We really shouldn’t believe for a moment that the affinity which compels most economists to join Keynesian “Kraft” in D.C. is benevolent leadership. Keynes’ own Fabian beliefs notwithstanding, do we really need at this critical juncture in our Nations history, a Federal Reserve Chairman whose ‘dying’ to get the job?
I remember something a great mentor of mine said years ago, he revealed “never give the job to anyone who actually needs it.” Find the person with the most independence, prudence and character. Give it to them well compensated. Period.
The current battle of personalities of who is to get the Fed ‘Chair’ reminds me of “Washington” the memoir by the late great Meg Greenfield from Newsweek, who upon being told she had months to live from debilitating cancer, left the job to write her memoirs, now held at the Library of Congress.
She reveals that the best way to understand Washington, is through the closed, specialized, myopia of high school.
We aren’t getting an adult appraisal of either Summers or Yellen. Instead, the media itself today shapes the very content of the stories it serves. It’s ‘mass-induced group think’ masquerading as news.
Should we expect Congress to do the job of ‘grilling’ Yellen/Summers? Why can’t we just follow what Allan Meltzer revealed a long time ago, when he revealed along with Vockler, Greenspan and Friedman that the Federal Reserves ability to carefully appraise the institutions capacity to help/harm the economy is the first order of business.
Can the advocates of different monetary regimes; discretionary, inflationary, price-level-targeting, nominal GDP targeting, hell. . . even Gold standard (or for that matter any specie). Gone is the informed relation between the impact a dominant political philosophy has on either a rules based/discretionary monetary regime.
Let’s start there.
What of multiple mandates and archaic templates long ago killed off and buried (Phillips Curve). . . And what of the political justification(s) given for intervention.
How realistic is it to ask for a single mandate?
Can we really believe that this Cartel of private central bankers whom have articulated ardent policy to justify securing equity positions in Treasury understand the real spheres of autonomy that underwrite this Great Republic? The Fed bitches about independence but acts otherwise. And what of our relation to foreign central banks? Can we continue altering the value of the dollar through buying/selling of exchanges? What operating political philosophy is at work here? And what of the ethics of hard money?
Have Milton Friedman, Ludwig von Mises and Fredrick Hayek alone responsible for understanding the social, political impact of inflation on the “bonds of solidarity that keep men free.”
My gut tells me that we’re a long way gone from the ethics that underwrote any synoptic tradition worthy of study. We’re living in a rich man’s world; an easy money tale of nominalism. . .
Why should I expect Congress to understand matters it would well punt on. . . Let’s face it, price and value have weak relationships along Wall Street. The Fed seems intent on sustaining a complete divorce between these indissoluble realities, realities grounded in nature itself. Instead, what we’re going to get is pure ‘sophistry’ masquerading as policy. Under Yellen or Summers, we’ll see the manipulation, the divorce between an inflated price and an overt stimulation undermining value. Let me break this down. . .
If the price of investment assets is rising, NOT because of improved economic conditions like credit-worthiness of debtors, or the profitability of companies, the real demand for commodities, BUT because the Fed had decreed so. How long can this inversion go on credibly.
Engineered inflation is self-feeding rather than self correcting.
Let me end by saying this: the Fed is a powerful yet UNCERTAIN player.
IT too can be defeated!