Perry vs. Romney on Ben Bernanke

August 16, 2011

Gov. Rick Perry’s tough comments on Federal Reserve Chairman Ben Bernanke are another sign that the Fed and monetary policy will be big topics in the Republican primaries and the general election. There is certainly a stark difference between how Perry talks about the Fed, and how Mitt Romney does. First, here is Perry from yesterday:

If this guy prints more money= between now and the election, I don’t know what y’all would do to him in Iowa, but we — we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous — or treasonous in my opinion.

Now here is Romney from April on CNBC’s The Kudlow Report:

Kudlow: What kind of job is Ben Bernanke doing right now? The guy is depreciating the dollar, we’re seeing this huge inflation of energy prices, including gasoline prices at the pump. What do you think of Ben Bernanke?

Romney: I think Ben Bernanke is a student of monetary policy. He’s doing as good a job as he thinks he can do in the Federal Reserve. But look, I’m not going to spend my time going after Ben Bernanke. I’m not going to take my effort and focus on the Federal Reserve. I gotta focus on my effort on the administration.

Romney’s comments kind of reflect what many mainstream Republican-leaning economists believe, that overall Bernanke has been an effective central banker, particularly during the nadir of the financial crisis. Romney’s comments may also reflect a belief in the value of maintaining Fed independence. And I highly doubt Romney wants to “end the Fed” as Ron Paul does.

On substance, Perry is correct. A strong argument can be made that the Fed’s bond buying caused inflation to flare, squeezing consumers and slowing the economy. (Interestingly, the president of the Dallas Fed is also against more QE3 bond buying.) But on style, Perry didn’t need to go there. I think that sort of loose talk sets a bad tone for the political debate. Also, if Perry should become the 45th president, he’ll need a Fed comfortable with eventually withdrawing stimulus without looking over its shoulder at the politicians. So if Perry’s savvy, maybe he’ll offer Bernanke an apology – and maybe send over a big mess of Texas barbecue while he’s at it. But I doubt it. Here is Perry spokesman Mark Miner:

The Governor was expressing his frustration with the current economic situation and the out of control spending that persists in Washington. Most Americans would agree that spending more money is not the answer to the economic issues facing the country.

Let me also add that I don’t think Bernanke will serve another term as Fed chairman beyond the current one. First, I hear he doesn’t want another term. Second, he probably couldn’t make it out of a GOP-controlled Senate or even one where Republicans have enough votes to filibuster. Certainly among Tea Party activists, there is a strong belief that the Fed should be shuttered.



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I do hope that it is centralist Republicans that survive the primaries this year. This country needs good leaders.

Posted by balancedcitizen | Report as abusive

“On substance, Perry is correct. A strong argument can be made that the Fed’s bond buying caused inflation to flare, squeezing consumers and slowing the economy.”

That semakes no sense at all. First, on substance, Perry disagrees with 90% of all academic economists, including such socialists as Greg Mankiw and Doug Holtz-Eakin. Second, core inflation – the one driven by Fed policy – is and has been through the recession, very, very low. Third, even if the Fed had been able to successfully cause moderate inflation, that would not have squeezed consumers, but rather helped decrease the real debt load, which is a major issue atm (there is a reason people are calling this a balance sheet recession…).

Posted by adam3smith | Report as abusive

There is yet another reason this comment makes no sense.

Perry himself, by suggesting (absurdly) that Republican Bernanke would act with the explicit objective of aiding Obama’s re-election, is saying that “printing money” should lead to economic improvement, at least in the short term. The only way Perry’s “play[ing] politics” comment could be consistent with Pethokoukis’ suggestion that Fed action slowed the economy would be if Perry were decrying Bernanke’s efforts to derail Obama’s re-election.

The incoherence here is staggering.

Posted by stevensteve | Report as abusive

There is yet another reason why the assertion that “Perry is correct” makes no sense.

The only way that Republican Bernanke could be acting with the explicit purpose of aiding Obama (as Perry absurdly suggests) would be if “printing money” were expected to improve the economy between now and the election.

Pethokoukis, however says that Perry is right on the merits because there is a good argument that Fed action has slowed the economy. This could only make sense if Perry were decrying Bernanke’s efforts to derail Obama’s re-election, rather than promote it.

