This Christian Science Monitor story on Ben Bernanke has boosted my hopes for a smooth transition from one of the most effective Fed managers ever to an "unknown" replacement. Bernanke is currently undergoing confirmation hearings before the US Senate. In the CSM story, he talks about finding a working balance of computerized statistical analysis and human judgement.
He and coauthor Jean Boivin concluded in the 2001 paper that man can outperform so-called expert systems. "There clearly remains considerable scope for human judgment about special factors or conditions in the economy," said the two researchers.
Wikipedia brings a little more backround to light. But I'm having a little trouble determining what this quote really says about his direction:
In March 2005, a few months prior to becoming Chairman of the CEA, he gave a speech which argued that a "global saving glut," resulting from new patterns in international capital flows, was largely responsible for the American current account deficit. This was controversial among those economists who felt the trade deficit was due instead to excessive governmental spending. It sounds reasonable that a "glut" of savings in economies targeted by US companies will result in a negative trade balance. What exactly constitutes crossing the line of excessive government spending is a little harder to determine vis-a-vis that deficit. Here's to hoping he's as good as he just might be at finding the right balance of Prime Rate incentivising to hold inflation to efficacious levels while
A) American business adapts to world demand for its products and
B) the economies with whom we do that business adapt to changes in their own needs and abilities to produce.
After all, you can't stifle growth just because it's difficult, just like you can't push it to the limit if it it's obviously about to kill you.
And you simply can not do it alone.