Jude Wanniski
July 26, 2005


From: Ben.S.Bernanke@***.gov
Subject: RE: china/hubbard
To: "Jude Wanniski" < >

From Ben S. Bernanke, 2:59 pm, 7/26/2005

Hi Jude.  I have tried to keep a low profile and to focus on working inside the Administration.  I read what you send me though.

I don't want to initiate a debate on the "global savings glut", but I would like to clear up what I think may be a misapprehension.  The (possibly poorly chosen) terminology notwithstanding, I don't have any Keynesian ideas in mind here at all.  Just simple classical supply and demand.  If desired savings is high, and effective access to capital investments is low (because of issues of governance, transparency, etc., as well as government policies that reduce access to potential investments in some emerging markets), then the equilibrium real interest rate will be low.  Nothing Keynesian about it. Of course, I realize that's not your only source of disagreement with the thesis.


-----Original Message-----
From: Jude Wanniski []
Sent: Tuesday, July 26, 2005 2:02 PM
To: Bernanke, Ben S. Ben.S.Bernanke@***.gov
Subject: china/hubbard

Hi Ben... Haven't heard from you lately.  You're not in the news, or have I missed you.  I ask because of Glenn Hubbard's piece today in the WSJ.  It's not too bad, although there is nothing memorable in it. He thinks he knows Japan, but there's too much in the piece indicating he has been misinformed about much of Japan's economic history.  Japan's "stumble" in the 1990s was the result of a U.S. push, by Nick Brady, in the last of the Bush years.  Japan raised its effective capital gains tax on Jan. 1, 2000, to satisfy Brady, and the Nikkei flamed out with a top of 38,000.

Don't be a stranger. Drop me a line sometime. You still get all our work, don't you? You did see my piece on the yuan yesterday, no?