Obama will make the biggest decision of his second term while most barely notice it
Last edited Sun Jul 21, 2013, 02:12 PM - Edit history (1)
Imagine if the Secretary of Defense was appointed by the president but couldn't be fired by the president, and could do anything with all those tanks and missiles he wanted to do during his term.
Bomb anyone. Invade anyone. Very, very little possibility of oversight short of impeachment.
Picking the Secretary of Defense would be incredibly important. In practice, however, the Sec Def cannot wage war unilaterally. Only Congress can declare war. The President is Commander in Chief and can fire the Sec Def at will.
The Chairman of the Board of Governors of the Federal Reserve, however, has that kind of unilateral power. It can be argued that it is the second most powerful job in the world. Like a Supreme Court Justice, you can only pick 'em and then they are on their own. Unlike a Supreme Court Justice, the Fed Chair wins all votes of the Board. None of this 5-4 stuff... the Fed Chairman is an autarch.
And there are excellent reasons for that independence. I do not wish to democratize the Fed because people would always want lower rates. (Except in a recession when some RW crackpots would call for higher rates at exactly the worst time... which a Fed Chair must also resist.)
But given that independence once confirmed, you can see why it is a big presidential act appointing a Fed Chair. One of the very biggest of any President's term(s).
Carter appointed Paul Volcker who, single-handedly and intentionally caused the recession of 1981-1982. (And high inflation never returned, so it seems to have worked as planned.) When Carter appointed Volcker I doubt anyone envisioned that Volcker would have to make a global-economy tipping decision with 10% unemployment on one side and 20% inflation on the other side. Inducing that recession was one of the most awesome (in the old sense of the word) uses of power we have ever seen. A truly terrible (again, in the old sense of the word) decision to make... like Churchill allowing Coventry to be bombed rather than tip off that we had broken the German codes.
One of the most momentous decisions Clinton made was reappointing Greenspan, who is a malicious RW idiot.
One of the most momentous decisions George W. Bush made was appointing Bernanke, who turned out to be more sane than a Bush appointee had any right to be.
Fed Chair is "the man behind the curtain" pulling levers most folks don't really think about, but very powerful.
If Alan Greenspan had been Fed Chair in 2008-1013 there would be five, ten, fifteen million more Americans in impoverished conditions than there are today. That is raw power.
A decision is being made right now that will shape American life under this president and under the next president. And Banks are Wall Street are keenly interested in the pick, even as most folks are unaware anything momentous is being decided. It will be discussed a lot on CNBC, but not much on CNN.
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except for hearing about it in passing on the tube.
That stuff is a bit "boring" ya know.
Then they wonder why they can't keep up with the jones.(yeah, I said "jones" , not joneses"
This has nothing to do with your central points, but Dean Baker writes:
"Former Federal Reserve Board Chairman Paul Volcker is a hero to the inside Washington crowd for having brought down inflation from its double-digit levels of the late 1970s. Never mind that this drop in the inflation rate occurred in every other country in the world also. We still must praise Volcker.
We also should not be bothered by the fact that his policy pushed the unemployment rate to almost 11 percent. This was necessary pain that those outside the elite just had to endure for the good of the country as a whole. We also are not supposed to be bothered by what his high interest policies did to heavily indebted developing countries."
Thought you might be interested in that perspective.
