Ralph Benko

Mitt Romney is the favorite to win the Republican nomination for president. If nominated, the campaign against Obama may well hinge on the dramatically different views on monetary policy between Obama’s Fed chairman, Ben Bernanke, and that of R. Glenn Hubbard. Hubbard is dean of the Graduate School of Business, Columbia University, former Chairman of the President’s council of Economic Advisers, and, with Harvard’s N. Gregory Mankiw, one of Gov. Romney’s most trusted economic policy counselors.

Hubbard, with journalist Peter Navarro, has written an important book: Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity (foreword by public intellectual — and Supply Side doyenne — Amity Shlaes).

This books lays out a credible blueprint for the restoration of American prosperity. Of most striking relevance is the chapter on “Why Easy-Money is a Dead End,” and, in particular, why “The Road to American Prosperity Cannot be Paved with a Cheap Dollar.”

“Fed chairmen such as William McChesney Martin and Paul Volcker have fiercely protected the independence of the Federal Reserve and conducted Fed policy with price stability and sound money foremost in their minds. But the United States has also experienced another type of Fed chairman. This type is an activist who strongly believes that monetary policy should be used in a discretionary manner not just to keep the American economy on its basic track but also to fine-tune the economy over the ups and downs of the business cycle.

Despite their successes in some important areas, our last two Federal Reserve chairmen, Greenspan and Bernanke, have taught us that there is much truth in what [Milton] Friedman said about the dangers of discretionary activism.”

Contrast Hubbard’s hawkish stance against “the dangers of discretionary activism” with Chairman Bernanke’s rhapsody for the exercise of such power in his recent lecture at George Washington University, entitled Origins and Mission of the Federal Reserve.

Here’s Bernanke:

Ralph Benko

Ralph Benko, author of The Websters’ Dictionary: How to use the Web to transform the world. He serves as an advisor to and editor of the Lehrman Institute's thegoldstandardnow.org and senior advisor to the American Principles Project.