In reacting to Krugman's criticism of Bernanke Sumner admits he really can't criticize it:
"I think what Bernanke meant to say was that the Fed should not raise its long run inflation goal when unemployment is high. And that’s certainly a defensible proposition. But he didn’t express this view clearly, and hence got hammered by people like Paul Krugman and Brad DeLong. And I can’t blame them, because the Fed is acting as if they don’t care at all about the unemployed. It’s acting like the ECB. Inflation has averaged much less than 2% since mid-2008, which would be an excessively tight policy even if the Fed didn’t care at all about the suffering of the unemployed."
He does try to give Bernanke something of a benefit of the doubt:
"My hunch is that Bernanke does care about the unemployed, and wishes the Fed had done more. My hunch is that he doesn’t have the Fed with him, but feels forced to defend Fed policy for political reasons. This is very awkward, and he occasionally stumbles. (It’s also a very poor reflection on Obama’s leadership, as he appointed 80% of the Board of Governors, including Bernanke.)"
He then notes:
"It’s much easier to be head of the ECB, because you don’t even have to hide the fact that you don’t care about the unemployed."
Here here! But to his point about Obama, well... I'll be the first to tell you that I'm a partisan Obama Democrat and I tend to mistrust Obama bashing whether on the Left or Right. I believe that he's been our only line of defense against Paul Ryan-Mitt Romney style austerity.
In my defense I'll appeal to one of the very greatest Republicans, Thaddeus Stevens who declared,
"Principles indeed! Betray your principles and get behind your party!"
Sumner though perhaps does make a good point here that Democrats should ask themselves. Obama did have an opportunity to shape the Fed. Many of us are frustrated by the SJC. This week again in hearing the case of the draconian Arizona immigration law, the Justices unfortunately seem to be inspired more by a partisan conservative Republican ideology than to really applying the law properly.
For them it seems perfectly natural for Arizona to target Hispanics for invasive investigations. Yet, here Obama has a chance to really influence the Fed-he could appoint as many as all 8 of the FOMC and yet he has not been out in front on this. What I think is a fair question is what exactly is Obama or his economic advisers monetary philosophy-do they have any opinion at all? Have they even considered that the Fed offers them a much to be envied opportunity to shape monetary policy for decades to come?