Monday, January 25, 2010
I got to disagree
And it isn't often I feel any need to disagree with Paul Krugman. Today, his column addresses the problem of Ben Bernancke. Paul begins by reiterating the strong case against his re-appointment as Chairman of the Fed. He goes on to say he disagrees and presents a very weak case for his disagreement
There are other people with the intellectual heft and policy savvy to take on his role: among the possible choices would be my Princeton colleague Alan Blinder, a former Fed vice chairman, and Janet Yellen, the president of the San Francisco Fed.This week, the best you can do won't fly. There are capable replacements for Ben and Barack needs to find one.
But — and here comes my defense of a Bernanke reappointment — any good alternative for the position would face a bruising fight in the Senate. And choosing a bad alternative would have truly dire consequences for the economy.
Furthermore, policy decisions at the Fed are made by committee vote. And while Mr. Bernanke seems insufficiently concerned about unemployment and too concerned about inflation, many of his colleagues are worse. Replacing him with someone less established, with less ability to sway the internal discussion, could end up strengthening the hands of the inflation hawks and doing even more damage to job creation.
That’s not a ringing endorsement, but it’s the best I can do.
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