Yesterday's re-appointment of Ben Bernanke as Chairman of the Federal Reserve System was wise a decision! Sure, he was slow recognizing the subprime problem, but he showed true innovative genius once he engaged. Although there is never any way to prove it, I am confident he prevented the Great Recession from becoming another Great Depression!
But, rewarding a person for a job well-done understates the significance of this re-appointment. If nothing is done to unwind all Bernanke has done, inflation is a certainty! Unfortunately, unwinding these actions will be politically unpopular. It will be easier to unwind them by Bernanke than someone else, who is more beholden or less familiar with the details. Bernanke knows his legacy is ruined if it doesn’t prevent inflation. This was the best thing President Obama could have done in the short run to prevent inflation in the long run.
