by Calculated Risk on 1/16/2008 02:19:00 PM

I recommend this article from the Sunday New York Times magazine The Education of Ben Bernanke, by Roger Lowenstein. It is long, but well worth reading.

“I think Bernanke is in a very difficult situation. Too many bubbles have been going on for too long. The Fed is not really in control of the situation.”
Former Fed Chairman Paul Volcker (Chairman from 1979 to 1987) to Roger Lowenstein.

While on the subject of Paul Volcker, here is a speech he gave in February 2005.

Click image for video. Former Fed chief Paul Volcker spoke in Feb 2005 at the second annual summit of the Stanford Institute for Economic Policy Research. In his keynote speech he warned that the nation was facing 'huge imbalances and risks'.

Volcker always talks about fiscal discipline, and that bring us back to the Lowenstein piece:

Bernanke updates Bush and Vice President Cheney several times a year, but he prizes his political independence. Unlike Greenspan, he has avoided taking positions on economic issues that do not relate to the Fed’s mission. (An exception is his affirmation that he “believes in the laws of arithmetic,” a none-too-subtle rejection of the Bush ideology that championed deficit-spawning tax cuts.)

I couldn't have said it better.