by Barkley Rosser (originally published at Econospeak)
OK, so the immediate reaction of many to this title might be to laugh, but I challenge anybody reading this to name another Fed Chair who was clearly better than she is. I do not think you can. However, one reason why one may not think much about her is that things have been so inconsequential since she has been Chair. Nothing much has happened. She continued the Quantitative Easing for awhile started by Bernanke and then stopped it. Inflation has remained below 2% mostly. Growth has not been dramatic, but it has been steady and higher than in most other advanced market capitalist economies. There has not been a recession since 2009. There have been no bubbles and no crashes. Nothing dramatic has happened and certainly nothing bad, even if lots of deep problems of the US economy such as inequality remain. But that one is not the Fed’s responsibility anyway. So, bottom line, she has been doing a great job even if everybody is quite certain Trump will replace her, with all kinds of candidate names being thrown around. But none of these will be better than she has been.
So, going backwards her most serious rival might be her immediate predecessor, who looks to have played a substantial role in the save of September, 2008 that involved buying a lot of eurojunk from the ECB, only to roll it off over the next six months or so. Of course some of the more innovative things done then were coming out of the NY Fed, but Bernanke did an excellent job when the crisis hit. At the same time, Janet was around during that period, initially as San Fran Fed president, and then later as Vice Chair. But where Bernanke looks not so good is the runup to that crisis, where he seems really not to have seen it coming. Who saw it coming and as far back as 2005 sounding the alarm about the housing bubble? Oh, right. Janet Yellen.