Confusion on the Federal Reserve
This is a nice list of potential nominees for the Federal Reserve board, but it's not necessarily an informative list. In part, you get the sense that people are simply tossing names out because there's no settled consensus on where they fit. Who's acceptable to the left? To the right? To Wall Street? To the administration? In some ways, the Federal Reserve has been too de-politicized: People should at least have opinions and an understanding of an institution that powerful.
Something to remember when thinking about the Federal Reserve Board is that it's a bit like a Supreme Court appointment: The question isn't just the ideology or analysis of the individual, but their skill at influencing other members of the board. That creates an interesting tension when dealing with some of the community development types under consideration: They'll offer an important and fresh perspective, but will they be influential in a room dominated by academic economists? Will they themselves be swayed? Or maybe they'll be far more effective for being able to bring market failures to the attention of people who'd otherwise manage to escape knowledge of such imperfections.
It's all hard to say. But I'd echo William Sherrill, a former Fed governor who says that the picks should post-financial crisis choices. “All the attention lately has been on rescuing the financial sector from ruin," Sherrill explains, "but the inability to move the stimulus over to the real economy — and most directly, small businesses — has been the problem.”
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Ezra Klein
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March 9, 2010; 12:55 PM ET
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Posted by: Lomillialor | March 9, 2010 1:28 PM | Report abuse
If the Fed has been working for the good of the GOP, well, who needs enemies when you have friends like that? I'll bet McCain wishes the Fed had operated a little differently over the 2001-2007 period...
Anyway, I note (unsurprisingly) with some dismay that Scott Sumner is not on the short list...
Posted by: justin84 | March 9, 2010 5:52 PM | Report abuse
When you're talking about two or three appointments, quantity has a quality all its own. Insofar as the chair's fairly rigid control of the agenda doesn't predetermine what happens, even a small block goes a long way.
Posted by: paul314 | March 9, 2010 9:38 PM | Report abuse
Fed chief testimony to Congress has consistently favored GOP policies such as abolition of minimum wage, reduction in taxes, concerns over rising middle-class wealth, elimination of employee stock options, favoritism toward supply-side economics, unconcern of transfer of US mfg jobs overseas, systematic reduction in interest rates to compel savers to transfer funds to stock market, and so on.
Any analysis of why we have a great recession is incomplete without detailed comments about the pitiful performance of the fed.
As an example of what I am talking about, watch Sen Bernie Sanders blast Greenspan in this video:
http://www.youtube.com/watch?v=nBnKh6B2cMw
Posted by: Lomillialor | March 10, 2010 6:48 AM | Report abuse
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Ezra
What do you think about auditing the fed?
Did you hear Bernie Sanders comments to Greenspan about how the fed is oblivious and ignorant to middle class issues?
In this day of extremist politicization, isn't it fair to assume the fed too has been politicized and is no longer working for the good of the country but for the good of the GOP party?
Don't you think the fed is unconstitutional?