Sunday, August 29, 2010

Bernanke Said What?

Dean Baker is picking up on the scent that Bernanke is a mad scientist. He writes:

In his speech at the annual meeting of central bankers in Jackson Hole, Wyoming, Federal Reserve Board Chairman Ben Bernanke listed his options to counter a faltering economy. One of the three items on the list was reducing the 0.25 percent interest rate that the Federal Reserve Board now pays on reserves.

It is striking that Bernanke would include this item on his list because he just instituted the policy of paying interest on reserves last year. At the time there was no discussion of the possibility that paying interest on reserves would have any significant negative impact on growth.

1 comment:

  1. Last year? Bush was President when the Fed started paying interest on excess reserves.