Blogging for brainiacs: Summers vs. Bernanke
You might call it the egghead version of a celebrity spat.
Former Treasury Secretary Larry Summers is squaring off against Ben Bernanke to debate economic theory on the ex-Fed Chairman’s newly-launched Brookings Institution blog.
However, this is hardly on the order of a Hollywood cat fight.
Among the “nasty” comments from Summers are, “Ben grudgingly acknowledges that there are many theoretical mechanisms that could give rise to zero rates.” While Bernanke replies, “A shortcoming of (Summers’) secular stagnation hypothesis is that it focuses only on factors affecting domestic capital formation and domestic household spending.”
Yahoo Finance Senior Columnist Michael Santoli says there’s no question the Marquis of Queensbury rules are being used here.
“Lots of mutual respect,” he notes. “There is no way that Ben Bernanke, in his inaugural blog post, directly says ‘I will now tell you why I don’t believe in Larry Summers’ secular stagnation hypothesis.”
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Yahoo Finance Editor in Chief Andy Serwer adds that even though the topic seems awfully dry, he likes what he sees.
“It is pretty wonky, but it’s actually kind of interesting,” he says. “They’re using modern tools of communication. We’ll be following this second-by-second. This is our version of a gossip war.”
Santoli agrees.
“It’s an interesting, serious kind of big picture argument,” he points out. “It’s not about the next Fed meeting.”
So what are they debating exactly?
“Is there something about today’s world economy that makes us save too much, invest too little, grow too slow,” Santoli explains. “Summers’ argument speaks to very aggressive fiscal spending to try to bridge this gap and Bernanke is saying it’s more normal than not and we should be able to grow out way out of this.”
However, Santoli wonders about the serendipity of the exchange…he smells the possibility of a conspiracy going on here.
“Something tells me the Brookings Institution’s Distinguished Resident Fellow, Ben Bernanke, had an idea that that the former President of Harvard and the nephew of two Nobel Prize winners in economics, Larry Summers, was going to maybe have an answer,” he says. “It’s kind of an orchestrated thing, they’re being very cordial about it, they’re inviting each other to disagree.
Sewer adds, well, at least we can dream of two of the biggest names in economics taking swipes at one another.
“It’s like Kobe and Shaq and Lindsay Lohan and Hilary Duff,” he laughs. “They’re raising awareness on economic issues.”
