According to John Hilsenrath, “according to a person familiar with the matter,” Barack Obama is poised to nominate Stanley Fischer to be vice chairman of the Federal Reserve.
This is a bit of a surprising development if only because Fischer didn’t seem to be seriously considered as a contender for the top Fed job. I figured that was either because Fischer wasn’t interested in a government job or because the White House deemed him insufficiently American. If either of those were the case, it would seem to disqualify him for the vice chairmanship too. But he’s extraordinarily well-qualified, a distinguished academic economist (Ben Bernanke’s mentor) who also served as chief economist at the IMF and as president of the Bank of Israel. As Janet Yellen is already poised to be the best-qualified Fed chair in history, the duo would represent a significant upping of the ante in terms of the idea that the institution should be stewarded by real central banking professionals.
Fischer himself is an interesting guy (read Dylan Matthews’ profile from February), born in a town in what was Northern Rhodesia at the time but is now known as Zambia. When he was 13, his family moved to Southern Rhodesia, which at the time was run as a kind of apartheid rogue state. Then he went to the London School of Economics, then MIT for graduate school. He stayed in American academia throughout the 1970s and 1980s, then worked at the World Bank and the IMF through most of the 1990s. He’s essentially a native of countries that don’t exist anymore, and as he’s Jewish he obtained insta-citizenship in Israel when in 2005 he was asked to run its central bank. But he’s also an American citizen. As Bank of IsraelpPresident, he helped Israel weather the recession through massive currency inflation. Fischer says he was running an inflation-targeting central bank and denies that any kind of NGDP targeting was happening, but the fact of the matter is that Israel’s NGDP was more stable than its inflation rate during his tenure. He’s also against forward guidance, which may be awkward as vice chair since forward guidance has become key to the Fed’s thinking.