NationStates Jolt Archive


This man will have more impact on your life than any politician will!

Eutrusca
25-10-2005, 13:27
COMMENTARY: Even moreso than Supreme Court Justice appointments, the individual appointed as Federal Reserve Board Chairman has long-lasting and wide-ranging impact on Americans and their future. You probably won't find this article, or the man about whom it's written very interesting ... but you should!


White House Gamble Pays
for a Princeton Professor (http://www.nytimes.com/2005/10/25/business/25profile.html?th&emc=th)


By LOUIS UCHITELLE and EDUARDO PORTER
Published: October 25, 2005
Even before President Bush named Ben S. Bernanke as chairman of the Council of Economic Advisers this spring, Mr. Bernanke decided to gamble. He sold his home in New Jersey last year and told friends that, instead of returning to a tenured professorship at Princeton University, he was taking a chance that President Bush would elevate him from obscurity as a Federal Reserve governor to a top political appointment.

The gamble paid off. If the Senate confirms him, Mr. Bernanke will arguably become the most powerful economic leader in the world. Not since Arthur Burns, the Federal Reserve chairman from 1970 to 1978, has a university professor run the nation's central bank.

But while Washington policy making may be Mr. Bernanke's newly chosen field, no one seems to have a clear idea what his political views are, other than the fact that he is a registered Republican. Mr. Greenspan took strong political positions, using his pulpit at the Fed to promote Social Security private accounts and to sell the president's tax cuts. Mr. Bernanke, in contrast, has been muted on such political hot potatoes even as the president's chief economic adviser.

Now, as he moves to the Fed, he is likely to steer the central bank away from the broader political debate. "One can expect Bernanke to adhere strictly to a more silent stance regarding issues outside of monetary policy," said Kevin A. Hassett, director of Economic Policy Studies at the American Enterprise Institute.

Mr. Bernanke, 51, is more like a "Mr. Smith Goes to Washington" than the political figure that Mr. Greenspan already was when he became Fed chairman in 1987. Appointed a Fed governor in August 2002, Mr. Bernanke from the start considered his term in Washington as a time-out from academia.

But Washington grew on him. His friend, Gene M. Grossman, another Princeton economist, said that Mr. Bernanke "thought it would be informative and interesting to actually work on policy."

"And then he found he was enjoying it and he was good at it," he said.

Hooked as he was, Mr. Bernanke nevertheless bridled at Washington's customs, including its dress code. "The biggest downside of my current job is that I have to wear a suit to work," he told fellow economists in a speech last January. He likes tan socks and was once chided by President Bush for wearing them with a dark suit. His puckish response was to buy a dozen tan socks and distribute them at the next White House gathering.

Less than three years into the Fed job, Mr. Bernanke's name went to the top of the list of candidates for the chairmanship of the Council of Economic Advisers. By then he had sold his home for $630,000 in Montgomery Township, N.J., where he had served for a while as president of the board of education, and purchased a house in Washington, paying $839,000 for it.

As a professor he wrote dozens of papers on economics and was the co-author with Robert H. Frank of Cornell University of an economics textbook for beginners. At the Fed, his heavily footnoted speeches had a scholarly twist. He is credited with coining the term "savings glut" to help explain the huge American trade deficit that is largely financed by the savings of foreigners.

A diffident, unassuming man, he nevertheless is often playful. He regularly wrote songs and skits for Christmas gatherings of faculty and students, and sometimes performed in them. While Mr. Bernanke was working on a textbook with Mr. Frank in the late 1990's, a competitor, N. Gregory Mankiw, a Harvard professor and Mr. Bernanke's predecessor at the council, published his own textbook.

Mr. Mankiw, in his book, made a point about the value of time, and posed the hypothetical question: Should the basketball superstar Michael Jordan mow his own lawn? The Mankiw textbook was a best seller and made him a considerable amount of money. According to Mr. Frank, Mr. Bernanke insisted that their book ask the question: Should N. Gregory Mankiw mow his own lawn?

Mr. Frank, a liberal professor at Cornell, and Mr. Bernanke were an odd couple as authors of "Principles of Economics," published in 2001. While Mr. Frank wears his politics on his sleeve, Mr. Bernanke does not.

[ This article is two pages long. To read the rest of the article, go here (http://www.nytimes.com/2005/10/25/business/25profile.html?pagewanted=2&th&emc=th). ]
Call to power
25-10-2005, 13:32
I don't get it:(
Lacadaemon
25-10-2005, 13:36
I don't get it:(

He'll be in charge of interest rates. A lot of people think that is the most important job in the US.
Heron-Marked Warriors
25-10-2005, 13:38
He'll be in charge of interest rates. A lot of people think that is the most important job in the US.

But they'd be fucked without the garbage collectors and burger flippers!
Neu Leonstein
25-10-2005, 13:40
He'll be in charge of interest rates. A lot of people think that is the most important job in the US.
It kinda is though. You people look to the president for the state of the economy - you should be looking at the boss of the fed.

And Bernanke wrote my first year textbook!:D
Lacadaemon
25-10-2005, 13:41
But they'd be fucked without the garbage collectors and burger flippers!

