Giving credit where it may be due

Larry Kudlow writes that maybe we ought to be giving Ben Bernanke some credit for an improving economy.

Interestingly, while the inflation rate has remained subdued, so have market-price indicators, such as gold, the dollar and commodity indexes. The suggestion here is that Bernanke, rather than mounting a high-inflation policy, has been avoiding deflation.

At the end of the day, the Federal Reserve is not the engine of growth. Low tax rates, light regulation and limited government spending create the incentives for more rapid economic expansion and prosperity-inducing opportunities.

But if I have this story right, the market monetarists want the central bank to enforce a nominal GDP growth rule, which will avoid both deflation and inflation, and thus give fiscal incentives breathing room for a more rapid job-creating expansion.

I don’t agree with Bernanke’s unemployment target or his criticism of lower government spending. But I confess that he may have the monetary-stability story more right than I originally thought.

If gold remains soft, and King Dollar steady, perhaps the former Princeton professor deserves a little more credit. He may have gotten that story right.

I like it when a conservative is willing to break free of the pack and give credit to someone who may deserve more credit than he is being given by everyone else who is in lock step with the prevailing conservative view! Isn't that what we would want from the other side when we have ideas of merit?