Larry Summers officially fell on his sword over the weekend by removing his name for consideration to be the next Federal Reserve chairman. I'm sure this came as a relief to the White House (they probably orchestrated the move), who has more than enough on their plate right now with Syria and finding more money to fund the government at the end of September. It also sparked a huge overnight fall in the stock market.
So the question is, are we going to see a female dollar? I hope so, I think it could be a nice change to see what a female could do as chairperson of the Fed. I am of course referring to Janet Yellen, who is number two at the Fed. One thing I think about government and politics is that you can be completely incompetent and if you just stay around long enough, you get pushed up the food chain to the top job. The official name for this phenomenon is the Peter Principal. The Peter Principle is a proposition that states that the members of an organization where promotion is based on achievement, success, and merit will eventually be promoted beyond their level of ability. The principle is commonly phrased, "Employees tend to rise to their level of incompetence."
It remains to be seen whether or not Janet Yellen can do a good job. She is certainly going to inherit a disaster of a mess when Bernanke leaves in January 2014. Somewhere down the line we are going to see just how ineffective the policies of the Fed and this administration were in solving the economic downturn that we have all be experiencing the last five years.
Certainly spending trillions of dollars did not help the the average worker and the general economy, it did however help the stock market, which is more visible to everyone. But low interest rates helped crush what little savings folks had in the bank. It also destroyed the retirement of millions of Americans who are living on a fixed income. What remains to be seen is what's going to happen to all of these bond prices
when inflation rears its ugly head.
If Janet Yellen is elected, and that looks to be the way it's going now that Larry Summers is out of the picture, it's going to be interesting to see what she will do with the dollar. Whether she carries on with the continued debasement of this currency and eventually we see the US dollar lose its reserve status, are all questions we can only ponder about at this juncture.
To whoever becomes the next Fed chairman, I wish them good luck. They are going to need it.