What’s at Risk if the Fed Becomes as Partisan as the Rest of Washington?
We could become Venezuela... Life as we know it could be at risk. Sure, the super rich might ride it out - if their homes aren't burned by angry mobs.
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Moore and Cain, should they find themselves confronted by a new Democratic President, would almost certainly try to tank the economy to drive that person from office. That is why their nominations must be resisted.
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Cain was nominated to make Moore look good by comparison. Or the other way around.
The Fed has been partisan from it's existence.It help's rich people get richer. Privatize the profits socialize the losses .Ask the average American how much of the 4 trillion created since 2008 landed on their doorstep.
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I've seen Moore on TV many times, always the same vitriol & smug "good-natured" chuckling.
One may smile, and smile, and be a villain - Shakespeare ...
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Trump is just a cat’s paw for the billionaires behind all this emasculation of regulation and expertise. The Kochs, the Mercers, the DeVos, ... the list of wacko wealthies goes on ... are eager to see all control relinquished to themselves.
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I believe that President Trump is working to reduce respect for the federal government.
Beyond continually attacking -- often falsely -- that government's officers and employees, often including those he appointed, he appoints people who lack the character, experience, or ability to serve.
Cain and Moore may be able but they are too partisan for the job for which they have been chosen. The Federal Reserve is supposed to be independent, not sycophantic.
His family members may be able, but they are selected (as are many others) not for loyalty to the Constitution but to President Trump.
Taking a longer view: Will President Trump's tax returns stay secret? Is he concerned that people will be too impressed or embarrassed :
(1) that he has been so eager to pay his full share of taxes as a patriot would -- rather than scamming the government as too many grifters do to avoid paying their fair share of the costs of the government that protects them,
(2) that he deducted charitable contributions so generous to those who lacked the inheritance and tax dodges and bone spurs that smoothed his life's path -- rather than just amassing and keeping wealth in a society where private philanthropy is the norm?
Eventually the tax returns will come out, perhaps after the Trump Presidency, perhaps even after his death. They will then show how he failed these basic tests of patriotism and social conscience, thus further eroding trust in and respect for the federal government.
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The risk is loss of the dollar as the reserve currency and all our debts/deficits crashing in on us.
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Just yesterday, IMF chief said that tickling with monetary policy is more dangerous now than ever before or something like that leaving us the options to play more with Fiscal game. It is very difficult to say that FED was ever independent.Then the question comes: How much dependent it is? By the laurels of 2008 & thereafter, FED cannot anymore claim its exclusiveness. While many people use strongly worded abusive language, I would like to give it a chance, assuming the Senate approves two nominees...
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Questions about Fed accountability date to its origins. After all, the Reserve Board is not an impartial body. Fed history indicates that it is protective of financial institutions. As such ,it represents the interests of the banking sector. 'Nuff said...
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If... If... If the GOP continues to corner and use all the power of government, what's at stake is a great deal, and the remedy some will seek will be in extra-constitutional action. Ask Ireland's IRA. Ask ETA. Ask FARC.
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Please do not suppose the Senate led by Mitch McConnell is going to stop these appointments. McConnell has sold his soul to the Trumpian ideal. The well being of the nation is clearly secondary, and the desire to politicize everything has become the mantra. Neither man is a credible nomination, but theyw ill be confirmed and yet another institution damaged for a generation.
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@dairyfarmersdaughter
But Mitch has money that could be at risk. This might, because it involves everyone's financial security, be the issue that shakes GOP out of their stupor. If we're lucky.
It looks like Sean Hannity could have recommended Stephen Moore to Trump during one of their cozy nighttime chats. What's scary is that the possibility doesn't require a stretch of the imagination. As for Cain ... well, pizza.
4
Looking forward to Moore and Cain explaining the relevance of the IS-LM model to Fed policy.
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@pinewood or the identities of Irving and national income accounting.
As to whether Cain and Moore would behave like "normal" central bankers (and I have no idea what that behavior would look like) I have no doubt that they wouldn't. Trump wants inflation. Every real estate developer does. They are clearly nominated to loosen the purse strings.
