Barack Obama is making the right choice in reappointing Ben Bernanke for a second five-year term.
While Bernanke has plenty of haters and doubters, we’d say that many of their criticisms could simply be levelled against the Federal Reserve itself. But the Fed has its own, built-in ideology (it’s kind of like the EPA or HUD in that regard), and getting rid of Bernanke wouldn’t have changed that.
While Bernanke has proven himself to be qualified, perhaps the real story is what it says about Obama.
Tyler Cowen wrote back in July on the subject:
Not reappointing Bernanke would make the markets very nervous about the future autonomy of the Fed. (Even if Alex is right more generally about central bank independence, I don’t want the current Fed to resemble General Motors or Chrysler.) There’s lots of talent in the current White House, but given how much policy has been run from the White House, it would be a bad signal to look to the White House for a Fed pick. Many of the other possible picks seem to be largely untested at a major league level. You can complain about Bernanke all you want but his likely successors probably have the same list of drawbacks that perhaps you are ascribing to him.
By making this pick, Obama’s shown that he knows when to pull back a bit, and not put one of his team (most likely it would’ve been Larry Summers, who would’ve gone over terribly) in the slot. That’s really why it’s a good pick.
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