Bernanke warns America under Biden is returning to '70s 'stagflation'

Joe Biden returns to the White House, Friday, Feb. 4, 2022, after a labor event in Upper Marlboro, Maryland. (Official White House photo by Adam Schultz)
Joe Biden returns to the White House, Friday, Feb. 4, 2022, after a labor event in Upper Marlboro, Maryland. (Official White House photo by Adam Schultz)

It’s called “Bidenflation” by those including the Boston Herald, Business Insider and Las Vegas Review-Journal. It’s when inflation is at 11% at the point of wholesale, about 8.3% for consumers, but gasoline prices are nearly double from a year or so ago and food prices have surged by well into the double digits.

But Ben Bernanke, a former chairman of the Federal Reserve who led American through what, until now, was considered the most precarious financial moments in decades, has a different term: stagflation.

That’s when a nation is beleaguered by inflation, unemployment and a general malaise in its economy, none of which is good. Those are the facts confronting the United States now under Joe Biden’s economic policies.

For example, he’s repeatedly shut down and attacked energy industry components such as pipelines, resulting in a dependency on foreign energy production, a reversal from the policies under President Trump, who effectively had made America energy independent.

It is DNYUZ that reported on an interview about his new book, “21st Century Monetary Policy: The Federal Reserve from the Great Inflation to COVID-19,” about the pandemic, the “overnight pullback in employment” and the “infusion of money not seen in history.”

Bernanke was one of the leaders responding to the recession in 2008, but his focus now was on the 1970s, “which he suggests is the closest analogue to what’s happening in today’s economy and what could happen next,” the report said.

“He is hopeful that Jay Powell, the current Federal Reserve chairman, can help tame inflation without having to put in place the extreme measures that the former Fed chairman Paul Volcker did in the 1970s or send the economy into recession,” the report analyzed.

But he warned “stagflation” is a possibility on the horizon.

“Even under the benign scenario, we should have a slowing economy,” he said. “And inflation’s still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high. So you could call that stagflation.”

He warned, “The difference between inflation and unemployment is that inflation affects just everybody. Unemployment affects some people a lot, but most people don’t respond too much to unemployment because they’re not personally unemployed. Inflation has a social-wide kind of impact.”

He also expressed concerns about the “credibility” the Federal Reserve holds with the public, “especially given the aggressive approach that he took in 2008 and that Mr. Powell continued during the pandemic,” the report said.

“I had this fantasy conversation in my head between Jay Powell and William McChesney Martin, where I think Martin probably would have had apoplexy or something because of the different things that intervening chairs have done,” he explained, citing Martin, who was chair of the Federal Reserve from 1951 to 1970.

He also, in the book, frets over the reputation of the Federal Reserve, which he said “depends in part on the personal reputations and communication skills of key policymakers.”

Bernanke now is a fellow at the Brookings Institution and a senior adviser to banking firm Pimco.

He said housing prices – up some 30% in two years – need to be watched.

And he said he’s aware of the politics involved.

He said he tried to boost the Fed’s reputation while on the board by making it more transparent, by holding news conferences and releasing information.

On other topics: He said to forgive student debt would be very “unfair.”

Business Insider noted he also was interviewed on television on Monday, suggesting the Fed moved to raise interest rates – too late.

“With prices continuing to surge at breakneck speed, criticism of the central bank has reached a fever pitch. Several Wall Street banks have penciled in a recession in late 2022 or early 2023, arguing the Fed’s timing now forces it to slow the economy to a halt in order to cool inflation,” the report said. “Bernanke took a similarly hawkish stance in a CNBC interview aired Monday, saying the Fed’s patience in raising rates contributed to the inflation problem.”

He explained, “Why did they delay their response? I think, in retrospect, yes, it was a mistake, and I think they agree it was a mistake,” he said.

And the Daily Mail said stagflation technically is when the gross domestic product is down and unemployment and inflation are up.

That report said Goldman Sachs senior chairman Lloyd Blankfein also warned stagflation is “definitely a risk.”

Inflation it at a 40-year high now, and gasoline is at an average price of $4.48.

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This article was originally published by the WND News Center.

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