Janet Yellen for Fed Chair

Amid all the craziness in Washington, one good thing happened today.   The news was leaked that President Obama plans to nominate Janet Yellen for the next Federal Reserve Chair.

She is eminently qualified and a much better choice than Larry Summers would have been.   Back when Summers was still Obama's first choice, 20 senators sent him a letter strongly recommending Yellen -- which of course was both an endorsement of her and also signalling that they did not want him to nominate Summers.

In that letter, they emphasized her "independence, intellectual rigor and willingness to challenge conventional wisdom regarding deregulation -- traits essential for a successful Fed Chairman."

Calling Yellen "the pre-eminent policy economist of her generation," University of Michigan professor of economics and public policy Justin Wolfers, said further:

"Yellen is quite simply more qualified for the job than any of her predecessors.  She's an imaginative and technically adept economist possessed of a brilliant and precise mind.  As a researcher, she has made fundamental contributions to our understanding of unemployment and the importance of smoothing out the ups and downs of the economy. . . .

"[She is] deeply passionate about the capacity for economics to improve people's lives . . .  [Her] appointment reflects concern for Main Street, though it comes with a deep understanding of Wall Street. . . .  She's also remarkably humble. . . . . But Yellen is a tough and natural leader. . . . 

"While it's true that Yellen has forcefully advocated for more monetary stimulus in recent years, what's more notable is that she has gotten the big calls right.  Those who argued for tighter monetary policy have been proved wrong.  Inflation rates have been persistently below target, and unemployment has been too high.

"If Yellen had been in charge of the Fed over the past few years, millions fewer would be jobless, and we would be less concerned about the danger of deflation.   The point is that Yellen's pragmatic reading of the macroeconomic tea leaves has led her to avoid the errors of her theory-bound colleagues who have seen the threat of inflaton around every corner.  Both hawks and doves should applaud this appointment."

Sounds good to me.   And we dodged the Larry Summers bullet.

Ralph