Stupid Ideas from the Left: An "Irresponsible" Fed Chairman to Save Jobs
I've about had it. So this is why the liberals don't like Bernanke? He's not psychotic enough? Are you people out of your minds? The Fed's balance sheet went from $800 billion to $2.1 trillion in months (I'm making that number up, you guys can call me out on it if you want) and that's not enough?
Right now, unemployment is a much larger problem than inflation, and creating a specific inflation target would, as Paul Krugman puts it in his discussion of the Japanese case in the 1990s, allow "the central bank to credibly promise to be irresponsible - to make a persuasive case that it will permit inflation to occur, thereby producing the negative real interest rates the economy needs." Negative real interest rates would be the step beyond the zero-interest rate policy that the Fed is following right now, which is not enough to provide a significant monetary expansion to allow for employment growth.
Bernanke could, conceivably, do something along these lines. But he hasn't yet. On the other hand, if you wanted someone who could credibly promise to be "irresponsible," at least from the view of monetary policy hawks, why not pick someone who Bond Vigilante-types already think is irresponsible (read, cares about unemployment), like San Francisco Federal Reserve President Janet Yellen? Some might claim that this would damage the Fed's "political independence," but actually making use of the main check that the government has over the Fed -- appointing the chairman -- should be seen as within the normal bounds of Fed-government relations.
There are definitely downsides, of course. Financial markets, and bonds in particular, would probably react unwisely (remember that Bernanke was initially reappointed specifically to calm those markets on the day the updated budget was released). But it would be very smart politics for President Obama -- in one fell swoop, he demonstrates his seriousness about fixing unemployment, sticks it to the bankers that many Americans think he has been coddling, and captures a news cycle.
Hahahahahahahahahahahahaha putting Janet Yellen's irresponsible ass in charge of the Dirty Fed?! LMAO! That's an awesome idea.
See, this is why I don't read Paul Krugman (or at least 5% of it). You guys can't be serious. Do you understand that there are consequences for shit or do you just assume it magically fixes itself and 2% inflation is like a gift to yourself at the end of the year? Are you just bitter because Bernanke is supposedly a Republican as was the last one? So what. The Fed is "independent" and "politically neutral" or some shit, remember?
Besides, Bernanke doesn't behave like any Republican I know and the Libertarians sure as hell aren't going to claim Alan Greenspan on our team, that guy is fucked in the head.
Throw out that argument.
In a recent NYT Op-ed, Krugman calls the decade "The Big Zero" and it couldn't come from a more fitting critic. Whatever. Sorry inflation wasn't running at 4% there, killer, nothing to get depressed about now.
Not to offend any of my readers with a leftist bent but bwhahahahaha. Come on, we don't like Bernanke but it's not because he signed his voter card "Republican". Technicalities, the guy has bigger sins to atone for, none of which have to do with his claimed political affiliations. He has none. It isn't for me to dictate why people should and should not support a second Bernanke term but this is just stupid, you can't possibly suggest Janet Yellen is the solution to our fiscal and monetary malaise? She'd be like Obama's crack dealer. West Coast represent!
The answer to unemployment is not Janet Yellen unless the goal is more of it. The printing press has already had enough, it's a wonder we can keep it together at this point. With her "unprecedented vision", we'd tip over in a week. The bond market is already pissed off, no need to poke it any more than we already have.