Said Krugman, "A man of great ken,
Said to signal, in crisis,
Inflation of prices,
Would get people spending again."
"But his Fed, in my own objectivity,
Has shown unexpected passivity
To use every tool
That he spoke of in school
To boost economic activity."
"To fight unemployment so brutal,
One should use the whole kit and caboodle,
But the Fed, in its thrall,
Against which, resistance is futile."
In a scathing critique entitled "Earth to Ben Bernanke", New York Times columnist and Princeton professor Paul Krugman took the Fed chairman to task for seemingly forsaking the advice that he gave to Japan's central bankers twelve years ago. Then-Professor Bernanke lectured the Japanese on their "Self-Induced Paralysis"; were they to face the "liquidity trap" of a stagnating economy and zero interest rates with sufficient boldness, wrote Bernanke, the Bank of Japan would signal a higher inflation target of, say, 4%. This would likely induce folks to take their yen out of their futons and spend them. A similar lesson would apply to today's Fed, says Krugman, but Chairman Bernanke has not followed the advice of Professor Bernanke. Has Bernanke been cowed by anti-inflation political bullying, he asks, or "assimilated by the Fed Borg and turned into a conventional central banker?"