Anatole Kaletsky Watch [1]

In The Times (of London) today, Anatole Kaletsky wrote:

"Investors seem to be losing faith in the Fed’s willingness to maintain the value of the dollar. If Mr Bernanke decides to stop tightening while inflation is still moving upwards, we could well see financial markets decide to test the new Fed Chairman’s mettle — just as they tested Mr Greenspan with the stockmarket crash of 1987 and Paul Volcker with the collapse of the dollar and explosion of gold prices in 1981.

I am convinced that the Fed will eventually pass this test, that any US inflation scare will turn out to be a minor hiccup and that the dollar will, in time, re-establish itself as the most trusted currency in the world. A year from now the dollar will almost certainly be stronger than it is today against the euro and the pound and gold will be valued again for its usefulness in dental fillings, rather than its monetary magic. But first, investors will have to be persuaded of the Fed’s ability to control US inflation — and of Professor Bernanke’s ability to control his words."

You can find Sean Corrigan's critique of both Kaletsky and Martin Wolf (of The Financial Times) here.

In October 2005 Kaletsky wrote:

“Mr Greenspan, together with his predecessor Paul Volcker, and if all goes well, his newly announced successor Ben Bernanke, will take pride of place when historians try to understand the transformation from the solid golden world of Midas and Mammon to the modern global economy, where completely worthless bits of paper and coded electronic signals are sufficient to represent all material dreams and aspirations and keep billions of people permanently in their thrall.”