weisenthal and Matthew Boesler
Ben Bernanke Put On An Ingenious Performance Today — Here's What Just Happened by Joe Weisenthal

Rortybomb: Monetary Policy Explained with Animated gifs