Greg Mankiw on the Financial Funk

Greg Mankiw's Blog: If I were a member of Congress...

What is my opinion about all this? I am of two minds about the complex situation we find ourselves in.

On the one hand, I share many of the concerns of the letter signers and other critics of the Treasury plan.

On the other hand, I know Ben Bernanke well. Ben is at least as smart as any of the economists who signed that letter or are complaining on their blogs or editorial pages about the proposed policy. Moreover, Ben is far better informed than the critics. The Fed staff includes some of the best policy economists around. In his capacity as Fed chair, Ben understands the situation, as well as the pros, cons, and feasibility of the alternative policy options, better than any professor sitting alone in his office possibly could.

If I were a member of Congress, I would sit down with Ben, privately, to get his candid view. If he thinks this is the right thing to do, I would put my qualms aside and follow his advice.

I don't know Ben Bernanke, though my initial "feeling" for him is that, while he may know A LOT, he has analysis paralysis. It seems to me that he's a little late to this party (as in, he got there after the cops closed it down and there are just a few folks left to clean it all up), but action taken now to avert a calamity of colossal proportions later (maybe today) is better than the alternative. Of course.

But I like Mankiw's views on a lot of things. His advice here is sound. Where's the leadership in Washington? Oh, yeah, forgot.