All Bernanke, all the time

It's FOMC meeting day two and, in case you missed it yesterday, the Wall Street Journal had a series of three articles in the op-ed section (all free!) that touched on commentary from back in 2003, commentary in both the editorial section of the WSJ and by Fed Chief Ben Bernanke after Fed meeting transcripts from that era were released recently.

The lead op-ed piece - Bernanke at the Creation - provides this summary:

The Federal Reserve's Open Market Committee meets today, amid a debate over how and when to remove the flood of liquidity it has poured into the economy in the last 18 months. Fed officials say not to worry, they're as vigilant about inflation as ever -- which is itself a reason to worry. We've all seen this movie before, when the Fed's failure to act in time gave birth to the housing bubble and credit mania that eventually led to panic and today's recession. Will it make the same mistake now?

We remember that 2003 debate because it turns out we played a part in it. The Fed recently released the transcripts of its 2003 FOMC meetings, and what a surprise to find a Journal editorial the subject of an insider rebuttal from none other than Ben Bernanke, then a Fed Governor and now Chairman. We had run an editorial on monetary policy on the same day as the Dec. 9, 2003 FOMC meeting, and Mr. Bernanke clearly didn't take well to our warning about "Speed Demons at the Fed."

We reprint nearby both Mr. Bernanke's comments and our editorial from that day. Readers can judge who got the better of the argument, but far more important is what Mr. Bernanke's reasoning tells us about the Fed today. Our guess is that it won't reassure holders of dollar assets.

Other links: Slack Labor Markets will Hold Down Prices and Speed Demons at the Fed.