Bush Banking on Bernanke

Industry officials are already applauding Bush’s decision to choose Bernanke to lead the Fed. “Ben Bernanke knows monetary theory forwards and backwards, and he himself has contributed a great deal to the existing body of knowledge on the subject,” said Dorsey Farr, Ph.D., vice president, director of asset allocation and portfolio strategy at Wilmington Trust. “He is an advocate of inflation-targeting,” Farr says, and would “likely advocate establishing a formal inflation target for the Fed.” Bernanke has also expressed “skepticism about the appropriateness and feasibility of central bank intervention to deflate asset-pricing bubbles–a topic of considerable debate over the past few years,” Farr says. “So, while Bernanke might publicly express concerns about the level of asset prices–as Greenspan did with his comments about irrational exuberance and his recent statements about the housing market–his implementation of policy would likely mimic Greenspan’s laissez faire approach toward asset prices.”