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Dear Congress,
You do understand that the good-faith-and-credit of the United States as well as the Dollar's place as the reserve-currency-of-choice are two of the corner-stones of American's financial stability?
Right?
*crickets*
7
Hey, I’d like to nominate myself for whatever the heck this pizza guy and the other one are up for. I’ve ordered at least a dozen pizzas for birthday parties and I’m sure I could fake an economic paper or two — I certainly couldn’t do any worse than any of the other Cabinet members. . . . .no? Of course, my dog was born in New York not Germany although he is a German Shepherd, but you can’t have everything and I understand the Prez doesn’t like dogs.
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Obama's Fed created money out of thin air to balance the anti business sentiments and policies of the administration. From redistricting to judges ideologies to Fed's policies the left is suddenly professing shock and revulsion at finding that politics play a role in governance. There may even be gambling going on in Casablanca.
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@Just Saying - No, Obama’s Fed adopted quantitative easing in a desperate attempt to revive the economy after the Great Recession caused by the Bush administration. And it succeeded.
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@Just Saying>>Obama's Fed created money out of thin air. WATCHING A LOT OF YOUTUBE "ECONOMIC ANALYIS," ARE YOU
It is not uncommon to find Presidents that draw from a pool of ideological soulmates. Competent candidates are easily found.
Trump prioritizes loyalty to his person, not necessarily an ideology. This dramatically reduces the size and competence of that pool.
The danger our nation faces is not a misguided ideology, but rather a lack of competence.
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@Jim Robbins I guess the consolation is that after a Trumpian disaster, people will have renewed appreciation for competence.
1
You thought it was impossible to imagine Trump being elected, now Cain appointed a FED Governor. Now imagine this:
Herman Cain, after serving a couple years on the Fed Board of Governors, is appoint the Chairman of the FED.
If y'all haven't noticed it, we're in a period that follows Postmodernism, a period where any possibility that can be imagined can become real, where lies and fiction are no longer discriminated against and are buoyed by affirmative action and given equal time on stage as truths and facts. This is why, for example, we have so many false equivalencies such as giving the 3% climate change skeptics the same 50% of air time in the media as the other 97% of scientists who have reached consensus that climate change is an anthropogenic fact.
I call this period the Mendacine. We're lying to ourselves that the realities we create are real as the ones we find.
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Well said!
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Re: would Mr. Moore and Mr. Cain adopt the cautious, careful language typical of central bankers — or embrace a role as partisan warriors?
Wonkish
In the case of appointments to the Central Bank board research shows that the past is a good predictor of the future
From
http://www.parisschoolofeconomics.com/reshef-ariell/papers/MR_CBG_june2016.pdf
How Do Central Bank Governors Matter?
Regulation and the Financial Sector
"Do employment and educational characteristics of central bank governors affect financial regulation
?
To answer this question, we construct a new and unique dataset based on curriculum vitae of all central bank governors around the world in 1970-2011, and merge this with data on financial regulation and other variables. The proportion of governors that had past experience in finance increases from 10 percent in 1980 to 30 percent in 2010.
Past experience in finance matters, and the effect is large: Over the average duration in office , a central bank governor with financial sector experience deregulates
three times more than a governor without financial sector experience. "
I.e. if you want less regulation of a Nation's banking system (more deregulation) that its Central Banks supervise, pick governors with financial sector experience
Given that Fed failed to properly oversee the US financial sector - resulting in the Great Recession - non-financial expert might be useful additions to the board
@Woof The economy suffered in 2008 in substantial part because of deregulation passed in the 1990s. I'm not sure if the Fed let us down, or if they were just following the laws Congress passed.
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Another example of Trump and his cronies attempting to totally corrupt the government (see Cabinet and regulatory agency appointments, pandering to evangelicals, etc.). Add in the raft of “conservative” (that is, far right) judges and other lifetime appointments. Repairing the integrity of government after all this may be impossible. The Dems must move along from Mueller and make recovering from this wreaking crew damage part of their message. But will people listen? Does anybody care? Who knows?
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Is Trump knowingly trying to make America a second rate nation or is it just his natural attempt to bring us down to his level?
