The Perfect Fed Chairman?
The perfect Federal Reserve chairman, writes Simon Johnson, would have had both the right jobs before the crisis and the right opinions before the crisis. "Unfortunately," he says, "there is essentially no one who meets both criteria." The people with the right opinions weren't given the right jobs. And the people with the right jobs, almost by definition, didn't have the right opinions.
I'd add one thing: It also seems that the perfect Federal Reserve chairman would publicly announce that he will not seek, nor accept, reappointment after this term. By all accounts, this is not going to be an easy few years for the Federal Reserve. Daniel Gross put it best in a — sorry to do this to you — tweet. "A reward or a punishment?" He asked. "Next 4 yrs will be ugly, painful ones for Fed chairman. Removing $1 tril in liquidity is no fun."
Flooding the market with money is a lot more popular than pulling that money back into the Federal Reserve's coffers. For that reason, the chairman of the Federal Reserve is supposed to be politically insulated. But he's not really politically insulated if he's seeking another term, and he knows that, the administration knows that, and, arguably most importantly, the markets know that. Whatever comfort they're taking from Bernanke's reappointment, I imagine they'd take a lot more if he announced that this was his final term.
More: Paul Krugman has another take.
Photo credit: By Gerald Herbert— Associated Press
August 25, 2009; 3:39 PM ET
Categories: Federal Reserve
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