As word leaked out this morning that Fed Chairman Ben Bernanke will be reappointed to a second four year term a few items from Greenspan’s personal notes most recently printed in the book Maestro are worth noting.
Greenspan noted in the book Maestro, he was under pressure not to raise interest rates and especially not to raise rates during an election year. The book, a good read, noted that the purpose of interest rate hikes are to slow our economy and no incumbent president looking for re-election wants a slower economy.
We are not claiming conspiracy or anything of the like, what we are saying is it would be naive not to think that at some time during this re-appointment period, Bernanke and Obama had a visit to see if their views were similar concerning the timing and control of the expected recovery. President Obama likely would not want rates raised during his next re-election year.
This gives us a view that inflation chances are more likely than an early stifling of our economy.