No, I have no idea who the next head of the Fed will be. But it’s clear the gloves have come off.
But why limit the choice to Summers and Yellen? My choice, for what it’s worth, is Federal Reserve Governor Sarah Raskin (now awaiting confirmation as deputy Treasury secretary), who was recently interviewed in American Banker:
Q:What about critics who say the Fed is overstepping its bounds even just discussing income inequality, that this is not part of the mandate?
Well, I think we want to make sure that we are honestly approaching very difficult economic problems.
Our mandate is to maximize employment in the context of price stability and financial stability, and this is a very, very challenging mandate and it’s important to consider many features of the economy, including income inequality.
The impact of income inequality on the economy isn’t clear cut, so I welcome anybody whose research and analysis can help think through these linkages. I want their voices as part of the debate. We don’t want to be a close-minded institution intellectually. And I think our mandate is important enough and difficult enough that we want to make sure we’re creating an environment for people to put forth their best ideas.
Q:Do you have the support of your fellow board members on that?
I can’t speak for everybody, but certainly everyone is on board with moving us toward our mandate and being able to create maximum employment in the context of price stability. To do this, we have to stay open to the idea that there could be structural changes in the economy. And income inequality, wealth inequality, is a structural change that is undoubtedly in place. It’s an empirical reality.