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And...was there ever a more political guy at the Fed that Alan Greenspan a well known Republican active in partisan politics who headed the Fed?
We was opposed to regulation and eventually did not do a good job of it. He proselytized against regulation and pushed for something called self-regulation which ended as you well know, badly. He also at one point endorsed a tax cut while Republicans were in office because looming fiscal surpluses were about to 'damage' the economy.
And no one today wants to recall Greenspan's tenure at the Fed as an example of partisanship. Isn't that curious?
Also let's remember that the influence of Fed Governors on the Fed is also though their position on the Board not just as FOMC members. The Board of Governors is a smaller group and it is where the Reagan appointees and opponents of Volcker took 'control' of monetary policy. Volcker 'controlled' the FOMC. But the Board is the entity that votes on discount rate change requests of the district banks. and Reagan appointees out-maneuvered Volcker to approve a discount rate cut at a time that Volcker opposed a fed funds rate cut and that forced his hand. That episode is the clearest example that he had lost control. He soon left the Fed after that. The Board per se matters
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The Moore and Cain picks are pure Trump, who is only impressed with people he's seen on TV -- preferably stroking his ego.
But to the broader point, the increased politicization of the Fed has been inevitable since we moved away from traditional pensions and made the stock market the linchpin of most Americans' retirements. That's also raised the influence of the "wealth effect" on the economy. No president can afford to preside over a stagnant or falling market for very long.
It's those pesky old unintended consequences again...
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Trump only gets the best people.
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What defines a hack is the inability to spot a hack.
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Like all other nominations by Trump, they must have some kind of criminal past so that they will always be on even foot together.
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Just what is needed, a monetary policy to match the died gold of Trump's hair. Every appointee who is hair-brained gets the nod from Trumpistas who fear their own shadow at the ballot box.
The Trump picks are not partisan they are incompetent.
Everything Trump does is incompetent and he spreads that all over the government.
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Are you really hoping that the entire world has not been paying attention to the United States for the last 2 years?
Look, it's not the "partisan politics" that has you worried.
Every appointment Trump has made has been "partisan".
What's the difference on these two?
They are abysmally ignorant, even above and beyond the usual choices for this Kakistocracy: that is, the rule by the most incompetent, ignorant, and indifferent.
Now Trump is truly scraping the bottom of the barrel.
Getting nervous?
Oh, I'm dead certain that it's going to get much worse.
You can stop it anytime, you know.
Just point out what Graham, McConnell and all Republicans are playing at, the destruction of our civil society, our very own Trumexit from well-run governence.
Are you really going to let it all go down this drain?
Stop it.
Stop it now.
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Moore is patently Unqualified. Worse yet he is a deadbeat tax cheater. wife cheater and child support scofflaw. Held in Contempt of court in Virginia. How on earth can the US senate confirm this guy who thinks he is above the law? Is that the new Trump litmus rest? If so Dems can have a field day in hearings But sadly our currency is now at risk in the global markets
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It is incomprehensible, and without precedent that a president has chosen the number of derelicts, retreads, and convicted criminals, for public office, that Trump has.
This is his talent, and will be his legacy, and McConnells, too.
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Moore and Cain are boors; they should not be in a position of great power. In their confirmation hearings they will read from the Gorsuch/Kavanaugh playbook. When they are seated they will toe the Trump line. They are political fanatics who cannot even manage their own economic lives let alone those of a great nation. Disgrace. Shame!
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Neither of these clowns are credible. Stephen Moore is a diehard fundamentalist idelogue whose Holy Grail is the discredited Laffer Curve. Herman Cain made a complete fool of himself with his absurd “9-9-9” tax plan that was exposed as deficit-exploding hogwash.
As with most, if not all, Trump appointees, both men are known by Trump only because he’s seen them on T.V.
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@John C
Cain's economic advice regarding his 9-9-9 plan came from, that's right, Stephen Moor.
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Remember that Mitchell McConnell's senate would not approve Peter Diamond, an Obama nominee to the Fed's Board, for 14 months. He eventually withdrew his name from consideration. Dr. Diamond is one of the most respected macroeconomists of our time and won the Nobel Prize in Economics in 2010. Let's see how McConnell handles these nominations.