Don't forget the all important poo removal systems that are in most houses, someone has to keep that running too.

Those types of jobs aren't accorded much in the way of respect however. And it's not like a single individual has control of all the burger flippingry, garbage collecting or poo removing.
Call to power
25-10-2005, 13:41
He'll be in charge of interest rates. A lot of people think that is the most important job in the US.

isn't it a good thing that he doesn’t have any political leanings then?
Righteous Munchee-Love
25-10-2005, 13:44
Don't forget the all important poo removal systems that are in most houses, someone has to keep that running too.

Those types of jobs aren't accorded much in the way of respect however. And it's not like a single individual has control of all the burger flippingry, garbage collecting or poo removing.

Which is why we need unions.
Heron-Marked Warriors
25-10-2005, 13:47
Which is why we need unions.

And sarcasm detectors.
Lacadaemon
25-10-2005, 13:47
It kinda is though. You people look to the president for the state of the economy - you should be looking at the boss of the fed.

And Bernanke wrote my first year textbook!:D

You could make the same argument for the UK; but looking at the last election, people still placed more importance upon who is the PM and Chancellor of the Exchequer than who was running the bank of england.

It also depends upon how much importance you place upon the ability to set the central bank rate, and whether or not that actually is the mechanism that drives rates for the rest of the economy.
Lacadaemon
25-10-2005, 13:49
isn't it a good thing that he doesn’t have any political leanings then?

Everyone has political leanings. Some people are just better at hiding them than others.
Righteous Munchee-Love
25-10-2005, 13:50
And sarcasm detectors.

They shut down the factory :(
Neu Leonstein
25-10-2005, 13:50
isn't it a good thing that he doesn’t have any political leanings then?
The ideal reserve bank is completely apolitical. Having any sort of connection with the government is detrimental (I can go into details if you want, but it can get complicated - but I get to use game theory!!!).
If Bernanke really is fairly apolitical, then he is the best choice around (Taylor would have been another one)

And besides, I think it's great that they're gonna get an actual economist from an actual university for a change.

But it's obvious that Bush regards the Fed as too important to tamper with (unlike the Supreme Court...)
Heron-Marked Warriors
25-10-2005, 13:52
They shut down the factory :(

Damn communapitalists
Neu Leonstein
25-10-2005, 13:56
It also depends upon how much importance you place upon the ability to set the central bank rate, and whether or not that actually is the mechanism that drives rates for the rest of the economy.
In practice it usually is.
Through whatever mechanism, different ways to do Reserve Bank Policy return different inflation results, and different foreign exchange results. It doesn't get much more obvious than that.

I would say that from an economy point of view, the head of the Fed is probably first, followed closely by the various ministers and then the head of the government. In some countries that may be different, but in most Western nations, today that's what we see.
Lacadaemon
25-10-2005, 14:04
In practice it usually is.
Through whatever mechanism, different ways to do Reserve Bank Policy return different inflation results, and different foreign exchange results. It doesn't get much more obvious than that.

I would say that from an economy point of view, the head of the Fed is probably first, followed closely by the various ministers and then the head of the government. In some countries that may be different, but in most Western nations, today that's what we see.

I am not arguing that this is not the majority opinion. There are some people however who do not share it, and think that there are other more important mechanisms in play, like tax rates, size of budget deficits, tarrifs, etc. Making the fed less important.
Neu Leonstein
25-10-2005, 23:29
I'm with Eutrusca here: People should care a lot more about this than they apparently do.
Dobbsworld
26-10-2005, 00:15
He'll be in charge of interest rates. A lot of people think that is the most important job in the US.
A lot of people who place undue importance on meaningless shit like interest rates, anyway.

You know, people who make a living out of other people trying to make their livings; parasites.
Potaria
26-10-2005, 00:16
A lot of people who place undue importance on meaningless shit like interest rates, anyway.

You know, people who make a living out of other people trying to make their livings; parasites.

Exactly.
Neo Kervoskia
26-10-2005, 00:19
Exactly.
Interest rates affect everyone. I believe that Keynes emphasized them too heavily, but that's not the point.

Crap...another discretionary fellow. Pick a target growth rate, damn it.
Potaria
26-10-2005, 00:21
Interest rates affect everyone. I believe that Keynes emphasized them too heavily, but that's not the point.

Crap...another discretionary fellow. Pick a target growth rate, damn it.

Granted they affect everyone, but they mostly affect people who live off them, and they happen to be quite parasitic. It's just like landlords.
Neo Kervoskia
26-10-2005, 00:25
Granted they affect everyone, but they mostly affect people who live off them, and they happen to be quite parasitic. It's just like landlords.
You're forgetting about the businesses, the people who borrow from banks, and others. Interest rates can affect the supply of money which can prove to have a massive affect on the economy.
Neu Leonstein
26-10-2005, 11:03
Granted they affect everyone, but they mostly affect people who live off them, and they happen to be quite parasitic. It's just like landlords.
You know where this idea of interest being a bad thing originally came from?

And besides, apart from all moral considerations, the people directly affected by this man's decisions include everyone with a home loan on a variable interest rate.

And indirectly, that man also creates and destroys thousands of jobs with the push of a button, and starts or ends recessions.