The Fed's Talking Up Inflation Is Playing With Fire
Henry Kaufman's criticism of six of the main premises and conclusions put forth in Federal Reserve Chairman Ben Bernanke's speech of October 15 could use a seventh element ("," op-ed, Oct. 20). In the fourth paragraph of the section of the speech entitled "The Objectives of Monetary Policy" (see), Mr. Bernanke states, ". . . whereas monetary policymakers clearly have the ability to determine the inflation rate in the long run, they have little or no control over the longer-run sustainable unemployment rate." While the latter clause of this assertion seems obvious, should it be accepted as a given that the policymakers can control inflation?</br></br>The dramatic price increases that plagued Diocletian's Rome, post-revolutionary France, or numerous nations in the 1970s, including the U.S., of course, would argue that inflation, while often originated and encouraged through central bank money creation, usually ends with mass fear of currency value, and the coincident price spiral.</br></br>Mr. Bernanke's statement leads one to ask: If the Fed has "little or no control" over the unemployment rate, why is our central bank charged with a dual mandate that includes fostering maximum employment?</br></br>John Sirianni</br></br>Eau Claire, Wis.