Must-Read: Binyamin Appelbaum: Senate Confirms Jerome H. Powell as Fed Chairman

Must-Read: Marvin Goodfriend could have given any one of three answers to account for his rather strident opposition to Ben Bernanke’s monetary policy at the start of the 2010s: (a) that he was right, and that Ben Bernanke was lucky things turned out well and did not go south; (b) that he was wrong, and has rethought his views in such and such a way; or (c) that he was giving his political patrons what they wanted to hear. Any one of the three would have been better than filibustering: Binyamin Appelbaum: Senate Confirms Jerome H. Powell as Fed Chairman: “Brown and other Democrats questioned the qualifications of Marvin Goodfriend… [who] repeatedly predicted after the 2008 financial crisis that the Fed’s actions were about to unleash higher inflation…

…That did not happen…. Goodfriend was flustered by questions about his predictions. He conceded that some had been wrong, but defended others and declined to explain his thinking…. After the crisis, Mr. Goodfriend repeatedly criticized the Fed’s stimulus campaign as likely to generate inflation rather than economic revival. He told Bloomberg in 2012 it was “really doubtful” the Fed could reduce unemployment, which was then hovering above 8 percent, to 7 percent. Furthermore, he said, even if the Fed succeeded in doing so, “it would give rise to rising inflation in the next few years, which would be disastrous for the economy.”…

Mr. Goodfriend has continued to criticize the Fed in recent years. In March, he told a House committee that the Fed’s benchmark interest rate was “too low,” and he endorsed the adoption of a monetary policy rule that would limit the role of human judgment in raising and reducing interest rates. On Tuesday, Mr. Goodfriend said he remained in favor of a policy rule, but he was less critical of current Fed policy, which he described as being “more or less on the right path going forward.”…

January 27, 2018


Brad DeLong
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