Though I don't want to dwell on politics much in this blog, sometimes it's a hard subject to avoid. Rick Perry renewed his attack on Ben Bernanke yesterday, stating "We would put someone in who actually believes that the private sector is how you stimulate the economy -- not by printing more money at the Fed." Does Ben Bernanke think that printing money is the key to economic growth? Here's part of Bernanke's speech in Cleveland last night (note: this is not the first time that he made these points):
"In a nearly half-hour prepared speech, given as part of the Clinic's "Ideas for Tomorrow" series, Bernanke talked about lessons that can be learned from emerging market economies such as China and Korea. Some of the common threads of success stories include low inflation, deregulation, privatization, fiscal discipline and the reduction of tariffs and the removal of other controls on exports and imports."
Low inflation, deregulation, privatization, fiscal discipline and freer trade - those sound like policies that conservatives would embrace; policies that seem to rely on the private sector for economic growth. Bernanke added:
"Monetary policy can do a lot but it's not a panacea. It can't solve all of the problems..."
I don't think Operation Twist will be that effective and QE2 had a limited impact, but clearly Ben Bernanke recognizes that the private sector is the key to sustained economic growth. However, he doesn't have a say on fiscal discipline, trade policy, or regulations that affect non-financial businesses. It's disingenuous to blame him for budget deficits and other economic policies that are beyond his control.