President Bush Nominates Dr Ben Bernanke to Post of Federal Reserve Chairman

October 25th 2005

Alan Greenspan will be retiring in January 2006 and President Bush has nominated a former Federal Reserve Governor Ben Bernanke as his successor.  Nominated by Ronald Reagan, Alan Greenspan has been the FED chairman for 18 years. 

Both Alan Greenspan and Bernanke are considered rich.  It is estimated that Alan Greenspan is worth between 4 and 9 million dollars.  Bernanke’s wealth is estimated between 1.1 and 5.6 million dollars. 

According to Henry Blodget writing for Slate.com Bernanke is an academic economist, and most academics believe that the market is so efficient that stock-picking is usually a waste of time.  Some fear Bernanke will be a dove on inflation.

The Fed tries to control inflation by raising interest rates when increases in the inflation rate increase (CPI).  Raising interest rates will slow the economy because it will cost more to produce products and buy things. 

Let’s say homes prices are increasing.  One way to slow the rise would be to raise interest rates.  It would cost more for the buyer to buy a home if the interest rate is higher.  The sellers may not get as much as they would have if the interest rate were lower.

There is a debate among analysts as to whether Bernanke will increase rates enough to control inflation.  Some fear he would be a “dove” when it comes to increasing rates.  A dove has been a pejorative term for a Fed official who could tolerate higher prices if it meant a lower unemployment rate.

By Dan Wilson
Best Syndication Staff Writer

  Related Books

Keywords and misspellings:  Bermanke Bermancke reaserve