Will Obama Make the Fed Even Worse?

Aug. 27 (Bloomberg) -- President Barack Obama is making themost important economic-policy decision of his second term:picking a new chairman for the Federal Reserve. We shouldn’t beoptimistic, because nothing the president has said or donesuggests that he is at all displeased with a Fed performancethat has been just short of disastrous.

Tight money by the Fed was a major cause, and maybe themajor cause, of the financial crash. Its officials spent thesummer of 2008 worrying about the nonexistent threat ofinflation, and their first monetary-policy decision after LehmanBrothers Holdings Inc. collapsed was to discourage bank lending,a contractionary step. They let the economy’s total spendinglevel fall at the fastest rate since the Great Depression.