The New head of the Federal Reserve, Ben Bernanke

Everywhere I go, people are asking me what I think of the new chairman of the Federal Reserve, Ben Bernanke.

I know Bernanke pretty well because he was Chairman of the Princeton Economics department at a time when I was very seriously thinking of moving there, but ended up turning down offers on multiple occasions (which rightfully aggravated Bernanke to no end).

I have two thoughts on Bernanke running the Federal Reserve:

1) If I had to guess, the Chairman of the Fed has a lot less impact on the day-to-day performance of the economy than most people think. Although Greenspan has been elevated to God-like status, I suspect that he has been at least as lucky as he has been good. One of the most important lessons of modern macroeconomics is that it is probably impossible at the present time to “fine tune” it. More or less, you just want the Fed to stay out of the way and not totally botch things. There is mounting evidence that the Great Depression (and maybe also the stagflation of the early 1970s) was due in large part to policymakers following exactly the wrong course of action.

2) With that in mind, I think Bernanke is a great choice to run the Fed. He has an enormous appreciation of the history of monetary economics and past failures of Fed policy (see, for instance, this book he has written on the Great Depression). But at the same time, he is not an egomaniac who will pursue dangerous policies because of illusions of grandeur.


mathking

With all of the "Chicago v. Harvard" economics talk from the old blog, I just noticed that now two of the most prominent economists for the government could have Princeton connections, Bernanke and CBO director Douglas Holtz-Eakin. Both of them (and the CBO deputy as well) have also come off of stints as Chief Economist for the Council of Economic Advisors.

semivoid

Perhaps not in the day to day performance of the economy, but the Fed and the voting members of the FOMC can certainly allow things to get out of control in the long run...of course because of the God like status they are now given, one ill-advised statement will move both the bond and stock markets.

I would point out his Macroeconomics text with Dr Abel. It is well written and confirms that he is generally politically neutral.Apparently Abel was unaware that Bernanke was a Republican at the time...

That said the book has some issues. Specifically, the first third of the book has really corny 'examples'. I have found that there is a general consensus that they are an irritant to readers of the text.

RealValueAccntng.Com

Alan Greenspan is ending his reign at the Fed without having to deal with the fact that inflation for the last 700 years had two components and now still has two components. I am planning to send Mr Greenspan a copy of my book in which I identify inflation?s second component and show how we can stop it immediately and forever.
Ben Bernanke will hopefully soon only have to worry about single component inflation. Whether single component inflation will be a different beast than two component inflation we will have to wait and see. I think not - but I am not an economist.

RealValueAccounting

Alan Greenspan is ending his reign at the Fed without having to deal with the fact that inflation for the last 700 years had two components and now still has two components. I am planning to send Mr Greenspan a copy of my book in which I identify inflation?s second component and show how we can stop it immediately and forever.
Ben Bernanke will hopefully soon only have to worry about single component inflation. Whether single component inflation will be a different beast than two component inflation we will have to wait and see. I think not - but I am not an economist.

nathanhollis.org - Ben Bernanke Freaked

[...] Steven Levitt’s (theFreakonomics guy) view on Ben Bernanke [...]

The Brandon Hansen Experience :: New Head of the Federal Reserve :: October :: 2005

[...] Even though he hasn’t been confirmed by the senate yet it will be interesting to see how Ben Bernanke runs things differently then Alan Greenspan did. Here is an interesting blog to read about the subject. It is true that the public perceives that the head of the reserves has more influence on the day to day performance then he actually does. Any comments? Comments » [...]

bmc

Burning incense to Bernanke here!

vicki c

what is up with putting michael alix formerly of bear stearn as senior managing director of the federal reserve. haven't these people especially this one done enough damage. if you can't run bear stearns what make the powers that be think this guy will do any better now. this is like putting the fox in charge of the hen house. good grief haven't we learned a lesson.