The choice of a new chair for the US Federal Reserve will be the most important economic policy decision taken anywhere in the world this year. It is alarming, therefore, to hear President Barack Obama set out a job description that is insipid, narrow and out of date.
In a recent interview with the New York Times, the president said he wants a Fed chair who will not just pay lip service to the Fed’s dual mandate of maximum employment and stable prices. He then paid lip service to it himself with a lot of talk about inflation, bubbles and a sound dollar.
“When unemployment is still too high, and long-term unemployment is still too high, and there’s still weak demand in a lot of industries, I want a Fed chairman that can step back and look at that objectively and say, let’s make sure that we’re growing the economy, but let’s also keep an eye on inflation, and if it starts heating up, if the markets start frothing up, let’s make sure that we’re not creating new bubbles,” he said.