The worst of these candidates is Larry Summers. That is why he is most likely to get the post. Of the three, he seems to have fewest doubts.
Summers is so often described as "brilliant" that we are beginning to wonder about the word itself. Perhaps it's coming to mean something else. 'Virtually' used to mean 'exactly.' But people learned that something that was supposed to happen 'virtually' at dawn actually happened after morning tea. Maybe 'brilliant' too is coming to mean 'not quite bright,' which would better describe Larry Summers. He is the Tom Friedman of the financial world - always sure of himself, always with an answer to every problem, and always mildly retarded.
The real problem with Summers is that he lacks modesty. He is so sure he knows what is going on that he leaves no margin for error. Every problem has a solution, he thinks. And he has it!
Brad DeLong, writing in the Financial Times, judges all the leading candidates to replace Bernanke as 'excellent.' But he describes Summers (a FT columnist) as 'slightly more excellent.' DeLong's criteria for 'more excellent' seem to be based on the fact that Summers is "the most creative thinker around." Which just goes to show how far central banking has come. Throughout most of history, what people wanted in a central banker was lack of imagination. The banker was supposed to take in money...and then give it back to you. In the time of Edward II, for example, if the chief banker at the Royal Mint got creative with the realm's money, they cut his private parts off.
But now, DeLong maintains that 'these times are not normal,' and that the new person at the Fed must 'feel the pain of the unemployed in their viscera.' Perhaps English is not Mr. DeLong's native tongue. Or perhaps he really thinks unemployed people have some kind of pain in their viscera. And perhaps he thinks America's chief banker should feel it.
Why? DeLong doesn't explain. We are left to use our own creative imaginations. Presumably, Mr. DeLong thinks Mr. Summers is the man for the job because 1) he feels the pain of the non-working man, and 2) he has the creative imagination to help the poor man find a job.
Mr. Bernanke had little success at this. Even after disappearing 9 million people from the 'workforce,' the official number of unemployed has barely budged. Then again, maybe a more excellent Fed chief will be able to do something extra. But what can he do? More credit? Cheaper lending rates...perhaps, below zero? More creativity in central banking?
Wasn't Mr. Bernanke creative enough? In his enthusiasm for the Twist, ZIRP, QE and other innovations, he forgot the basics. The dollar of 2006, when he took over at the Fed, is now worth only about 88 cents (depending on whose numbers you believe). Maybe if he'd just stuck to the essentials, more people would have jobs. After all, that's what the Fed did following the Panic of 1907 and the Depression of 1902-21. Both times, the stock market collapsed almost 50%. And both times full employment returned within 2 years.
Which leads to our suggestion. First, let us learn from the 13th century. When Ben Bernanke leaves his post, cut his privates off. That will be his going away present. After all, he failed at his most important job - to protect the value of the nation's money. This will also serve as a reminder to his successors: don't use your imagination; stick with policies that work.
Second, when it comes to public service, your editor is against it. But perhaps once in a lifetime, he hears the keening lament of the motherland: 'help me, please.' And so, he offers his service.
Yes, dear reader, if we are asked politely we will serve as the next chief of the Federal Reserve. We alone among the candidates have the requisite qualities needed to avoid the financial disaster coming our way. We alone understand the proper, modest, role of central banking. And we have our plan of action already worked out.
Yes, dear reader, write to your Congressman, your Senator, your President, and to Santa Claus. Ask them to support our candidacy for Fed chief. We don't guarantee better results; but we guarantee that we will be more fun to watch.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.