Of the two frontrunners to be the next Federal Reserve chairman, Lawrence Summers would likely taper the Fed's quantitative easing more quickly than Janet Yellen, says Joel Naroff, president of Naroff Economic Advisors and a member of Newsmax's Financial Braintrust Alliance (FBA).
Summers, a former White House economic adviser, would likely start tapering sooner if the process hasn't already begun by the time current Fed Chairman Ben Bernanke finishes his term Jan. 31, Naroff tells Newsmax TV in an exclusive interview.
"Janet Yellen [currently the Fed's vice chairwoman] is much more concerned about the economy and unemployment and is worried that they could start doing it too soon," he said. "And if they start doing it too soon, does that really set back the whole process of recovery?"
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It's not a huge distinction between Summers, now a Harvard economist, and Yellen on QE, Naroff says. "I don't think we're talking about much more than a difference of three, maybe four, months."
Some critics of Summers have complained that his style is too aggressive. "The issue with Larry Summers is that he could be less of a consensus builder, more of a person who's at times fairly headstrong in his views," Naroff said.
"Given what a Fed chair has to do these days, it's not just be a good internal politician within the Fed itself, but be a politician especially with Congress, deal with the president and world leaders in the financial sector."
There's talk that Summers isn't up to the political end of the job, Naroff says. "What people are concerned about, and I don't know whether this would be true, is whether he has the temperament to be that kind of consensus builder that might be needed," Naroff said.
"[That's] especially [important] since we're now going to be starting to end quantitative easing, and maybe by the end of next year even raising interest rates. That needs a lot of outward discussions and communications."
All this raises the issue of whether the Fed is being politicized. Naroff says there's a real danger of that.
"The whole point of the structure of the Fed was to take it out of the politics," he said. "And you can't fire these people, which is the way it should be," Naroff said.
But the Fed chairman's frequent congressional testimony has turned into an opportunity for congressmen to "push their political viewpoints," Naroff said.
"So a Fed chair has to be able to navigate through all those political views that are so-called questions, but are really statements of approaches."
And that's an important issue, "because we don't want the Fed chairman to have to kowtow to a politician, whether it be the president or anybody in the Senate or the House."
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