Future Shock at the Fed

By JAMES GRANT
Published: October 26, 2005

PRESIDENT BUSH's choice to succeed Alan Greenspan as chairman of the Federal Reserve Board has raised a roar of approval. Economist, scholar, presidential counselor and former Fed governor, Ben S. Bernanke is a nominee from central casting.

But there is one rub. The man with the gray beard and the perfect résumé - winner of the South Carolina state spelling bee, Ph.D. from the Massachusetts Institute of Technology, former chairman of the Princeton economics department - professes to believe the impossible. He insists that the Fed can keep the economy chugging and prices stable just by pushing a single interest rate (the so-called federal funds rate) up and down.