The Real Fed Sweepstakes

At first, it was fun—this parlor game of guessing who the Obama administration will appoint as the next chairman of the Federal Reserve. We all assumed it would be Janet Yellen, because she’s a woman. And then suddenly we had Larry Summers all over the leading financial newspapers receiving multiple endorsements from respected economists. There were sly references to his intellectual prowess and invaluable experience, not to mention (but they always did) his connections with Obama’s closest advisers on economic and financial matters.

Now this little diversion for monetary policy wonks is shaping up to be a referendum on banking deregulation efforts and “sensitive gender issues”—even as the president emphasizes wealth inequality as the defining problem for a nation unable to regain its economic footing and start growing again despite four years of unprecedented fiscal and monetary stimulus.

“When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy,” intoned President Obama in his Knox College speech on July 24. “When middle-class families have less to spend, businesses have fewer customers.”

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