Tuesday, August 25, 2009

Death to a Conspiracy Theory?

The only good Obama "conspiracy theory" I could come up with was one that was rumored in the mainstream: Obama would appoint his adviser Larry Summers to be the next Fed chairman.

The thinking is that Bernanke is an inflation hawk and would raise interest rates if inflation expectations ran high. While debt-per-GDP is expected to grow exponentially due to the health care & entitlements costs, Bernanke won't help the gov't out by monetizing it. Hence, some thought Obama would appoint his friend Summers to be more aggressive in holding rates down and allowing inflation to rise to levels not seen since the early 80s-- in order to bail out the government's balance sheet.

Now that Obama is reappointing Bernanke, perhaps that conspiracy theory finally goes out the window. Or we can wait until Obama's second term... :-)

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