Squawk Box
Jude Wanniski
July 7/8, 2005


From: Jude Wanniski  <jwanniski@polyconomics.com        
To:      Ben.S.Bernanke@ * * * * *.GOV                                               
Subject: squawk box
Bcc: Poly
9:23 am, 7/8/2005

I missed the opening, but caught most of the interview.  Your maiden voyage was a success, I'd say.  As you might expect, I think you are in error in seeing a "global savings glut" as the reason for low long-term interest rates.  Cash-flow Keynesianism. There is always a sense that capital will flow to those parts of the world economy that are seen as likely to produce higher rates of return than others, and the U.S. economy is now that relative magnet for capital. You did mention "low-inflation expectations" as one explanation of the conundrum and you need not have gone beyond that. It's the primary reason for low bond yields. Gold at $425 is predicting a 20% rise in the general price level, but over a 10-year period, which works out to low bond yields. If Thomas can produce tax cuts on capital, the gold price will fall further.

I'll check Bloomberg to see if you said anything important at the open of the show. They should have asked what you expect the Fed to do and you would have dodged.


To: Bernanke
Subject: squawk box

4:35 pm, 7/7/2005

I see you will be on squawk box tomorrow morning. I was going to golf, but weather says heavy rain and thunderstorms so I will watch you instead.

If G-8 comes up... global warming esp. Here is a website you should be able to site on the President's behalf..... The dopey idea that the science is settled is undermined with the Oregon petition....



PS  Hope you say you would like to see the Fed pause. The stock market should take off.