Bernanke, the person nicknamed ‘Helicopter Ben’ because he said it would be easy to fight deflation even if it had to be done by throwing money out of helicopters, gave us ‘ZIRP,’ which means ‘zero interest rate policy.’ Now he seems to be leaning toward ‘NIRP,’ ‘negative interest rate policy.’ He is an economics professor now. We can only hope that his students do some outside reading, like Ludwig von Mises.
Jeff Cox and Katie Kramer of CNBC wrote this:
Former Fed Chairman Ben Bernanke thinks policymakers should give serious thought to implementing negative rates.
‘Since that can’t be assured, and since the current low-interest-rate environment may persist, there are good reasons for the Fed and other central bankers to consider changes in their policy frameworks,’ he added. ‘The option of raising the inflation target should be part of that discussion. But … it is premature to rule out alternative or potentially complementary approaches, including the possibility of using negative interest rates.’
This post was published at David Stockmans Contra Corner By Bert Dohmen, Forbes ‘ September 19, 2016.