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They will choose party first.
I worked at the Federal Reserve for several years as an analyst. Fed employees are the most professional and competent people I have ever worked with. Bringing in Cain and Moore, with all their baggage and lack of expertise, would be a mockery for the institution.
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The problem is, all that deep technical expertise has resulted in a series of horrendous forecasts and policy errors. Go back and read Bernanke’s speeches from before the Global Financial Crisis. They will make you cringe. Bernanke redeemed himself somewhat with the implementation of unconventional monetary policy like QE. But the response was insufficient, delaying the recovery at great cost. In October Chair Powell told us rates were “nowhere near” neutral while Trump was tweeting up a storm about too tight policy. Who was right? Ouch.
Credibility? That’s not gained through fancy degrees from top tier universities. Or from the ability to manipulate abstruse mathematical models. It comes from keen observation and judgment. That’s what Paul Volcker had. It’s been lost these days in the desert of r*.
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I think the US economy more important that what the arrogant leadership of the EU thinks. Look what they did to Greece - massive cuts in the face of a larger depression than in the US in the 30’s, including 1/3 of all jobs, 60% pension cuts, 28% sales tax on top of 40% income tax. Formerly the lowest suicide rate in Europe now the highest. If Greece could have left it would have. No wonder GB is leaving.
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Greece's incompetence is the problem. No working tax collection system for starters. Greece should never have been added to the Eurozone.
Editor’s note: This comment has been anonymized in accordance with applicable law(s).
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Herman Cain as a FED governor is as unthinkable as Donald Trump as president.
Imagine, Cain walks into the room for the first time and is utterly and totally incapable of comprehending the business at hand. He just sits there. The awkwardness would be unbearable, the language spoken would be foreign, the emptiness of his chair would be filled with a vacuous, gaping yawn of a mind.
At some point, he will be asked what he thinks about some thing, and everyone in the room will brace themselves for a response that is so worthless that the questioner who drew the short straw will struggle desperately to plan even a "thank you" much less a cogent reply in-kind, hoping against all odds any one of the other board of governors will step in with an "atta boy" type of gesture or some other kind of save.
There is no difference than if Herman Cain was appointed to a NASA committee on rocket science or an Oxford literary criticism board reviewing a thesis on Jaques Derrida, or if he was appointed to a cohort of MIT mathematics professors working to solve something that looks like a Jackson Pollack painting on the chalk board.
The rest of the world will have lost faith in the U.S. not because of Donald Trump but because a sufficient number of people elected him. We the people are what the world is afraid of, and rightly so.
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Well, on the bright side, they are more knowledgeable and experienced that most of Trump's other appointees.
And cabinet members.
And advisors.
And personal lawyers.
And ....
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Trump has scarred and damaged this country and the world, beyond repair. What can be repaired will take years or even decades. We The People, need to rise up and demand he stop it and our government agencies start representing the American people and working for the American people and not Trump. We need to think about what is best for America and not buy into the corruption of this administration. Count Trump's promises. Now count how many of these promises he has delivered. We are being manipulated and stepped on for other peoples gains. We need to protect our own future. Trump, McConnell and our government agencies aren't going to do it for us. They are working for themselves and what they can game from the system.
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Get out all those 70's and 80's books on to how protect yourself from inflation. I think this is the point. I have read a little on the hyper inflation in Germany during the 20's and the take away is the big industrialists washed their debt away with debased currency. I have actually seen a 50,000 German mark bill from the 20's which at the height of the inflation wouldn't by postage stamp.
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Won’t happen unless we lose the reserve currency and dramatic shifts in globalization that keep wages down. Unless American wages rise dramatically, no hyper inflation. Americans won’t receive any of that cash, only capital will.
Well it’s about time. The United States has been free riding on the dollar’s status as the world’s de facto reserve currency since World War Two. Exactly the way Brexit has killed investment in the British economy for a generation, Trump’s inept Fed machinations will make it less likely that dollars will be seen as a global store of value. Perhaps now is the time to revisit J.M. Keynes’ idea of a Bancor managed by an International Clearing Union.
