The challenge of a lifetime: the new Fed Chair will surely have her hands full.

• Author: Makin, John H.

"Any idiot can face a crisis--it's day-to-day living that wears you out."

--ANTON CHEKHOV

In addition to her impending, and no doubt ultimately successful, quest for Senate confirmation, Janet Yellen will have a lot on her plate in the coming months. Now that House Republicans and Senate Democrats have come to yet another temporary agreement on the budget and debt ceiling, there still exists another threat to the economy: The Federal Reserve's temptation to pursue an overly ambitious monetary policy aimed at offsetting the damage to the economy arising from poorly conducted fiscal policy. Now that President Obama's Fed Chairman nominee has been announced, the Fed needs to shift its focus from wondering who will lead it to what its realistic goals can be. Substantially different views are held by Fed hawks and doves.

The economy is still on uncertain footing, and public frustration with the Fed is increasing, especially since the May-taper into September-no-taper serious misstep. The Fed seems to be making up policy as it goes along. It has become distracted with trying to fix problems it is not well-equipped to handle, including sustained lower unemployment and a faster pace of growth than is obtainable during a period of fiscal consolidation and weak global growth.

The Fed's post-financial crisis mission creep, since 2008, has fueled an unhealthy codependence between it and the market, akin to the infamous pre-crisis "Greenspan put," whereby the Greenspan Fed was expected to--and did--step in to support financial markets whenever there arose a threat to rising asset markets. Markets assume the Fed can and will fix any problems, such as the latest episode of Washington's fiscal policy bungling, that might harm the economy or depress stock prices. Once necessary, but now dangerous, improvisations of monetary policy--quantitative easing and forward guidance in particular--have become alternately ineffective and counterproductive, as the recent tapering trauma has shown. Yellen, as the primary author of the Fed's new communication strategy, needs to identify ways to improve the Fed's communication with markets and the public.

The Fed has come a long way since its founding one hundred years ago. Its original role was to be the lender of last resort in a financial crisis. That role, as a temporary emergency supplier of liquidity in a panic, has continued and should continue going forward. But in the post-financial crisis period, the Fed has been...