When Should the Fed Crash the Party?

Peter Bernstein pits Mellon against Keynes (and Greenspan and Bernanke against the tide). The tome is shutting off the open bar to prevent the hangover.

(h/t to The Big Picture)

Editor’s Note:

Bernstein is author of two books I’ve read, The Power of Gold: The History of an Obsession and Against the Gods: The Remarkable Story of Risk. They are both quite worthy, and both certainly relevant to our “inflation ex-inflation” (quote pilfered from Barry Ritholtz) times. However, I found The Power of Gold more enlightening than the latter – Bernstein waxes poetic on the history of the metal, and concludes its worth is only in the eyes of the beholder. Against the Gods, on the other hand, won’t hit you like a Louisville Slugger unless you have some minimal exposure to elementary statistics. I’ve long since passed “Gold” on to a commodities trading friend, but Against the Gods still sits on the shelf. And if someone can develop a salient, but not necessarily completely risk-averse, argument as to why the Fed (and Congress, and the Treasury, and the rest of the Administration) should play hands off here, invariably allowing the meek to inherit (or at least take full economic advantage of) the scraps, I’ll send them my un-abused copy of Against the Gods for their reading pleasure.

Post your thesis in the comments, or put it on your blog and post a link down yonder. In addition, rationale to the contrary (why governmental bodies should step in and start paying your neighbor’s mortgage) will also be accepted, although taking that path may be fraught with risk.

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