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Bernake: If declines in the dollar and increases in commodity prices were creating upward pressures on consumer prices and causing expectations of future inflation to rise, those developments would be taken extremely seriously by the Committee and would have to be balanced against the high rate of unemployment that you posit in your hypothetical. Luskin: This is no hypothetical -- it's happening right now. We have a 10% unemployment rate, the dollar is falling, gold is a week or two off all-time highs, and oil prices have more than doubled this year. So why is the Fed running the easiest...

So let me do the preachers of Armageddon one better. Today's stock market isn't just the “worst since the Great Depression,” like they're so fond of saying. No, it's even worse than the Great Depression. Take a look at the chart, below. It shows the daily progress of the S&P 500 in terms of percentage change from the very top. The brown line is the change from the recent all-time highs on October 9, 2007. The blue line is the change from the all-time highs just before the Great Depression, September 6, 1929. As of yesterday's close (Thursday, March 5),...

Yesterday's Politico story puts it this way: Generally, financial analysts say the stock market likes Republicans more than Democrats. And while predicting market movements is as difficult as predicting the winner of the World Series in August, some experts say the market is already anticipating an Obama win on Nov. 4 and has at least partially accounted for it. “Potentially, you could see a one or two-day rally on a McCain victory, and not much of a reaction if Obama wins, because that’s what’s expected at this point,” said Justin Fishkin, a partner at The Cypress Group, a financial services...

Fiscal Policy: President-elect Obama says he's modeling his recovery plan on Clintonomics because it pulled the economy out of a ditch last decade. But that's an old myth — and a dangerous one at that."I've got an economic plan similar to Bill Clinton's," Obama has said, including tax hikes on the rich and Keynesian pump-priming, among other new government spending. He rationalizes that Clinton raised taxes during a recession, and look what happened — average wages went up, along with economic growth and the stock market. And eventually the Treasury reported surpluses after decades of deficits. Obama is even recycling...

WORST JOB IN THE WORLD Which circle of Hell would this be, exactly? For one's sins, one spends eternity as a Democratic spokesman with the duty of finding a rationale for why everything is terrible: According to one Democratic operative, the Dow's record close is "not an achievement but a failure." Robert Weiner, a Democratic strategist and former member of the Clinton administration, said people should remember it's taken nearly seven years for the Dow to break its previous record close, which happened on Jan. 14, 2000 - near the end of Bill Clinton's presidency... He said Tuesday's stock market...

[Several hyperlinks to supporting documents are missing from the article below. To access them, follow the URL to the web.] KRUGMAN HOLDS BACK THE SOCIAL SECURITY TIDE (KRUGMAN SPIDERHOLE WATCH 5) Here's a fearless prediction: President Bush's vision of Social Security reform with private investment accounts will be enacted into law in his second term. It's in the bag. What makes me so sure? Two reasons. First, I can see how much the liberal establishment fears it. And second, their arguments against it are utterly impotent. Here's a case in point. On Tuesday, bellwether "angry liberal" pundit Paul Krugman dragged...

BLOOMBERG'S CREDIBILITY "PLUNGES"Bloomberg News reports: Tasers Should Be Banned, Human Rights Group Says; Shares PlungeNovember 30, 2004 08:11 EST -- Police and military officers should be banned from using Taser International Inc. stun guns until their safety can be proven, Amnesty International said in a report. Taser's shares plunged 50 percent in early trading. Uh, no... the stock simply split 2:1 today. Thanks to our correspondent "Irrational Exuberance" for the catch.Posted by Donald Luskin at 8:22 AM

TAXATION AND SLAVERY: ROBERTS RESPONDS TO THE CRITICS    The following was sent to me by Paul Craig Roberts, in response to criticism of his column comparing the income tax to slavery -- which I myself defended last week. From time to time people write to me asking how they can become columnists. I tell them that they do not want to become columnists. Read on. Many years ago when I was offered an appointment at the University of Rochester, I remember wide-ranging discussions of economic issues with the many distinguished economists who were at Rochester at that time. One...

DIEBOLD-FACED LIES    When someone says "this isn't about money," you can be sure it's all about money. And when Paul Krugman says " there's nothing paranoid about suggesting" something, you can be sure that what he's suggesting is a crackpot conspiracy theory, built on lies and innuendo, that only a true paranoid could believe. What "there's nothing paranoid about suggesting" in Krugman's New York Times column yesterday is that touch-screen voting machines are part of a Republican plot to hijack elections. He sanctimoniously warns, "let's be clear: the credibility of U.S. democracy may be at stake." The proof? Krugman...

COVERING UP FOR THAT COVER   A rare Paul Krugman correction in the New York Times? Not quite. Today's corrections section states, "An article last Sunday about the differing covers on the American and British editions of a book by Paul Krugman, the economist and Op-Ed columnist for The New York Times, Page, referred incorrectly to a caricature on the British version. According to groups that distribute the image, the drawing of Vice President Dick Cheney, with the words 'Got Oil' on his forehead and a dark mustache, was intended to evoke the 'Got Milk' advertising campaign, not to suggest a...