By reappointing Federal Reserve Chairman Ben Bernanke to another term, President Obama has chosen to dance with the devil he knows–that's a good idea. The economy is just starting to show signs of stabilization and changing course would be unsettling.
I was not a fan of Bernanke when he assumed his position. I thought of him as a Greenspan acolyte who far too often turned to easy monetary policy to solve problems. He didn't earn the name "Helicopter Ben" for nothing! In fact, I was critical of Bernanke until we were well into the eye of the storm. I thought that he and other officials waited too long to adjust monetary policy amid the gathering storm.
But after the barn door blew wide open, I warmed up to Big Ben. He went beyond the ordinary tools at the Fed's disposal and brought creativity to the crisis. I also like that he makes himself easily understood, a stark contrast to his predecessor.
There are Bernanke critics, especially in Congress. Frankly, if lawmakers don't like him, I view that as a positive. Considering that the Fed Chair will serve four years, he may outlast some of his Congressional enemies. Once they get a chance to vent their bile, I expect that the Senate will confirm Bernanke without too much fanfare.
The big question that looms is how will the Fed under Bernanke extract the trillions of dollars it pumped into the cratering economy? Big Ben has taken pains to tell us that there is a plan afoot, but if history is any guide, we should expect that the Fed will overshoot its efforts. The central bank might act too quickly, choking off recovery, or too slowly, which could catalyze a period of inflation. I'm preparing for either scenario, but rooting for Big Ben & Co to get it just right.