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Responsibility to not politicize starts with the appointments by Presidents. Trump is a different antagonizer. He only cares about perceptions of himself vs perceptions of the reliability of our Federal bank. That is wrong. Trump, if he were truly capable of good management, would not threaten the perception and truth in the Fed Bank’s solid reputation as a non-political organization.
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If Fed becomes partisan, the worldwide cinfidence in Fed would rapidly deteriorate leading to the fall of the all mighty dollar. That makes all of us poor, but there is a silver lining, viz., the migration in our southern border will stop.
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Trump understands and uses bankruptcy as a tool to manipulate. So, what is his plan with the Fed, to bankrupt America to sell off our economy to foreign investors, such as, Saudi Arabia or China? Take a closer look at his motives not partisanship. Trump is not a partisan, such as, McConnell. Trump is about Trump.
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Funny that you should mention Alan Greenspan. That guy shepherded the United States into the great housing bubble and the second great depression. Partisan to the max. And strangely on the side is war profiteers and regime change raiders. He couldn't have done worse if he was the declared enemy of the nation.
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Politicizing the Federal Reserve and Supreme Court tears down two major protections from tyranny. Democracy requires apolitical (at least not overtly political) bodies of highly-trained experts with long term vision to protect the people from themselves and the occasional incompetent President and other ideologically-driven political leaders who obtain positions of power. The United States is not invincible from destruction from within as we may soon find out if Republicans do not come to their senses and control this incompetent President.
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Alan Greenspan, appointed by Clinton, has been superbly competent and a world class expert. However, upon reading his biography, he was the architect of the destruction of the American manufacturing base in order to create a finance and services economy that supposedly yielded hirer returns. So what is the use of a superb expert if he makes the wrong choices with utter disregard and arrogance toward millions of Americans as long as the stock market and Wall Street is happy?
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@Alexgri
There's no guarantee that world class experts will always make the 'right' decisions (and hindsight is 20/20), especially in a field as complex as monetary policy. But they will understand complex issues, be able to distinguish good arguments from bad arguments, and know evidence when they see it, and be able to use it. And while experts often disagree with each other, they will argue on the basis of the evidence. Maybe the current fed board members would in fact make better decisions if their expertise were broader, but deep knowledge and expertise about their domain has to be a minimum qualification for a competent fed board. And we can be sure that a board that lacks world class expertise WILL make bad, damaging decisions, because they won't know what they're doing. And of course the other minimum requirement is that board members not be such ideologues that they ignore all evidence and argument that challenges their ideology. I don't think the article is denying that historically fed board members haven't been influenced by their values, but is arguing that their decisions have not been rabidly ideological. And if you disagree with what I've just said, would you like to nominate me, with a philosophy background, to run NASA? I have lots of great ideas for the organization.
Do we think that the Senate Republicans will continue to undermine our government, economy and our place in the world by confirming these two unqualified, character compromised men?
If they do, then we can blame them for destroying the world economy?
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A competent person is likely to develop political preferences, especially when one party disavows competence.
That’s different from being incompetent.
Mr. Irwin’s article seems to want to confuse the difference.
The question is what hasn't trump endangered in our country. Democracy was already under assault by GOP election fraud, gerrymandering and voter suppression laws and he's just pushing the cart farther down the road. He doesn't like the way votes are tallied? Are there alternative ways to count votes?
The thing that really kills me is these American citizens who are so ready and willing to help him undermine us. I thought most people had some integrity. But Cain and Moore aren't even embarrassed about being nominated despite being horribly unqualified. They know they're being hired only to pressure the Fed Chair and they don't care. It's right up there with Bill "Cover-up" Barr. I just don't understand it.
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"In a democracy people get the leaders they deserve." - Joseph de Maistre
In this case the GOP and Trump base are fulfilling this quote and and sending the world economy onto a very slippery slope.
I only hope that we won't need wheelbarrows of cash to buy a loaf of bread or one egg by the time these impersonators are gone.
