What Bernanke has to look forward to

In this article for National Journal, I look at the task now facing Ben Bernanke at the Fed [the link expires in a fortnight].

I remember congratulating Alan Greenspan on his timing when he retired as chairman of the Federal Reserve Board in 2006. He left with a reputation for limitless, inscrutable wisdom -- and the stresses he let build up in the economy were going to be somebody else's problem. As it turned out, the crash that Greenspan's policies helped to cause was the worst since the Great Depression. So the books on Greenspan's tenure at the Fed were reopened; the man himself recanted his previous views on the economy; and his reputation was trashed, most avidly by people who had previously led the cheers.

History will not put Greenspan alongside, say, Paul Volcker on the roll of great Federal Reserve chairmen. But is such a place something that Greenspan's successor might aspire to?

Of course. Why else take the job? Ben Bernanke, just named by President Obama to a second four-year term starting in January, has had to cope with the immediate consequences of the financial crisis. He has taken the Federal Reserve into unexplored and even constitutionally dubious territory. His performance may not have been flawless, but the boldness of his interventions -- such a contrast with his quiet, scholarly demeanor -- has been amazing. And the innovation is by no means over.

I spend some time discussing David Wessel's excellent new book, In Fed We Trust. I'll post a fuller review of later this week, but in the meantime consider it recommended.