Hour Two: That'll Be 'Inflation' to You

With the U.S. economy wobbling, Federal Reserve Chairman Ben Bernanke opts to spur growth now and deal with inflation later. And no, it's not "stagflation."

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BILL WOLFF (Announcer): From NPR News in New York, this is the BRYANT PARK PROJECT.

RACHEL MARTIN, host:

Live from NPR Studios at Bryant Park in midtown Manhattan, this is the BRYANT PARK PROJECT from NPR News: news, information, book-learning. I'm Rachel Martin.

ALISON STEWART, host:

And I'm Alison Stewart. It is Friday, February 29, 2008, and it's leap-day, in case you didn't know.

MARTIN: Yup.

STEWART: Extra day in the year. I don't know if people do anything specific. I'm going to leave work early. Did I tell you guys that?

MARTIN: Oh, all right, then.

STEWART: Yeah, I just decided just now.

MARTIN: Thanks for sharing that.

STEWART: Yup, I just decided.

MARTIN: I was trying to think of something special to do last night. What can I do on leap-year day? And it hurt myself thinking about it, so...

STEWART: I might home backwards and see if anyone notices. Manhattan, nobody's going to notice, probably not.

MARTIN: Not at all.

STEWART: Okay. We've got a show. We're going to do it for you. We're going to talk about politics. We're going to talk about Vermont. It's one of these states, crucial primary coming up. We've gone through Texas, Ohio, Rhode Island, and now we are going to talk about Vermont, the Green Mountain State. Who are the people there? What's in their heads as they head to the polls? A performance by the group The Bowerbirds. Two of them live in an Airstream, North Carolina. They make great music, great Sunday-morning music. If it was Sunday morning and I put on the CD, I'd be just really happy, cozy.

MARTIN: Yup.

STEWART: It's cool. We're also going to wrap up the news from Iraq in a segment that we call the Week in Iraq. We're also going to explain to you what that book-learning's about, the debut of the BRYANT PARK PROJECT Book Club. And we'll get today's headlines in just a minute, but first, here's the BPP's big story.

(Soundbite of music)

President GEORGE W. BUSH: I don't think we're headed to a recession, but no question we're in a slowdown.

STEWART: So said President Bush yesterday. You know what else happened? The U.S. dollar hit an all-time low against the Euro, while today the price of oil hit a record high. Meanwhile, the first-time claims for jobless benefits, they're up. Food prices are up, and the gross domestic product is way down. So what does that all mean?

Well, that's a point of some debate, but at the very least, it means inflation. Federal Reserve Chairman Ben Bernanke told a Senate banking committee that while there is inflation, there's no stagflation. That's inflation combined with a stagnant economy. It was a big problem back in the 1970s. Bernanke said he's focusing now on stimulating the economy, and he expects inflation to subside.

Mr. BEN BERNANKE (Chairman, Federal Reserve): I don't think we're anywhere near the situation that prevailed in the 1970s. I do expect inflation to come down. If it does, then we will have to react to it, but I do expect that inflation will come down and that we will have both return to growth and price stability as we move forward.

STEWART: But while Bernanke and President Bush say it's an economic stumble, presidential hopeful Barack Obama said yesterday it's closer to a face-plant, and he says he knows who's to blame.

Senator BARACK OBAMA (Democrat, Illinois; Presidential Candidate): We are not standing on the brink of a recession because of forces out of our control. I think that's very important to understand. This was not an inevitable part of the business cycle. It was a failure of leadership in Washington.

STEWART: That's the BPP's big story. Now let's get some more of today's headlines from Rachel.

WOLFF: This is NPR.

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