With the increasing probability that Mitt Romney will end up the Republican nominee to run for President against Obama, APIA's senior economics adviser Ralph Benko decided to take a look at the economic philosophies that drive the two campaigns by contrasting the views of their economic advisers (Ben Bernanke and R. Glenn Hubbard, respectively). Perhaps unsurprisingly, he found considerable difference in how the two men view monetary policy and the Fed, with potentially game changing implications for the 2012 race. We hope you find this material of interest.
American Principles In Action
3/26/2012 @ 12:55PM
Romney v. Obama: The 2012 Race May Hinge On the Fed
By Ralph Benko
Bernanke at GWU. Photo by author.
Mitt Romney is the favorite to win the Republican nomination for president. If nominated, the campaign against Obama may well hinge on the dramatically different views on monetary policy between Obama’s Fed chairman, Ben Bernanke, and that of R. Glenn Hubbard. Hubbard is dean of the Graduate School of Business, Columbia University, former Chairman of the President’s council of Economic Advisers, and, with Harvard’s N. Gregory Mankiw, one of Gov. Romney’s most trusted economic policy counselors.
Hubbard, with journalist Peter Navarro, has written an important book: Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity (foreword by public intellectual — and Supply Side doyenne — Amity Shlaes).
This books lays out a credible blueprint for the restoration of American prosperity. Of most striking relevance is the chapter on “Why Easy-Money is a Dead End,” and, in particular, why “The Road to American Prosperity Cannot be Paved with a Cheap Dollar.”
“Fed chairmen such as William McChesney Martin and Paul Volcker have fiercely protected the independence of the Federal Reserve and conducted Fed policy with price stability and sound money foremost in their minds. But the United States has also experienced another type of Fed chairman. This type is an activist who strongly believes that monetary policy should be used in a discretionary manner not just to keep the American economy on its basic track but also to fine-tune the economy over the ups and downs of the business cycle.
Despite their successes in some important areas, our last two Federal Reserve chairmen, Greenspan and Bernanke, have taught us that there is much truth in what [Milton] Friedman said about the dangers of discretionary activism.”