Why Jerome Powell Must Go
On all of the defining issues of the moment, US Federal Reserve Chair Jerome Powell has shown that his instincts are out of step with what the country needs. In deciding whom to appoint to the position next, US President Joe Biden must not be swayed by clichés about bipartisanship and continuity.
NEW YORK – US President Joe Biden faces a critical decision: whom to appoint as chair of the Federal Reserve – arguably the most powerful position in the global economy.
The wrong choice can have grave consequences. Under Alan Greenspan and Ben Bernanke, the Fed failed to regulate the banking system adequately, setting the stage for the worst global economic downturn in 75 years. That crisis and policymakers’ response to it have had far-reaching political consequences, exacerbating inequality and nurturing a lingering sense of grievance in those who lost their houses and jobs.
There are a host of clichés about why the current chair, Jerome Powell, should be reappointed. Doing so would be a demonstration of bipartisanship. It would reinforce the Fed’s credibility. We need a seasoned hand to steer us through the post-pandemic recovery. And so on. I heard all the same arguments 25 years ago when I was chair of the US President’s Council of Economic Advisers and Greenspan was being considered for reappointment. They were enough to convince Bill Clinton, and the country paid a high price for his decision.