The incoherence here is stunning.

Posted by stevensteve | Report as abusive

adam and steve, (no pun intended)

Perhaps you look at the massive amount of monetary expansion that has taken place over the past 10 years. This is called currency devaluation or inflation. Have you ever wondered why the price of commodities are at all time highs? The answer is inflation. Also, compare the economic records of our recent stong dollar presidents (Reagan, Bush I, Clinton) versus our recent weak dollar presidents, read devaluationists or inflationists, (Carter, Bush II, Obama).

Posted by Caden_Banks | Report as abusive

Caden_Banks, all Presidents talk of strong dollar. I am unsure what inflation you are speaking of at this time that isn’t related to increased commodity demand globally. Inflation has been low enough that two recent years saw no inflation adjustment (by formula) to social secutiry benefits.

As for including Ronald Reagan in the strong dollar category, I believe you have forgotten the “Plaza Accord” agreement of the middle of his administration that led to a serious correction downward of a dollar that had grown too strong. The Japanese yen strengthened significantly against the dollar as a result.

Posted by Statistician | Report as abusive

I knew it. Romney is another Fed apologist. Says he wants to just focus on Obama. That’s the problem. Obama’s bad but so too is Bernanke. It was ignorant Republicans like Bush who supported the Fed when they were creating a housing bubble and devaluing the dollar. And the Fed is a regulator of the banks, banks like Lehman Brothers, and Bernanke was as blind as the ratings agencies on that one.

We need someone like Perry to call the Fed on the carpet, although the treason language was over the top. If Romney were to get elected say hello to QE3, QE4, QE5….

Posted by freemkts | Report as abusive

I don’t know how the government figures inflation, but all you people who say there isn’t any must not go to the grocery store or the gas station. I buy groceries every day and gas every week, and both are substantially higher. And by the way- Perry IS correct and all the liberals and rinos that are criticizing him need to talk to some real people from time to time.

Posted by Mriordon | Report as abusive

Economist fixated on the Great Depression and Keynes will never figure this out. Perhaps the exception would be Keynes himself because he analyzed each situation on its own merits.

The Fed can only impact the economy through the banking system. The banking system can only impact this economy if people or companies borrow money and spend it. Companies are not rushing out to borrow because they are paralyzed by uncertainty. Individuals are not rushing out to borrow because many are underwater as it is.

Just a few weeks ago Chairman Bernanke basically admitted he was unsure what else the Fed could try and that individuals needing to deleverage was one of the headwinds holding the economy back. Fed actions have exacerbated that problem and prolonged the deleveraging process.

Only fiscal and regulatory policy can fix this. The Fed should have the courage to admit this. The Chairman should be offering advice on the types of fiscal actions that would actually stimulate the economy.

Posted by Chuck62 | Report as abusive

I agree with Perry on the fact that the Fed is printing too much money, but Romney is 100% correct on where the focus should be (no blame). Obama’s (and Bush’s) administrations have had such a horrible monetary policy that it has naturally caused the need to have more money… stimulus package, bailout, more stimulus, more bailouts. Sure that increases taxes BUT it doesn’t happen immediately, the money has to come from somewhere… there for the Fed creates the money.

Perry’s comment shows, either a lack of education or a lack of tactic… both of which make him the wrong candidate.

Posted by psmithpreston | Report as abusive

This excerpt from my 15 year-old’s European History summer reading says it all: “The ever increasing need for money compelled the emperors to raise taxes, press hard on their subjects, and to bring on inflation by debasing the coinage. These elements were to bring on the crisis that ultimately destroyed the empire.” (in reference to the Roman Empire) –

Sound familiar?

Without quantitative easing, the administration’s only course of action would be to lower capital gains taxes, reduce regulations on business (direct and indirect like the assault on coal), or try something even more distasteful to the current social agenda. Perry’s the first to setup the framework for the argument that our ECONOMIC POLICIES MUST CHANGE. Despite the flack he’s receiving, it looks to me to be a good maneuver…

Posted by NEON | Report as abusive

Dear Statistician,

Since you can do the math, do it. Gold was $35/oz in 1972. It is now above $1800. What is the rate of inflation over last 40 years? 1800/35 = 5000%. Now look at gold in 2005 and compare to today. What has been the rate of inflation in last 6 years? 1800/445=400%.

