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The Next Fed Vice-Chair

Summary:
Oct. 30, 2017 — There has been speculation that after Trump picks one of the five candidates to be chair of the Federal Reserve (with Jay Powell now apparently the front-runner), he could pick another one of them to be Vice-chair.  This latter position is the one that, sadly, Stanley Fischer is now vacating. I hope that Trump asks Janet Yellen to be Vice-chair, assuming he breaks precedent and does not re-nominate her for Chair, and I hope she accepts. Most pundits assume that Yellen would not dream of accepting the number two position.  Conventional wisdom is that no self-respecting Washington official would settle for a job of rank lower to the position previously held.  I have never quite understood this logic. The argument seems to be “if I can’t be the most powerful person, then

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Oct. 30, 2017 — There has been speculation that after Trump picks one of the five candidates to be chair of the Federal Reserve (with Jay Powell now apparently the front-runner), he could pick another one of them to be Vice-chair.  This latter position is the one that, sadly, Stanley Fischer is now vacating.

I hope that Trump asks Janet Yellen to be Vice-chair, assuming he breaks precedent and does not re-nominate her for Chair, and I hope she accepts.

Most pundits assume that Yellen would not dream of accepting the number two position.  Conventional wisdom is that no self-respecting Washington official would settle for a job of rank lower to the position previously held.  I have never quite understood this logic. The argument seems to be “if I can’t be the most powerful person, then I’d rather have no power at all than settle for the #2 slot.”

Historically not all Washington officials have obeyed the conventional wisdom.  John Quincy Adams had a long successful career as a Congressman, after failing to achieve a second term as president. William Howard Taft too was happier serving as Supreme Court Chief Justice than he had previously been in the White House.  Setting a worthy example, Fischer accepted the #2 job at the Fed in 2014 even though his abilities and experience would have qualified him to be Chair.  It would be best for the country if Yellen stayed on.

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Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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