Stan Fischer saved Israel’s economy. Can he save America’s? by Dylan Matthews

As a professor at MIT — arguably the best economics department in the world — he helped found a school of economic thought that has come to dominate departments across the country. He also advised an all-star crew of grad students who went on top jobs in the policy world, including Bernanke, European Central Bank President Mario Draghi and former chief White House economist Greg Mankiw.

Umm, I'd rather it be Janet Yellen or Christina Romer.

Fischer left the IMF in late 2001, and some months later joined Citigroup in New York as a vice president. Three years into that role, in 2005, he was offered the post of governor of the Bank of Israel. At the time, Israel’s central bank was highly centralized at the time, with the governor had having near-absolute power to pursue whatever policy course he wished. Fischer accepted. Though he did not relinquish the U.S. citizenship he had held since 1976, he became an Israeli citizen upon arrival, in accordance with the law of return for non-Israeli Jews.

Citigroup should have been nationalized. It's too bad Geithner slow-walked Obama's request.

Big central banks tend to be cautious about using that lever. If Bernanke halved the value of the dollar relative to, say, the Chinese yuan, that would dramatically increase U.S. exports and probably economic growth, too, but it would also wreak havoc with the global financial system. Every dollar-denominated asset in the world, including all manner of bonds, would plummet in value. 

It’s less risky for small countries. There aren’t massive piles of shekels lying around in other countries as the way there are with dollars and euros, and Fischer took advantage of that fact. On May 30, 2008, a dollar was worth about 3.2 shekels. On March 6, 2009, it was worth 4.2 shekels. In less than a year, Fischer had reduced the value of the shekel by about 25 percent — a massive devaluation. 

It worked. Exports soared, and 2008’s trade deficit of $2 billion became 2009’s trade surplus of $5 billion. While other countries fell deeper into recession, Israel brushed its shoulders off.

Devaluing the dollar by 25 percent would be benefical.

It would be unprecedented for the United States to appoint someone from abroad to one of its most important government jobs. But Fischer’s time in Israel might actually be a plus in the Obama team’s eyes. Obama has a famously frosty relationship with Netanyahu and has battled suggestions that he is insufficiently supportive of Israel. How better to rebuke those critics than by picking an economist whom Netanyahu knows and respects to the most important U.S. economic policy job? That Fischer’s broadly Keynesian approach is a good fit with the administration’s is just gravy.

My guess is that they won't go with Fischer.