Bernanke vs. Buffett: Who's Right on the Economy?

Ben Bernanke is in the hot-seat today for his role in the extraordinary events of late 2008 (more on that later). Just 24 hours ago, however, the Fed chairman was making headlines for more pedestrian reasons: the conduct of monetary policy.

With a slight upgrade to its view on the economy, the Fed gave support to the "green shoots" crowd, which this week is also pointing to a surge in durable goods in May, rising housing prices and a better-than-expected revision to first-quarter GDP. (Final tally: down 5.5% vs. the 5.7% expected.)

On the other hand, both existing and new home sales were weaker than expected, jobless claims unexpectedly rose again and no less an authority than Warren Buffett stomped on the green shoots theory in various media appearances this week.

Despite having cataract surgery, Buffett jokingly told CNBC he can't see the green shoots. "The risk of a collapse in the financial system has past, but we have not got the economy moving again," he said.

Put Diane Garnick, investment strategist at Invesco, in the same camp as the Oracle of Omaha.

"It's too soon" to be talking recovery, Garnick says, suggesting Americans are too impatient and desirous of instant gratification. "It's going to take a little while for us to see whether the green shoots are here to stay or we're going to have to add more stimulus on top of what's already there."

Garnick also agrees with Buffett's concerns about inflation, and says Treasury Inflation Protection Securities (TIPS) are "such a good investment right now" because they are currently priced for very low inflation 20- and 30-years out.