Paul Krugman vs. Bob Corker

Senator Corker, New York Times columnist and Nobel prize-winning economist Paul Krugman is calling you out.

A post on Krugman’s blog Tuesday titled “Merchants of Misery” focused on Corker. It links to a Wall Street Journal piece describing how Corker met with Federal Reserve chairman Ben Bernanke Tuesday.

After that meeting, Corker told reporters he thinks the Fed’s dual mandate of promoting price stability (i.e., managing inflation) and pursuing maximum employment needs to be cut in half.

In other words, forget employment. Corker thinks the Fed needs to focus on getting inflation and interest rates right.

That ain’t sitting well with left-leaning economists like Krugman, who have practically begged Congress and the White House to pursue more fiscal policy moves (fiscal stimulus is what lawmakers control – taxes, spending programs, stimulus, etc.) to bring down unemployment.

But Congress is all about belt-tightening these days. That leaves the Fed, which controls monetary policy (the flow of money in the economy), to do something. Which it recently did with the big quantitative easing announcement, oh, you may have heard about recently.

Nevertheless, Republicans like Corker think the Fed needs to ratchet its efforts like that way down.

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