In Case You Missed This
Jude Wanniski
August 11, 2005


From: Jude Wanniski
To: "Bernanke, Ben S." <Ben_S._Bernanke@* * * * .gov>
Subject: RE: In case you missed this.
Bcc: Poly, Breen

Hi Ben:

I should come down again and have another dinner with you at the Palm. It has been eight months since we had our sit-down. I do appreciate how you have been willing to engage me in discussion about ideas that I believe are critical to straightening out the US and world economies. And how you have kept an open mind. To be honest, though, the only thing I have to show my staff for the time spent was your statement three or four months ago that the natural ff rate may be below 3.5%. But that was quite a lot, and I was heartened by your appointment to the CEA (although I think I told you I have a lot of skeptical clients).

I dropped a note today to Karl Rove, by the way, with oil running up again (in tandem with gold). I told him he had to try to understand why there will always be an energy crisis until we return to a gold standard, a la Bretton Woods, and that if he didn't understand, he should check with you and you would explain it to him. You can at least explain my hypothesis to him, I believe, and if you don't accept it, you should tell him why, and tell me too. (I did say that there could be temporary surpluses of oil in global recessions, which is what Greenspan seems determined to produce.)

As for supply-siders, they are all over the lot, so it will not be possible to please them all.  I for one am always ready to listen to arguments for higher taxes, more regulation and restraints on free markets, as I might be persuaded that under certain circumstances they would "invite," not "stimulate" (a Keynesian idea), long-term growth.  I'm not "anti-government," in other words.  (The Grover Norquist idea of opposing all tax increases is dumb, and Grover knows I believe that.) I would support higher ad valorem tariffs if they would be offset by lower tax rates on capital, for example, and I would have insisted on an increase in the federal gasoline tax to finance the infrastructure in the transportation bill. (Gas taxes have not kept up with inflation. When gold was $35 oz, regular unleaded gas was 25 cents/gallon. And of course I am in favor of most of the environmental regulations, but believe Kyoto is a global menace... and thank goodness for GWB opposing it. Anthropogenic GW is a hoax.

If you would like to discuss any of this on the telephone, I'd be happy to do so. I'd prefer not to come to Washington in August. It is bad enough in Morristown.


PS  As CEA chairman, you have to be intellectually responsible for monetary policy and should not dodge it on the grounds that it is the Fed's purview. Your hands are not on any levers of power, so you can give the President the big picture, monetary policy included. You are failing him if you believe the Fed is in error, but think you must keep that opinion to yourself. I don't mean to lecture you Ben, only to tell you I have known CEA chairman going back to McCracken in 1969 and know there is no Chinese wall between you and the Fed. Quite the contrary, your experience at the Fed should make it easier for you to speak up on Fed policy when you are in agreement or disagreement, not necessarily in public, but certainly to Rove and the President.

At 04:17 PM 8/11/2005, you wrote:

I had seen it.  I can understand that gold people would not be comfortable with me at the Fed, an opinion to which they are entitled (although I have listened to you and tried to keep an open mind.) Putting aside monetary policy, which is not part of my current job, I hope though that I can persuade supply siders that I am committed to a program of low taxes, low regulation, and free markets as the way to stimulate long-term growth.   

-----Original Message-----
From: Jude Wanniski []
Sent: Thursday, August 11, 2005 2:52 PM        
To:      Ben.S.Bernanke@ * * * * *.GOV       
Subject: In case you missed this.

I know Tamny. He's a functionary at CATO. A nice fellow, a devoted fan of mine and a gold guy. He has picked through your checkered past and presented an unpleasant picture of you for fellow supply-siders.  If you had mentioned gold positively in the last year as an important info signal, this wouldn't have happened. As for CATO generally, it is almost wall-to-wall Friedmanite, as Milton captured it yeas and years ago on the idea the "free market" should set the price of gold.