No COLA in SS means the government is lying to you. Wake up!

Posted by JackWayne | Report as abusive

The Fed under Bernanke, along with Treasury under Paulson and Geithner, have been all about shoring up the big banks – foreign and domestic – and the powerful financial institutions – read Goldman Sachs – at the expense of the USA. TARP did no good for the average American and lots of good for Goldman & Co. The “stimulus” only stimulated local government jobs, and the “auto bailout” only bailed out the UAWwhile screwing the bondholders and stockholders. that nobody from the financial community, including Bernanke, Paulson and Geithner, is being tried is a crime in itself.

Posted by Snidely70448 | Report as abusive

You talk about style versus substance? I think we’ve had just about all the STYLE we can stand from the current occupant of the White House. SUBSTANCE is all anyone should care about after everything we have gone through under the current administration. If by “style” you mean Perry should have been “politically correct”, FORGET IT! Mr Perry is dead on accurate. HOW REFRESHING that at least one major contender for the GOP nomination is telling like it is!

Posted by BorisBad | Report as abusive

In what way does that make Romney an apologist for the fed read the comment again.

“I think Ben Bernanke is a student of monetary policy. He’s doing as good a job as he thinks he can do in the Federal Reserve.”

First off being a student of monetary policy is neither a positive or a negative he is not making a statement for or against him what is telling is the “He’s doing as good a job as he THINKS he can do in the Federal Reserve.”

That actually sounds a lot more like a criticism then support for the policies the fed has been engaging in and indeed in both debates he has criticized the monetary policy and the fed and like Santorum has said he believes the fed needs to be audited. This is nothing more then a reporter for a very liberal Reuters trying to make two good candidates look bad.I’d like to point out that Romney is right that we should be concentrating on the Administration right now and not the Fed, because until Obama is gone there is nothing we can do to change the monetary policy of the US.

Posted by Zerabp | Report as abusive

“On substance, Perry is right”..WHAT SUBSTANCE?? He calls printing money treasonous and threatens ugliness in Texas. Is that what you call substance? I have some advice for you: never try to write for an intelligent audience.

Posted by sooku | Report as abusive

Amnng the tea party activists, there is a strong belief that the whole country should be shuttered. The only Americans who have a right to live are the millionaires.

Posted by sooku | Report as abusive

Herman Cain is the best choice for President. A true conservative with real experience and accomplishments (not just winning political races). Most of all, he is not a politician, just somebody who gets things done.

slick Rick Perry is a D student who is Tax Raising, Amnesty Loving, Big Governmnet RINO.

Perry has done nothing for Texas. The office of Texas Governor is weak and has very few responsibilities (the light weight Bachmann has more responsibility…and she is probably the weakest in the current field in regards to experience).

Unlike all other states, Texas is lead by its legislature (as it should be), not at all through the Governor’s office.

What Perry has managed to do is:

1. Raise Taxes billions of dollars on businesses and consumers

2. Executed health mandates against the will of the legislature and the people of Texas

3. Forced the citizens of Texas to pay for the college education of illegal immigrants

4. Engaged in the abusive use of eminent domain

5. Attempted to sell Texas roads to foreign interests

6. Pro Amnesty (in the recent campaign cycle he has taken to reversing this stance as the Tea Party has become more of a threat to him than the Hispanic caucus)

7. Engaged in wide scale cronyism by signing contracts for Texas projects to companies that give him campaign cash or for which is his former staff now work.

8. Misused the resources of Texas by having sizable security details travel with him at all times (abnormal for a governor)…even on foreign trips…all at the expense of Texas taxpayers.

9. Misused (i.e. stole) Texas taxpayer money by spending $700k on housing over a 2 year period.

Posted by cpaguy | Report as abusive

I disagree with the policies of Bernanke of just printing money with out capital that what Bernanke is doing is trecerous agreeing with Gov Rick Perry from Texas.

Posted by randallk | Report as abusive