The right candidate for Fed chief - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 14 August 2013
The right candidate for Fed chief A  A  A

Poitou, France

When will these markets get back to business? Probably soon.

But not yet. Yesterday was another meaningless, directionless, pointless day.

Even the financial press seems to be out at the beach. Nothing much of interest has come our way for weeks.

And still no call from the White House! We've been sitting by the phone. Every once in a while, we make a 'hurrummmp' sound to clear the throat...ready to reply...

"Yes, Mr. President...Bill Bonner here.

"Take the job of running the Fed?

"Well, I don't know. How much does it pay?

"Is that all? Do I get health insurance too?

"Well, okay, I guess so...but it's a big I need to check with my wife."

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But all this rehearsal has been in vain. The phone hasn't rung. And the person not calling is none other than Barack Obama. And the job he's not offering - Fed Chief - is the very job that your editor is the clearly, decisively, no-questions-about -it most suited for.


Ah, glad you asked. You see, there are some jobs that require real skill. Don't ask us to fix your computer or to make you a fine piece of furniture. When it comes to electronics, we're better off without them. And as for fine woodworking, if we can't do it with a chainsaw, call someone else.

But central banking? Right up our alley.

It is a profession akin to air-traffic control or to a being a night watchman. If an air-traffic controller does his job, everything goes smoothly. But his scope for artistry and improvement is limited. He cannot do a better job by improvising novel systems or causing pilots to undertake unorthodox procedures. He is more like an accountant than a screenwriter. If he does his job well, the accountant adds two plus two and gets four. He cannot do better and get five or six. Four is all he can get. So too, the air-traffic controller can help make sure people get where they were going safely. If he does his job well, things will turn out as expected. If he does an excellent job, however, travelers end up where they didn't expect to go; he has not really added to the sum of human happiness. Out-of-the-box air traffic controlling will not make the world a better place. It can only make a mess of things.

Likewise, the best a central banker can do is the normal thing. Creative central banking, or experimental central bank policies, should be avoided. They don't make the world a better place; they only take people where they didn't want to go.

At best, the central banker is a dull person who does more or less nothing. He doesn't build anything, invent anything, create anything, manipulate anything, jiggle anything, twist anything, pull anything, push anything, increase anything, decrease anything, adjust anything, fix anything, stimulate anything or even touch anything... The central banker keeps to his essential mission - like a night watchman - and does nothing at all...he merely surrenders the premises in the morning exactly as he found them the night before.

Not only does the ideal central banker not do anything...neither does he think anything. The last thing you want in a central banker is the energy and brilliance of a man like Larry Summers, who has many thoughts (almost all of them terrible). Instead, you want a central banker who rarely thinks at all...and then, when he does have a thought, it is not about central banking.

That's why our favorite central banker of all time is a Frenchman. Yes, who can forget Emile Moreau? Apparently, everyone!

Even the people who live in this area of France...scarcely 5 miles from Emile Moreau's home...cannot remember the man. Last night, at dinner, we asked friends?

"Have you ever heard of Emile Moreau?"


"Emile Moreau. Governor of the Bank of France, 1926-1930. You passed his house on your way here tonight."

What was marvelous about Monsieur Moreau was that he was a central banker able to keep things in proper perspective. He attended a central banker's summit in the mid '20s - along with Benjamin Strong from the Fed and Montagu Norman of the Bank of England. On the agenda were the most pressing and important issues of the day - how to save the UK economy, and how to settle the reparations issue and avoid another world war. But what was on Moreau's mind was something much more important - hunting season. When the season opened in this part of France, at the end of August, Moreau promptly left the conference and took up his shotgun.

We hope to be able to follow Moreau's great example and to live up to the standards he set for himself and his profession.

Of course, some will argue that we lack the experience necessary to do the job.

True we have no experience as a banker. In fact, we haven't written a check in at last 35 years. Nor have we stepped foot into a bank in at least 25 years - except for a brief visit to the Waterford branch of the Bank of Ireland (The poor bank has no money. We felt sorry for the clerks; we thought we might cheer them up).

But there are some things that are best done without training or experience. When you get married to a young woman, for example, you don't want her to be too skilled in the art of lovemaking. You'll wonder where she got the training!

Likewise, you're better off with a virgin central banker. Preferably one headed to a convent!

No kidding. When it comes to debauching a currency, once is already too often. Better to get a central banker who claims he has never done it before...and who pledges never, ever to do it again.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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2 Responses to "The right candidate for Fed chief"


Aug 14, 2013

Always creative and entertaining. Bill wouldn't make a good central banker as he does not met the boring criteria..



Aug 14, 2013


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