Tuesday, June 9, 2009

Kudlow On Summers as Fed Chairman

Larry Kudlow makes some interesting comments on what Larry Summers as Fed chairman might mean:

So given the choice between [Bernanke and Summers]..., who do I like? Well, meaning no disrespect to Mr. Bernanke, I think I’ll go out on a limb and choose Summers. Why? Because during the Clinton years, when Summers held several Treasury posts (including Treasury secretary), a strong-dollar policy was in place. Back then I called it King Dollar. And I frequently praised Robert Rubin and Larry Summers for backing King Dollar.

And since I believe in a price-rule approach to Fed policy, where the dollar should be stable and the Fed head should watch open-market prices such as the dollar, gold, and commodities in order to promote price stability and economic growth, Larry Summers’s résumé as a Clinton-Rubin alumnus is closer to my liking.

And in terms of Mr. Summers’s so-called prickly personality, that might be an excellent credential for a truly independent Fed chairman. Paul Volcker had a prickly personality, but he was the inflation slayer (with Ronald Reagan’s help).

Ben Bernanke, on the other hand, seems to be targeting the unemployment rate, and he has never given much emphasis to a stable dollar as a key Fed-policy variable.
I have noted before that at the Rubenstein interview of Summers, Summers mentioned inflation as a concern. On the other hand, he hangs with David Rubenstein and the like, who have little interest in sound money.

Thus, it is difficult to get an accurate picture of what a Summers regime at the Fed would be like. He seems to have some intellectual fear of inflation, but will he ignore that and print money to support the Obama regime and its cronies?


  1. He's going to be Fed chair... you don't get to be Fed chair by championing a gold standard (Greenspan did, but he obviously forgot about that by the time he became Master Of the World's Biggest Printing Press)

  2. I spoke to cheer leader Larry Kudlow on his Sat. radio show and stated that Summers is one of the persons most responsible for the mess we are in. Summers thwarted attempts to regulate derivative markets and supported bank reform that allowed banks to engage in non traditional areas. He agreed! So how can he like Summers as Fed Chairman. Also, Larry berated Greenspan when he raised rates and urged him to lower them, so I discount his thoughts as that of a Economist from the "Kiss Up School of Thought".