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They will blame democrats after the mess comes home.
''The credibility of the Federal Reserve around the world has been built over decades,'' wrote the author.
A very popular sophism in America. Not around the world.
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It is appalling that Trump, who seems to understand little about economics, wants to turn the Fed into another instrument in the cause of "Trump wins." The Executive branch seems to already be mostly in the business of making that happen.
As far as interest rates go, they are already low by historical standards. If the Fed caved to Trump's wishes, lowered rates and resumed quantitative easing when, not 'if,' the economy eventually goes into recession, there would be no tools in the Fed box to soften the blow and try to get the economy back on track. Maybe Trump would have had his "skyrocketing" economy, but it would be a brief flare. It might get him re-elected, but it would leave many people and the nation in economic pain in short order. Trump, of course, does not care what it does to the nation or its people as long as "Trump wins."
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I think Jared and Ivanka would do a better, if not similar, job at the Fed.
1
This is why Janet Yellen had to go. She would have told Trump to stay in his lane. Powell, whose name I can barely remember half the time, has already caved to Trump once. Women have more backbone and integrity these days it seems. That, or Trump has culled nominees and others until he's got the weakest, worst, most corrupt or most malleable of the day.
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Reading conservative websites and blogs, the Fed has been a favorite whipping boy for quite some time. Alas, almost none of those castigating the Fed actually understand the function, mandate or the decision making process of the Fed (particularly the current president). Removing its independence and making it political is ludicrous and dangerous as well.
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The last two years have been like living in bizarro world. Either appointees are hostile to the mission of their agencies, incompetent or criminals. I say this tongue in cheek, but Moore’s elevation is unfair to Paul Krugman. The former is a charlatan whose brand of voodoo is ascendant while the latter, a Nobel Laureate, has painstakingly exposed the former and the destruction of his ideology. Just once I’d like to see the tables turned.
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Stephen Moore was the last picked for anything during his youth. Now it’s his revenge. He’s unhinged. Just look at him. C’mon, folks, this has to stop.
Just once would like to see Trump nominate someone with some qualifications. Just once.
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The FED has an important role, and independence is crucial. Just imagine Trump’s ill-timed tax cuts combined with aggressive cutting of interest rates. All the ingredients for an economic nightmare! And that is what you get when Trump fills the seats with people like Moore. Incidentally, I don’t believe Moore is even remotely qualified for the job. Read his pieces, or even better watch him on YouTube “discussing” with a WaPo journalist. Hilarious!
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The politicization of the Federal Reserve board is just one in a long line of “tramples” by this rogue president.
Would that EVERY thing he has done or signed or nominated could be reversed—our nation would be far for the better.
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I followed the Fed for years, communicated with governors, read their commentaries/studies and now POTUS is out to destroy its credibility. But then again, why am I surprised, Trump has no respect for the Fed.
2
Trump finally got his Roy Cohn at the Dept. of Justice just in the nick of time to suppress the Mueller Report and keep his taxes secret.
Now he wants to do the same thing at the Fed to keep the economy juiced with low rates and QE even if inflation erodes the buying power of the dollar and hurts the standard of living of millions of lower income Americans.
I don't like this one bit.
1
Nominating Stephen Moore to the Federal Reserve is akin to putting Elton John in charge of NASA. Sure, his 1972 hit, Rocket Man had something to do with space travel, but Elton John is no more a rocket scientist than Stephen Moore is an intellectual economist.
Mr. trump, our nation deserves better. Remember your promise to appoint only the best people to your administration? Really?
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@D. Ben Moshe
"...appoint only best people..."
He may be true to his word - the best he could find in the swamp that comprises his pool (pun intended) of candidates for almost every position he's filled so far, with sycophantic help from the GOP controlled Senate.
1
While not overtly political and re-nominated by Clinton as well as Bush, Greenspan had a strong deregulatory agenda that he pushed skillfully. He also stepped outside his technocratic role when he endorsed Bush's deficit-causing tax cuts for the rich.
