In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Oct 28, 2005 / 25 Tishrei, 5766

Faceless face at the Fed

By Robert Robb

Printer Friendly Version
Email this article

http://www.JewishWorldReview.com | One of the most important tasks for new Fed Chairman Ben Bernanke, assuming what should be an easy confirmation, will be to make his job less important.

Bernanke seems well suited to do that, which is a compliment. The primary economic contribution that a central bank can make is to maintain a stable currency. Bernanke's predecessor, Alan Greenspan, has certainly led the Federal Reserve Board in accomplishing that during his 18-year tenure.

But Greenspan also clearly saw a role for the central bank in fine-tuning and regulating the overall economy, pressing the gas when the economy was slowing, putting on the brakes when it was growing faster than Greenspan thought prudent. Over the last six years, the Fed has changed the interest rates it sets some 30 times.

Greenspan was also a high-profile kibitzer about fiscal policy and other issues, such as Social Security reform. His public standing was so high that both parties sought to use his often opaque pronouncements to advance their positions.

Republicans stressed that Greenspan supported tax cuts and thought they should be made permanent. Democrats stressed that he worried about deficits and thought tax cuts should be offset. Neither party made much of Greenspan's view that offsets should occur primarily if not exclusively through reductions in federal spending, since neither party has the stomach for doing it.

This broader role of the Fed chairman as an economic oracle and, in Bob Woodward's highly unfortunate metaphor about Greenspan, maestro is unwarranted and potentially dangerous.

The Fed can ruin the economy by creating inflation or depriving it of liquidity in a downturn. But the tools available to the Fed are insufficiently powerful or precise to be constantly fine-tuning economic performance.

In reality, the interest rates the Fed sets only affect the cost of capital at the margins. Long-term interest rates have remained remarkably impervious to the Fed's six-year period of hyperactively seeking to influence them. That's in part because the Fed has done its primary job of maintaining price stability so well, since long-term interest rates are in significant part a function of inflation expectations.

The Fed has more direct influence on the money supply and thus inflation. But even here, there's a great deal of imprecision. It's hard to control what is increasingly more difficult to define and measure.

Because of his public standing, Greenspan was able to get away with drifting into fiscal policy and other issues. But it's a dangerous undertaking for a central banker. Getting into the business of politicians in other areas increases the risk of politicians trying to get into monetary policy. And that, history proves, is a pathway to economic disaster.

When President Bush appointed him, Bernanke was careful to say that he sought "continuity" with Greenspan's policies and strategies. But there is reason to believe that he will depart from Greenspan's approach in ways that are useful and beneficial.

Bernanke is one of the foremost advocates of a central bank publicly setting an inflation target. Greenspan resisted this because it would limit flexibility. But that's actually one of its virtues.

A publicly set inflation target obviously puts price stability above other economic goals, decreasing the temptation to attempt to fine-tune the economy. Moreover, it more properly aligns public expectations with what a central bank can and should do, which is to maintain a stable currency.

As Bernanke put it in a Wall Street Journal column he co-wrote in 2000: "(T)he transparency of the inflation-targeting approach would encourage politicians and the public to focus on what monetary policy can do (namely, maintain long-run price stability), rather than on what it can't do (create permanent increases in growth through expansionary policies)."

Bernanke has a calm view of the so-called twin deficits, the current account deficit in trade and investment and the federal budget deficit. He brought fresh insight into the current account deficit by arguing that it was more a function of a worldwide savings glut finding safe harbor in the United States than a reflection of fundamental flaws in the U.S. economy.

He's also more likely to stick to his knitting publicly than Greenspan was, leaving fiscal policy and other issues to the politicians elected to tend to them.

Achieving a stable currency is a remarkable and powerful economic achievement. But done right, the doing of it should be practically unnoticed.

If, in five years, Bernanke is as well known as Greenspan is today, it will be more a sign of failure than of success.

Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

JWR contributor Robert Robb is a columnist for The Arizona Republic. Comment by clicking here.

Robert Robb Archives

© 2005, The Arizona Republic