There was a time when the appointment of a new Federal Reserve chair caused little excitement, writes Law Professor Alasdair Roberts in the article “Who Should Run the Fed? Yellen, Kohn, or The People” published on the Foreign Affairs website.
“Today, Americans argue intensely about this appointment in the same way they have always argued about nominees for chief justices of the Supreme Court, and for the same reason: because that is where the power lies,” writes Roberts, who is the Jerome L. Rappaport Professor of Law and Public Policy at Suffolk University Law School.
In his article, Roberts tells of the transition from the political action that followed the Great Depression to the monetary policy now used to regulate the economy in the aftermath of the financial crisis of 2008.
“The two salient features of the economic crisis have been political gridlock and technocratic entrepreneurship,” writes Roberts. After the Great Depression, “it was the political class that took the initiative, while the Federal Reserve took a secondary role. President Franklin D. Roosevelt himself set the government’s tone, working with Congress to pass a battery of legislative initiatives aimed at restoring confidence.”
In his article -- one of the most viewed on the Foreign Affairs homepage following its publication – Roberts argues that “the power of the Federal Reserve is greater than ever before. Congressional dysfunction and partisan warfare have made the possibility of economic recovery through fiscal measures or other legislative initiatives remote; monetary policy and the Federal Reserve have become the last hope.”