Sunday, September 15, 2013

Summers withdraws

You have undoubtedly seen the news by now. Chicago Tribune, and Wall Street Journal

I'm sad, actually. A Summers confirmation would have been a great focus for a national debate on the role of the Federal Reserve, the role and character of its Chair, proper relations between the Fed and Wall Street, where we are going with financial regulation, whether bailouts and stimulus are a good idea, and how macroeconomic and monetary policy should be conducted.

I mean that as a totally honest statement -- don't read any coded pro- or anti- Summers implications in it.

I don't see that happening with any of the remaining candidates. We are at a good moment to attract some lightning, and I'm sorry to see the lightning rod bow out.
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8 comments:

  1. AbsalonSeptember 16, 2013 at 12:20 AM

    Summers' personality and history would have been a distraction from the substantive issues. To the extent bailouts, stimulus or fiscal policy would be enacted through Congress they are not appropriate topics for a confirmation hearing for the Chair of the Fed.

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    Replies
    1. Jason WeinmanSeptember 16, 2013 at 4:33 PM

      So bailouts, stimulus, and government spending are not impacted by the fed?

      Delete
    2. AbsalonSeptember 17, 2013 at 1:12 PM

      Of course those things are all impacted in some ways by the Fed. Everything is impacted by the Fed. That does not mean that a confirmation hearing for the Chair of the Fed should be turned into a debate over what Congress should be doing.

      Delete
  2. Benjamin ColrSeptember 16, 2013 at 7:56 AM

    I don't think the questions would have been very elevated...I would like to know Summer's views on Woodford's views that an increase in the monetary base should be permanent...but really Senator Cobb anyone?

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  3. EdwardSeptember 16, 2013 at 1:08 PM

    YES!!!!
    Yes! Yes! Yes! Yes! Yes Yes!

    I'm very happy. But still subdued. Bernanke wrote amazing things critical of Japan's "self-induced paralysis" Its ironic that he did the same while in office. Volcker never moved on inflation until he had Reagan's support, and Haruhito Kuroda could not have created his policies without Shinzo Abe. (I wonder what you think of Abenomics, Dr. Cochrane, since it seems to be a great success so far and you're on record as a hawk?) Its the President or CHief Executive who is in charge of M.P, and thats a frightening thought. Janet Yellen might not be able to do much. And the White House is incredibly thin-skinned about the whole process, according to a recent article in the journal by David Wessel

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    Replies
    1. Jason WeinmanSeptember 16, 2013 at 4:52 PM

      Strange that you would consider Abenomics a "success." By what metric? I can't speak for Professor Cochrane, but not all opposition to central banking is predicated on the notion that money is too loose in every case. If it's true that Japan will benefit from much looser monetary policy, than free banking would have addressed this problem long ago. Abe is just as likely to do too little as too much. In either case, there is no advantage to distributing cheap money to the fortunate beneficiaries of central banks, rather than as markets would direct; at least as far as I can see? Even if devaluation is the cure to Japan's problems (which seems unlikely--the persistent appreciation has been more likely a symptom than a cause of the stagnation), Abe can't seem to deliver (the yen is stuck just about where it was in 2009).

      Delete
  4. PhiloSeptember 16, 2013 at 6:39 PM

    I agree with Absalon that Summers' personality and history would have distracted too much from the debate on monetary policy. That (more substantive) debate can still take place at Yellen's (or whoever's) confirmation hearing, without the distraction. And we won't be running the risk that Summers would actually have been *confirmed*!

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  5. John L. Davidson, Esq., Saint Louis, MissouriSeptember 16, 2013 at 9:33 PM

    Clayton Christensen says the problems started w/Friedman and are caused by MBA schools like Booth, not bailouts or stimulus vs. austerity. http://bit.ly/19YudDq

    ReplyDelete

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