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  • market_logic2010 market_logic2010 Oct 15, 2010 6:52 PM Flag

    Best and Worst FED Chairmen-the List

    BEST: Win/Place/Show

    WIN-William McChesney Martin, 1951-1970. Martin was best remembered for his remark that the role of the FED chief was to "take away the punchbowl when the party got good." Martin presided over the postwar period of steady growth with mostly low inflation. He brought the Korean War period inflation under control with adept use of monetary policy.

    PLACE-Paul Volcker, 1979-1987. Volcker was brought in by President Carter to control double digit inflation in the wake of the Iranian oil supply shock. Volcker targeted the money supply, and controlled inflation at the price of a severe recession. But growth was rampaging again by 1984.

    SHOW-Marriner Eccles, 1934-1948. Eccles used open market operations to stop the cliff dive of the early depresssion years. By 1935-37, strong growth had resumed, although unemployment remained high. The recession of late 1937-38 was due to fiscal tightening by FDR and Congress, not monetary tightening. Eccles was a early advocate of Keynesian deficit spending, and was opposed to FDR's 1937 spending cuts. Eccles kept inflation under control during the war, and the post-war inflation didn't get out of hand until the Korean War.

    HON. MENTION (4th)-Benjamin Strong, 1919-1928. Strong wasn't the FED Chairman, but the President of the New York Fed. But at the time he was more powerful than the Chairman. Strong, with his associates, invented open market purchase and sales of government securities to control monetary policy. Strong died in 1928, so he had no role in the crash of '29 and the plunge into depression. If he were around, I think he would have aggresively used open market purchases to reduce the damage.


    WORST: Win/Place/Show

    1. WIN (worst): G. William Miller, 1977-1979. President Carter's FED Chairman. Stood by like a log as inflation surged to double digit levels. Resigned in 1979 to become Treasury Secretary; replaced by Volcker who cleaned up the mess.

    2. PLACE: Alan Greenspan, 1987-2007. Who else but Alan? Bubble man. After a good start providing liquidity after the 1987 market crash, it was all downhill. Presided over serial bubbles: the tech market bubble of 1996-2000; the housing bubble of 2003-2006, etc. Famous for saying bubbles ("irrational exhuberance") were difficult if not impossible to recognize. Totally ignored his mentor, Ayn Rand. Also famous for pushing "WIN" Buttons (Whip Inflation Now) when he was economic advisor to Pres. Ford, just before inflation stopped during the 1975 recession.

    3. SHOW-Arthur Burns, 1970-1977. Basically took orders from Nixon. A political operative. Allowed inflation to get out of hand in 1973-74 during the 1st Oil Shock.

    HON. MENTION--Eugene Meyer, 1930-33. Stood by like a log as the depression deepened. Let the money supply fall and didn't provide liquidity to the failing banks.


    Where will Bernanke be: one of the best or worst? If QE works, amybe one of the best. If it fails, one of the worst. Odds? 25% best; 75% worst.

    What do the rest of you think of the list?

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