Monday, October 24, 2005

Replacing the Almighty Greenspan

Today Bush announced that Ben Bernanke will take over for Alan Greenspan as Chairman of the Board of Governors for the Federal Reserve, which is a major announcement, considering the fact that Alan Greenspan is the equivalent of an economics "rock star" (which I know is a oxymoron) and the fact that Greenspan has led the Federal Reserve since before some of my students were born (August 11, 1987).

We will talk much more about the role of the Federal Reserve chairman and Ben Bernanke next semester when we get to Macroeconomics, but for now here is a link to various economists talking about how this is a good nomination, and here is link to a summary of Bernanke's major contributions to macroeconomics.


Brian Zabell said...

Well I mean the guy has some good credetials at least. He's just as experienced in economics and macro policy as the other candidates, and good macro policy officials aren't easy to find.

Even Greenspan wasn't an economics rock star though at least. He made mistakes too. He had problems dealing with inflation under Ford when he was chair of CEA and kinda didn't deal too well with .com either. Still it's not like he didn't really do very well with our ecomony. China and Japan are growing faster for now at least but from what I hear that won't last too long.

Though, Berknanke graduated summa cum laude with an econ degree in Harvard and earned the respect of his peers over many years as a policy wonk.

Problem is it sounds like he wants more inflation, and while that's all good when you are an Argentina or Brazil and trying to inflate your way out of debt, I'd rather see a strong dollar, low inflation and payoff of debt.

Best nomination Bush has made this year at least.

Michael Arjona said...

A couple of comments:
- by saying Greenspan is an economics "rock star," it is more a reference to his fame, not necessarily his talents (although his talents are hard to doubt as well)
- Bernanke is actually known for an idea called "inflation-targeting," where the Fed explicitly aims for a particulat inflation rate. This gives me confidence in Bernanke's ability to keep inflation down & the fact that he does not want more inflation.

Brian Zabell said...

Ok I misinterpreted