The Washington Post has been all over the Larry Summers Fed story and their latest post examines what Bernanke’s heir would do at the Fed. They make 10 points about Summers-time at the Fed.
- Summers wouldn’t be any more dovish or hawkish than Ben Bernanke
- Summers won’t have a big effect either way on the Fed’s taper
- While Summers is somewhat skeptical about QE, that has little practical importance
- Summers would look well beyond the unemployment rate to measure the health of the labor market
- While he’s likely to focus on employment while inflation remains low, he’ll be a hawk if inflation starts to rise much beyond the 2 percent target
- Summers would think more about what the Fed can do to stop financial bubbles, but he’d be more likely to address those concerns through regulation
- If a crisis did occur, he’d be no-holds-barred
- He thinks capital is king
- He would use the Fed to pressure global banks to be more transparent and accurate
- He’d try to use the Fed’s control of the guts of the financial system to help lower- and middle-class Americans
Meanwhile, despite his frontrunner status, the knives are still out for Summers. The Huffington Post quotes a former senior White House official with some negative words for Summers.
“I think it would be very problematic,” said the former high-level official. “He’s smart on many topics; I don’t think monetary policy or regulatory policy is the area where he’s actually smart or particularly good. I think the possibility of severe dysfunction at the Fed is the most worrisome part of all of this. Exactly the skills you need in the modern world to get things through in the Open Market Committee — you need to win people over behind a mixture of the strength of your arguments and your ability to persuade — and that is not where Larry is going to be good.”
