Posted on 07/24/2013 7:13:11 AM PDT by SeekAndFind
Ezra Klein reported yesterday that Larry Summers is now the leading candidate to replace Ben Bernanke when Bernanke's term as Fed chairman expires in January. This, for those who haven’t been following every twist and turn in the Fed sweepstakes, comes as a surprise. For months, most Fed-watchers assumed that Janet Yellen, currently the Fed Vice Chairman and a longtime president of the San Francisco Fed, had the job all but sown up.
Ezra helpfully lays out the criteria that are likely to guide the Fed selection:
1.) Obama’s personal affinity for a candidate;
2.) the candidate’s monetary policy stance (i.e., do you care more about inflation than unemployment, or vice versa);
3.) crisis-management ability;
4.) “credibility” in the markets (a vague, elastic, and grossly overused concept, but not one that’s entirely meaningless);
5.) ability to manage the Fed’s key interest-rate setting body, the Federal Open Market Committee (which consists of seven Fed governors based in Washington, the New York Fed president, and a rotating cast of four regional Fed presidents).
The case for Summers is that the former Treasury secretary basically wins on points: Summers comes out ahead on criteria 1, 3, and 4; Yellen comes out ahead on 5; 2 is basically a tossup. I can almost hear Summers’ friends inside and outside the administration—the Gene Sperlings and Bob Rubins and Jason Furmans of the world—framing the choice in these terms, since this is how they typically argue.
The problem is that the pro-Summers case implicitly assumes all five categories should be weighted roughly equally, when there’s no good reason to do that. Relatedly, the pro-Summers case overlooks the extent to which bad performance in one category can leach into another.
(Excerpt) Read more at newrepublic.com ...
RE: What difference does it make
Hillary is fast becoming the most quotable person of this decade. :)
Yeah, a catch phrase that will take years to go away. The sad thing is that Hillary was right as events have turned out. Appears no one will be held accountable.
Larry Summers, “The economy slowed down due to the snow storm”, that just prachy.
do they still bother with hearings and votes?
Probably not.
What difference does it make. The Fed is boxed into creating money to keep the entire world’s economy from collapsing. Their goal is to push the inevitable collapse as far down the road as possible.
Yep, this is worth repeating. Given the Fed’s policy of creating money to avoid a collapse it seems rather certain we will eventually see huge inflation. I think most people in economic circles realize this even if they avoid discussing it.
If 0zer0 nominates Summers, it proves he willingly is trying to destroy the US economy, either by being completely clueless on how economies work, or being a puppet to his masters who really want a New World Order composed of a few worldwide ruling elites in governments and finance, and billions of debt slaves/serfs to do their bidding. Larry Summers has DESTROYED every single financial entity he has ever been involved in. His track record for failure is unmatched. If Summers is the new Fed Chairman, the end of this economy will come quickly.
It’s a shame that “Personal Affinity” and not policy is the number 1 criteria.
If Summers is as associated with Deregulation as claimed, he’s a bad choice. The FED’s lowering of the reserve rate, leaving them no where to go in a liquidity crisis, is one of the key factors in the 2008 banking crisis.
We need someone who understands history and the proper role of the FED and the FDIC in regulating banks.
We also don’t need someone who is going to tighten the reigns on the money supply before the economy has recovered. What would be great is someone who really understands the economy and influence the international trade policies.
FED pumping is like a 1” cork in a 2” hole. It’s better than nothing, but congress needs to fix the offshoring and put Americans back to work.
It also said this..."Yellen is considered by many on Wall Street to be a "dove" (more concerned with unemployment than with inflation) and as such to be less likely to advocate Federal Reserve interest rate hikes, as compared, for example, to William Poole (former St. Louis Fed president) a "hawk" (see definitions under Inflation).[9]"
Focusing on unemployment is the right policy. But she needs help from the US International Trade Commission. The FED can't fix this alone.
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