My hunch is that President Obama's first choice was to appoint Larry Summers as Fed chairman. For one thing, such a move would tie-in with any new president's natural inclination to put his new stamp on things. And Mr. Obama aims to have the most transforming presidency since Ronald Reagan took office in 1981.
For another, Obama trusts Summers on economic and financial matters -- he wouldn't hold the position he does otherwise. And all signs suggest that Fed chairman is a job Summers would like to have.
So, why did President Obama announce he will be reappointing Ben Bernanke?
The timing of his announcement -- while on vacation -- is supposedly because the White House wanted that to be the story of the day. No argument with that.
But the reason for Bernanke's reappointment is something else. It could be that the White House "tested the waters" behind the scenes and got feedback that a Summers appointment would not be well-received by the financial markets.
Or, perhaps the president figured out that Bernanke is committed to giving him everything Summers would -- plus the "stability" the markets crave.
Let's face it -- ALL presidential administrations want low interest rates and easy money policies. Summer would have definitely given Obama that. Yet so will Bernanke.
I believe Bernanke will keep printing money like crazy. Even if the Chinese and others eventually cry foul, the White House and the Fed are more likely to keep the money printing going than defend the US dollar. Why? Because defending the dollar would mean pain at home. Even crushing, Depression-like misery.
We will probably see pain in our future anyway. Yet politicians are, well, politicians. And they'll put off pain for as long as they think they can.
I could be wrong. But nothing I've seen so far has made me regret establishing my position in the SPDR Gold Trust ETF (GLD).