A return to economic sanity

Miracle at the Fed: A hawk becomes a dove, signaling hope, change and job creation are possible in a second term  

By Andrew Leonard

Seven weeks before Election Day in the United States, a wonky speech by the president of a regional Federal Reserve Bank is hardly the kind of thing likely to make waves in the larger political discourse. At this point in the campaign, even the most die-hard economy watchers tend to be obsessed more by the latest poll numbers in Iowa or Colorado than the intricacies of monetary policy. Meanwhile, the politicians that one might hope would be focusing their attention on spurring economic growth are locked in a permanent nightmare of partisan sniping. Don’t look for sense from Congress — just try to keep your head down and avoid the mud.

But that’s all the more reason why the speech delivered Thursday by Narayana Kocherlakota, president of the Minneapolis Fed, is worth paying attention to. Because an amazing, remarkable thing happened in the course of that that speech: A hawk became a dove! One of the Federal Reserve’s strongest critics of aggressive monetary policy aimed at bringing down unemployment changed his mind.