James Pethokoukis has this take:
“During Ben Bernanke’s Senate testimony this morning, Republicans again lambasted the Fed chairman for worrying too little about the inflationary potential of his low interest rate/quantitative easing monetary policy. From the WSJ:”
A testy exchange between Sen. Bob Corker (R-Tenn) and Bernanke. Corker says Bernanke has sparked a global currency war and created “faux” wealth. Bernanke says he’s not engaged in a currency war or targeting the currency. Corker says Bernanke is the biggest monetary ‘dove’ since World War II, proud of it and degrading society. Bernanke shoots back that he’s got the best inflation track record among Fed chairman since World War II. Corker says Bernanke is punishing savers with his low interest rate policies and throwing seniors under the bus. Bernanke says he’s looking out for long-term unemployed and that the stronger recovery he seeks will help savers. Following Corker’s advice, he adds, would throw the economy back into recession.
The GOP may think it´s giving Bernanke a hard time! Quite the contrary. Bernanke´s ‘defense’ is full proof. The most popular measures of inflation – the Core measures of the PCE and CPI (please, let´s avoid the ‘ups and downs’ of the Headline measures because they´re pretty uninformative about ‘trend’ inflation), in particular the Fed-preferred Core PCE, has never been so low, even quite a bit lower that the previously implicit and now explicit 2% target.
Bernanke responds that he´s “looking out for the long-term unemployed” by trying to engineer a ‘stronger recovery’. That´s the point Senator Corker (if he was assisted by a good economist) could have ‘nailed’ Bernanke.
He could say: Oh my! You really have the best inflation track record among Fed Chairmen since WWII, but on the other hand you have the worst aggregate spending (NGDP) growth record since the late 1930s! So tell me, how you can say with a straight face you´re “looking out for the long-term unemployed? And you´ve been keeping rates at zero for more than four years without much to show in terms of growth and employment gains.
And then showed him any version of this chart: