Dear Mr. Berko: Could you give your opinions of recent chairs of the Federal Reserve Board — namely, Alan Greenspan, Ben Bernanke and Janet Yellen? — TD, Akron, Ohio
Dear TD: I believe I know enough about economics, money and banking to spend a month of evenings talking with Janet Yellen about how she and her colleagues run the Federal Reserve.
I think this great woman is doing a much better job of running the Fed than Alan Greenspan, who was well-known as a skilled political operator and a lady’s man. Greenspan headed the Fed between 1987 and 2006. He was an incurable bon vivant, reveled in the spotlight, enjoyed nightlife and answered questions in ways calculated to burnish his image. He even considered running for president. Good Lord! Alan was the archetypical mumbling incompetent, and a clearly spoken sentence was not in his repertoire. He was too politically friendly with Congress and bankers and copiously coveted their social attention.
Meanwhile, “Gentle Ben” Bernanke — who served two terms, ending in February 2014 — was not socially, philosophically or economically a Greenspan fan. Bernanke took over the Fed holding buckets of night soil left behind by the numerous bubbe meises with which Greenspan had so blithely fooled members of Congress, few of whom had the brains to identify the smell. Bernanke and Greenspan were not compatible.
I didn’t care for Alan “The Mumbler” Greenspan as an economist or as chairman at the Fed, the position for which he so ungraciously lusted. I didn’t care for his support of the gold standard (he was a fawning devotee of Ayn Rand) and was disappointed with his do-nothing tenure. During his last five years at the Fed, even the Standard & Poor’s 500 index was basically unchanged. In fact, Time magazine and other respected publications claimed that The Mumbler was to blame for our mortgage and banking crisis because he refused to acknowledge the subprime loan fiasco that brought on the housing bubble and then the bust.
Bernanke, the epitome of calm, was the medicine man the world badly needed. His amazing temperament, his unstinting courage and his unusual creativity brought order to the financial world. His forceful actions at the Fed — plus his insistence on transparent cooperation with other agencies, including those of foreign governments — prevented a worldwide depression that would have easily eclipsed the Great One of the 1930s. And he deftly presided over the orderly collapses of Lehman Brothers, AIG, Merrill Lynch, Bear Stearns, General Motors, Fannie Mae, Freddie Mac and other American icons. His unorthodox measures of lowering interest rates to zero and quantitative easing, his courage, and his timing will be marveled and talked about by future economists and historians.
The 5-foot-3 Janet Yellen is the most nearly perfect chair for today’s Fed. Her small stature belies her height as an intellectual giant with a convincing velvet hammer. Whereas Bernanke was left with the daunting task of cleaning up Greenspan’s acutely tragic mess, Yellen comes to us like a steel-willed grandmother with a good recipe for chicken soup to nurse the economy farther away from the edge. In mid-July, I listened to her patient answers as she was being interviewed by Congress. I won’t mention the names of those members of Congress who sought to cross-examine and game her. But I feel compelled to comment about how logically, respectfully and serenely she dispensed with the dozen or so stupids, whose ignorance of economics and monetary policy was palpable. Yellen may be the most qualified Fed chair in history; only Paul Volcker, whose multi-decade career at the Treasury and Fed, can come close. Yellen was an economist for the Fed in the ’70s, ran the Council of Economic Advisers for over two years, headed the San Francisco Fed for six years and was vice chair at the Fed between 2010 and 2014. She is a genuine gem. Let’s hope President Donald Trump allows her to continue as chair.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775, or email him at email@example.com.