With Fed Chairman Ben Bernanke's nomination for another term increasingly in doubt,
this suggestion is an intriguing one.
...Ben Bernanke should withdraw and the president should nominate Paul Krugman to take his place.
Paul Krugman is an expert on monetary policy – he wrote the classic paper on balance of payments crises (and probably could have got the Nobel Prize just for that), his work on Japan in the 1990s shaped everyone’s thinking of how to handle potential deflation, and his assessment of the crisis and needed response in fall 2008 was right on the money.
Krugman is known to many academics as a trade theorist and as a pioneering modeler of growth with increasing returns. But just because Keynes wrote eloquently on Indian currency reform did not prevent him from also understanding what had gone wrong with the world economy – and how to substantially fix it.
Krugman also has exactly the paper trail that you would like to see from any potential Fed chair. He has written pointedly and with complete clarity about all the leading policy issues of the day.
There is no question where he stands, for example, on “too big to fail” financial institutions: he’s opposed and would push for fundamental financial reform and tough oversight.
It's an interesting idea, although Krugman himself
has already shot it down as "crazy." I'm not sure about that, but I do agree with Krugman on "agonizing" over whether Bernanke - "a great economist" who also "completely failed to see the trouble building as the housing bubble inflated" - should be confirmed for another term. I could go along with Bernanke not being confirmed if it's Paul Krugman as his replacement. But unless we can find someone of that caliber, I'm with Krugman on this one: stick with Bernanke.
