Who will replace Ben Bernanke as the next Federal Reserve chairman? This question has been dominating dinner tables in US political circles, with news that the administration is considering former Treasury secretary Lawrence Summers for the role. But what has been less debated is precisely what the next incumbent will need to accomplish.
Monetary intervention is one of the more complex areas of public policy, but a simple children’s story can summarise what awaits the next chair. He or she will need to answer the important Goldilocks question: was Mr Bernanke’s response to the Great Recession too hot, too cold, or just right?
The next candidate for the post will come under intense political scrutiny, especially from the conservative movement, over the idea that Mr Bernanke did far too much. It would be troubling if his successor were to agree: year-over-year inflation rate is the lowest in 50 years, while unemployment still remains high at 7.6 per cent.