Paul Krugman Doesn't Think Fischer Has Edge to Be Picked to Head the U.S. Federal Reserve

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New York Times columnist Paul Krugman says he doesn't think Bank of Israel Governor Stanley Fischer has a leg up on the competition to be chosen the next chairman of the U.S. Federal Reserve.

In a recent column, Washington Post blogger Dylan Matthews proposed Fischer as a possible successor to Ben Bernanke; Fischer is retiring from his job in Jerusalem at the end of June.

Krugman, a Nobel prize laureate in economics, says Fischer "would indeed be highly qualified." But he takes exception with Matthews' suggestion that Fischer might, in Krugman's words, have a "leg up" because of his "success as governor of the Bank of Israel who worked well with [Prime Minister Benjamin] Netanyahu."

Fischer and other possible candidates such as Janet Yellen, a Fed vice chairwoman, and Christina Romer, the former head of President Barack Obama's Council of Economic Advisers, would all be qualified, Krugman wrote in a column entitled "Stanley and the crazies."

But he added: "Matthews is failing to face up to the deep monetary craziness of the modern GOP," the Republican Party.

"Two years ago they lectured Ben Bernanke on how terrible it is to 'debase' your currency. And of course the utter failure of their predictions hasn't changed their minds a bit. So here comes Stan Fischer, who says I still think Keynesian economics is extremely important, and if anybody didn't think so, this crisis should have made them rethink."

According to Krugman, "And as head of the Bank of Israel, his signature achievement was a large debasement - sorry, depreciation - of the currency, which insulated the nation from the crisis and was achieved through huge purchases of foreign exchange.

"This is actually a form of quantitative easing (as well as a bit of currency war ); it's exactly the kind of thing the GOP goes wild about when Bernanke does it," said Krugman, concluding: "I guess my point is that Obama should go for someone good - Stan, Janet, Christy, or someone else to be named - and not even try to appease the crazies."

Paul Krugman addresses the World Business Forum at Radio City Music Hall in New York, October 7, 2009.Credit: Bloomberg

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