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President Jimmy Carter appointed Paul Volcker to the role, and he tamed inflation by stepping on the throat of the U.S. economy. In addition to bitter complaints in Congress, the street protests included farmers blocking the Fed’s headquarters with their tractors.
His reappointment by Republican Ronald Reagan in 1983 got confirmed in the U.S. Senate with just 16 no votes.
When the current chairman, the Republican Bernanke, was reappointed by President Obama, there was a sometimes heated, bipartisan debate in the Senate over such Fed actions as the massive infusions of capital in the banking system and a bailout of a reckless insurance company.
Then the Senate confirmed Bernanke with 70 votes.
The way this job stays out of politics is to have it be held by a technocrat, someone who needs to be just really smart, not necessarily brilliant, and who has the credibility and skills to drive consensus for an independent Fed policy.
The president needs to finally decide, and the wise choice is a “safe” choice, someone who can step in and pick up where Bernanke left off. Yellen would seem to be a very good candidate.
To take a different course of action — worst case being another horse race — risks turning the Fed chairman’s post into just another thing for politicians to squabble about.
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