Salient to Investors:

Professor Frederic Mishkin at Columbia Business School said the Fed has helped save the world.

William Dudley at FRB of New York said:

  • The force with which Bernanke has attacked joblessness has distinguished him, and his legacy is in being very creative and aggressive in an adverse economic environment.
  • It’s OK to be aggressive on monetary policy because there are long-run costs of not getting back to maximum sustainable employment quickly.
  • Bernanke’s open-mindedness is one of his defining characteristics and reflects intellectual confidence – he’s willing to throw out novel, seemingly crazy ideas which is very unusual for a senior policy maker.

Don Kohn at Brookings said the chances of Bernanke accepting a third term under Obama are quite low, but Bernanke has been an outstanding chairman who did what he had to do under extremely difficult circumstances. Former colleagues doubt Bernanke will stay on, no matter who wins.

Ethan Harris at Bank of America said so far, quantitative easing has probably been a small stimulus to the economy and has not created an inflation problem, but how hard is it to exit?

Benjamin Friedman at Harvard said the dual mandate was ignored for so long by Bernanke’s predecessors. Friedman said the Fed pursued both objectives but pretended they weren’t to bolster their inflation-fighting credibility, said Friedman.

Marvin Goodfriend at Carnegie Mellon said the Fed apparently does not want to get into the discussion of boundaries at all, thereby risking increasing Fed involvement in fiscal matters.

Richmond Fed President Jeffrey Lacker said the public and political system’s expectation for regulators’ and supervisors’ responsibilities is unreasonable, and set us up again to be scapegoats the next time something goes wrong.

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