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August 6, 2013

The Real Choice at the Fed Isn’t About Summers or Yellen

Choosing Ben S. Bernanke’s successor as chairman of the Federal Reserve is one of President Barack Obama’s most important remaining jobs. Nobody questions what’s at stake. Even so, the recent quarrel about the presumed front-runners, Lawrence Summers and Janet Yellen, verges on the ridiculous.

This is partly because both are exceptionally impressive candidates. But it’s frustrating for another reason, too. There’s more to setting the post-Bernanke Fed on the right course than choosing the best person for the top job. The fuss over Summers and Yellen is helping people to ignore this.

Obama is wise to take his time in deciding who ought to succeed Bernanke. Others should do the same, and here’s what they should be looking for.

Deep expertise in monetary economics goes without saying — combined with the right ideas about what monetary policy can rightly be asked to do. The new boss should agree with Bernanke that the Fed’s dual mandate for price stability and full employment gives equal weight to both. (If you doubt the wisdom, take a look at Europe.)”

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Read full Bloomberg Editorial here

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