Credit where credit is due ---
White House Shocker
It's surprising just how few chairmen of the Federal Reserve there have been in the last half-century: five, to be exact.
President Harry Truman appointed the blueblood William McChesney Martin Jr. back in 1951, and he served for almost 19 years. The disastrous tenure of Arthur Burns included interest rates that were kept obscenely low to help Richard Nixon get re-elected in 1972 and that led to the out-of-control inflation that characterized the 1970's. Jimmy Carter's choice to succeed Mr. Burns was hardly any better: the lackluster G. William Miller was gone in just over a year.
That decade of monetary ineptitude finally ended with Mr. Carter's 1979 appointment of Paul Volcker, who took over the country's central banking system at a time when inflation was a whopping 14.8 percent. Mr. Volcker heroically tightened credit, sending the country into recession but knocking inflation down to 4.4 percent by the time he left, in 1987. We need not list the accomplishments of Alan Greenspan. Some fumbles aside, like intruding into a political debate to back President Bush's ill-conceived tax cuts, he will be known as one of the most influential central bankers ever.
And now Mr. Bush has appointed the chairman of his Council of Economic Advisers, Ben Bernanke, to succeed Mr. Greenspan. Given that this is the same president who, just this year alone, appointed John Bolton, the radical anti-multilateralist, to be ambassador to the United Nations, and the White House counsel, Harriet Miers, to the Supreme Court, it is small wonder that markets and economists and everyone else were fretting that Mr. Bush might conjure up an ill-suited political pal for the Fed. Some of the names floating around, including Lawrence Lindsey, the former director of the White House National Economic Council, were downright frightening.
But wait. Mr. Bush may have just picked the best person for the job. Mr. Bernanke is not the sort of inner-circle member that Mr. Bush clearly prefers for big posts. An Ivy League economist and monetary theorist, he has worked closely with the White House only since June, when he was sworn in at the economic council. For three years before that, he was a governor at the Federal Reserve, where he was viewed as a superb monetary economist who won over financial markets. A star professor at Princeton, Mr. Bernanke is considered a very good communicator; at the Fed, he reached out to junior staff economists in cafeteria seminars.
Though conservative, Mr. Bernanke is independent, critics and allies say, a trait critical for this job. His biggest weakness is a lack of Wall Street experience, an area where Mr. Greenspan excelled. Beyond shoring up those credentials, Mr. Bernanke will have to show bond markets that he can tackle inflation.
Clearly, Mr. Bernanke will have a tough job filling Mr. Greenspan's shoes. But he is as close to the perfect choice as Mr. Bush could have made. |