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I'm mixed on this. For one I disagree with lower rates. The problem is that rates are not high enough. However we might eventually need to see a period where rates are negative to counter some market trends. I sort of which the Fed could develop dual policy where there would be dual rates. Basically negative interest rates for the rich and much higher interest rates for the poor (to encourage the poor to save and the rich to spend). That's unlikely, so the main policy should be towards increasing rates perhaps after a period of negative rates that first encourage spending. The long term goal should be to encourage saving by the majority instead of encouraging too much debt reliance.
Nonetheless I think we are here primarily because of politics already long influencing the fed for accommodative policy. Further politicalizing it could help with its destruction which I feel would be ideal (e.g. end the fed).
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Not clear that "in the immediate future, this probably won't mean much for policy." This will change the character of the Board and send a message to Powell and other existing governors, almost all appointed by Trump.
Likely will have an effect. Even if Cain and/or Moore are not approved, like Roosevelt's effort to pack the court it may make the Board more cautious about raising rates, should that be merited, because of this as well as fear of remaining the focus on Trumps tweets.
While there is often no consensus between economists when discussing monetary policy and how to balance inflation, unemployment and economic growth. However, while economics is not a hard science, there is a rigor to their thought. The economists we would want to help formulate US monetary policy are not dilettantes and bring a degree of intellectual rigor in their consideration of an issue. I see nothing in either Cain's or Moore's history that would suggest any expertise beyond making money to warrant their appointment to the Fed. While further politicization of governmental institutions may benefit Trump, it is not in the best interests of our country.
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http://www.nytimes.com/1983/06/19/business/business-forum-it-s-all-too-easy-to-be-a-critic-lester-c-thurow.html
''What should we do about problem X?'' (where X may be inflation, productivity, unemployment, or some other public problem) is a question commonly posed and answered by economists. But it is a question designed to produce disagreement. The issues are only partly technical; the rest involves value judgments.
Should America raise unemployment to stop inflation? Different economists have different answers, even if they agree technically on the distribution of gains and losses from an increase in unemployment.
To find professional economic disagreements, a different question must be asked. Liberal and conservative economists most frequently disagree on who 'should' be hurt and who 'should' be helped. Their technical disagreements on who will be hurt and who will be helped are much less frequent.
The Federal Reserve is not non partisan or above politics.
Fed Chairman Arthur Burns in the early 70's juiced the economy to help his pal Richard Nixon be re elected.
Fed Chairman Alan Greenspan wanted to limit the role of government. He supported George W Bush's tax cuts even though Greenspan knew [but did not say] these cuts would produce large deficits. Greenspan wanted the deficits to be used as a means to argue that social programs like Social Security and Medicare be slashed.
That is a political and not an economic choice.
There is a trade off between inflation and
employment/ unemployment. Perhaps imprecise but a trade off exists.
Who decides where the level should be.
Burns induced a recession to halt the early 70's recession. Voelcker induced a huge mini depression [10% unemployment] to stop the 80's inflation.
Were these recessions the only way to halt the inflation.
Could a lesser recession be accepted in exchange for a slightly greater inflation.
These are political decisions.
Economists [both liberal and conservative] have little disagreement about the effects of raising rates.
The disagreement is who should be hurt or helped by Fed policies.
Should those decisions be made by UNELECTED members of the Federal Reserve or should they be made by ELECTED members of Congress.
2
@david Volcker's appointment by Carter was a political decision. Carter knew that putting Volcker in that job would result in a recession.
What he may not have realized is that in addition to stomping out inflation, Volcker's monetary policy would trash the balance sheets of virtually every American savings and loan and quite a few commercial banks.
In the end, Volcker's time at the helm of the Fed started a secular decline in interest rates that has persisted to this day. His inadvertent destruction of the American depositories did force us to finally join in the Basel Accord with the rest of the developed world. A good thing.
Ultimately Volcker sewed the seeds for the next big crisis via the Resolution Trust Company teaching Wall Street and the rating agencies that just about any debt security can fetch a AAA with enough financial wizardry. Taken to its logical conclusion, Wall Street started issuing AAA securities backed by absolutely nothing and, in so doing, trashed the American and global economy for a time.
