Bernanke is least inflationary Fed Chairman?

[1000-points-of-fright]

So I was channel surfing last night and came across Rachel Maddow talking about how Republicans all agree on facts that aren't really facts. One example she gave was Newt's claim during the last debate that Bernanke is the most inflationary Fed chairman we've had in I don't know how long. She then showed a graph that had Bernanke as the least inflationary out of the past 5 or 6 Fed chairmen. With the amount of $$ introduced into the system over the past decade, I find this difficult to believe.

Is she correct or is she just incorrectly defining inflation as price increases instead of using the actual definition which is increase in the money supply?

[trey4sports]

dont know how she is coming to that conclusion, because he fails at both. Inflation both in terms of money expansion and consumer prices has gone up steadily during his reign.

[matt0611]

They might be using government CPI numbers but I'm not sure. And even if they did they have changed how they are calculated so its not even directly comparable.

If you go by the amount of money actually injected into the system (the old definition of inflation), Bernanke is by far the most inflationist chairman ever.

Once those dollars start getting into the system (and they have started to), watch out.

Once again, its just Maddow twisting the truth as she always does.

[Zippyjuan]

There are delays in Fed actions reaching their full impact in the market. It is too early to say if Bernanke has had inflation the most under control or not. The money they tried to pump into the economy has not spread yet- inflation could certainly pick up when it does. And there are many market factors which are out of the control of the Fed- it has less control over things than some people think. Just look at how successful (or rather unsuccessful) they have been in trying to reduce unemployment. They can have some influence on the economy but they can't control it.

[acptulsa]

Yeah, Volker wishes they didn't include food or gasoline back when he was Fed chair.

[Zippyjuan]

There are two CPI numbers- one with food and energy costs and one without. Both get reported. The one with is called the "all items index".
http://www.bls.gov/news.release/cpi.nr0.htm

The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau
of Labor Statistics reported today. Over the last 12 months, the all
items index increased 3.6 percent before seasonal adjustment.

The gasoline index rebounded from previous declines and rose sharply
in July, accounting for about half of the seasonally adjusted
increase in the all items index. The food at home index accelerated
in July and also contributed to the increase, as dairy and fruit
indexes posted notable increases and five of the six major grocery
store food groups rose.

The index for all items less food and energy increased as well,
though the 0.2 percent increase was slightly smaller than the two
previous months. The shelter index accelerated in July, and the
apparel index again increased sharply. In contrast, the index for new
vehicles was unchanged after a long string of increases. The index
for household furnishings and operations was flat in July as well,
and the recreation index declined slightly.

The 12 month change in the all items index remained at 3.6 percent
for the third month in a row. The change in the index for all items
less food and energy continued its upward trend, rising to 1.8
percent in July, with the shelter and apparel indexes contributing
notably to the acceleration. The energy index has risen 19.0 percent
over the past year.

[Zippyjuan]

Yeah, Volker wishes they didn't include food or gasoline back when he was Fed chair.

Volker inherited high inflation. He became Chairman of the Fed in August 1979 and the US inflation rate peaked in 1981 at 13.5%- it had been slowly and fairly steadily rising since the 1960's. . By raising interest rates sharply (at the cost of higher unemployment) almost as soon as he became Chairman (under Ronald Reagan) raising the Fed Funds rate to 20% and the Fed Prime Rate to 21.5% by 1981. Within two years the inflation rate was down to 3.2% by 1983. http://en.wikipedia.org/wiki/Paul_Volcker

Volker took over with a high inflation rate and left with a low one. Bernanke could very well face the opposite- coming along at a time of low inflation and leaving with a higher one.