President Barack Obama should look for a truly “post-crisis” candidate who can reassert the Fed’s independence and move away from the unusual policies of the last six years. During the credit crunch of 2007-2008 and its aftermath, it was proper and right that the Fed and the Treasury Department were joined at the hip: Both had an interest in easing the financial crisis, which took precedence over everything else. It was also proper for the Fed to aggressively lower interest rates -- a popular policy that the administration avidly supported. But the next chairman will have to decide when to trim the Fed’s portfolio, swollen with its extraordinary program of bond purchases. And it will have to raise short-term interest rates, which are currently near zero. It may be sooner, it may be later -- the moment will come. Money cannot be free forever.I’m sorry but this argument is what I would expect from the National Review and not from Bloomberg. OK, Lowenstein is a financial journalist and not a member of the economics profession. So maybe he can be excused for not realizing that Janet Yellen is smart enough to reverse course on monetary expansion when the economy gets back to full employment. But we are still far away from full employment and with fiscal policy turning contractionary, this is not the time to raise interest rates. And yes – the best candidate for this job is one who recognizes what Roger Lowenstein refuses to. Count me as a member of Team Janet.
Wednesday, September 18, 2013
Roger Lowenstein’s Reason to Rule Out Janet Yellen
Lowenstein actually thinks we need a banker and not a qualified economist to lead the Federal Reserve: