© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
August 8, 2013 5:13 pm
I have a modest proposal for Barack Obama. I think that the president should consider writers as well as economists as he looks for the next chairman of the Federal Reserve.
I just fear that people of this sort were meant for a time that has come and gone – by which I mean the era when central bankers actually moved interest rates up and down.
Economists were handy in those circumstances because they had facility with figures needed to quickly calculate the precise level of the overnight lending rate – to the very basis point – that would yield full employment, low inflation, harmony and understanding.
But the Fed no longer aims so high. The central bank lowered the overnight rate to nearly zero close to a half decade ago – in 2008 (you could look it up) – and it is still waiting for the desired results. The Age of Aquarius hasn’t been quite what it was cracked up to be, in case you haven’t noticed.
The big drama at the Fed these days involves the question of when it might start to taper – not end or reverse, mind you, just taper – its latest round of bond-buying or quantitative easing, known as QE3, which was undertaken to hold down longer-term interest rates for mortgages and that sort of thing.
The Fed’s role in this context has become largely literary. It doesn’t change rates. It issues statements about its feelings – which are then parsed by the financial community, as if they were passages of the Bible, for signs of policy shifts to come.
We all hope this state of affairs will pass and economic conditions will return to the old normal. But a wish won’t make it so. There’s a very real possibility that the next Fed chairman will do nothing more than produce text, and that suggests Mr Obama should at least consider a professional writer for the post.
Now, I know what many of you are thinking and I would say for the record that I’m not interested in the job. You’re looking at one reporter who can resist the lure of public service – at least for now (the midterm elections could change things, given my enduring commitment to working families with children in New York’s Fourth Congressional District, where I grew up and was taught in the public schools).
Besides, there’s a world of better choices. Mr Obama will obviously select a US citizen to head the central bank, but if we let our imaginations drift across the literary landscape, we would find scribblers in all corners of the globe who could help the Fed better describe the current economic environment.
Near the top of any list would be Salman Rushdie. There’s a man who wouldn’t go weak-kneed at the sight of bond market vigilantes; after all, he has taken on the real-life Revolutionary Guard. I also suspect he would be better equipped than most economists to handle the public relations side of central banking. The key, of course, is to be interesting without being understandable, and anyone who has tried to read The Satanic Verses knows Mr Rushdie’s skills in this regard. This guy would be like Alan Greenspan on steroids.
Another possibility would be someone along the lines of the unforgettable Milan Kundera. His skill set is exactly what the Fed needs to carry out its basic mission in these tentative times – to change its language on the economy. Mr Kundera originally wrote in his native Czech and then switched to French. Think of what it would be like if the Fed could move between the two tongues to suit the situation. The level of nuance would be off the charts; CNBC’s Rick Santelli, for once, would be rendered speechless.
Back in the USA, Mr Obama might consider the poet who appeared at his second swearing-in ceremony, Richard Blanco. Indeed, the piece Mr Blanco read – a survey of a day in the life of the US – reminded me in its rigour of the Beige Book, the Fed’s regular summary of economic conditions in its various districts.
The difference was that Mr Blanco put flesh on the data points, and I can’t see how it would hurt the Fed’s next leader – whoever it is and whatever his or her academic training – to do something similar.
Even when monetary policy is on hold, the Fed chairman still speaks to a people in motion. Days give way to nights, as Mr Blanco said, leaving “all of us/facing the stars/hope – a new constellation/waiting for us to map it,/waiting for us to name it – together”.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.