The Bernanke Standard (The Fed nominee inherits his own inflation revival.)

From OpinionJournal.com:

When Alan Greenspan was nominated to succeed Paul Volcker as Federal Reserve Chairman in 1987, financial markets tanked. The more positive reaction to Ben Bernanke's selection yesterday shows how much the markets have come to trust Mr. Greenspan and how they expect Mr. Bernanke to run monetary policy in the same fashion.

He'll have a hard act to follow, or rather, two hard acts. As the nearby chart shows, the watershed year in modern monetary policy was 1979, when a rebellion by financial markets forced Mr. Volcker's selection on Jimmy Carter. With the stalwart backing of Ronald Reagan, who said the dollar should be "good as gold," Tall Paul killed inflation.

Memories of the 1970s were still fresh enough in 1987, however, to make markets wary of Mr. Greenspan's ascension. But he has continued the drive toward stable prices that Mr. Volcker began, albeit with some blips along the way. This is the Fed's one overriding duty: defense of the dollar's purchasing power, at home and abroad. And one of its byproducts has been a generation of extraordinary economic prosperity. Since 1983, Americans have seen their assets climb in value by some $20 trillion, and the Dow has multiplied from less than 900 to more than 10300. A stable price level lifts all boats.