Policy makers rarely can see the full impact of their actions. But at least their actions can be based in the welfare of the nation and not their own political welfare.
I have met people who work at the Federal Reserve. They work tirelessly and dispassionately to understand our economy and to adjust interest rates to balance unemployment and inflation. Their job is difficult because many political interests want less unemployment and low interest rates while others want higher unemployment (so as to lower wages) and higher interest rates.
Politicization of the Fed like politicization of the SCOTUS are steps towards a place most Americans would not want to go if they understood what is going on.
16
I’m a retired research scientist with degrees in physics, mathematics, and engineering. In my 34 year career I had over 100 publications. The astounding thing, to me, is to think of what my “career” would’ve looked like without the formal training—i.e., essentially what putting either Moore or Cain on the Fed would look like. The simple answer is, “A disaster.” I wouldn’t have lasted a week.
At the same time, I have the utmost respect for people who’ve studied and worked hard to become experts in other fields besides my own. That’s why, for example, when I need medical advice I go to my doctor rather than my auto mechanic. One of the persistent themes I see with this administration (not to say others haven’t done it, too, but this one’s more blatant) is appointing clearly unqualified people to the very highest positions in government with no more thought than I would give to the pressing question of whether I should have sliced bananas or strawberries on my morning breakfast cereal.
Just when you think Trump has lowered the bar on competency as far as it’ll go, he digs a deeper hole to allow his candidates to slither under it.
38
@David Walker
Its not even like going to your auto-mechanic. It’s like going to the actor who plays an auto-mechanic in the commercial for the auto-shop. Moore, like Larry Kudlow, is a “journalist”/pundit. As I stated earlier, if Cain’s economic bona fides rest on being a CEO of a Pizza company and preposterous “999” tax proposal, he’s even less qualified.
1
The independence of the Fed is a myth, when a politician appoints the Fed members and Chairman. President Trump, to his credit, has dispensed with the pretense of non-partisanship in his appointments to the Fed, Cabinet or Courts. Mr.Herman Caine not being an U. Chicago Ph.D.is indeed a welcome event. Hopefully, other stakeholders in the Fed, like Union leaders and economists also would find their place in the Fed Club.
2
@T. Ramakrishnan. This is not an area in which unqualified folks should roost. There are many actual economists available for the jobs; we do not need PhD from a particular school but YES. We do need actual economists. PhD in that field. Not associates degree, not Masters degree, not minor degree.
1
The Fed has always been partisan. It has always been extremely partisan toward the wealthy and the powerful of America. Protecting wealth and power has been its primary agenda. Considering what happened in 2008 making the Fed politically partisan might actually be an improvement. It probably can’t do any real harm.
6
Harm? Don’t you mean the actual risk taking and deception of the Big Banks? That’s what took us over the edge of the cliff.
1
The Fed has always been a Political Battleground.
Democrats have always been in Control because the Big news is always Backing Their Candidates when they are in control.
President Trump simply Makes no Bones about putting people in place who agree with his Policies. Of course the news takes offense at him daring to do so > so OPENLY.
2
@didyouconsider. Well...his policy of glorifying ignorance have already cost our nation too dearly. Every appointee by this person and every tax bill rammed through puts us in danger of national default. Study more and learn about national debt crises.
2
@didyouconsider
No; you are wrong. And, even if you are right, Trump is a buffoon, so whether he chooses candidates that agree with him, who cares? He is the least-aware president in my long lifetime, SPECTACULARLY unfit for the office. Who cares if these clowns agree with him? They're bad choices for the board.
Does President Trump ever appoint very qualified candidates to any post? If he does, it certainly is an exception to what usually happens.
41
@janye no he does not; he is exponentially unqualified, himself, and seeks always to appoint similarly unqualified people....
1
Total loss of public trust and faith in our State institutions will result in catastrophic failure of the State. I am already more than half way there. What will be left?
17
Please. You said if Trump won markets would crash and recession would ensue. The opposite happened. So spare me the dire predictions.
Called it the Trump touch: everything he touches corrodes and dies.
67
@HenryR
Lie down with dogs and you get fleas. Almost every single person who associates with this presidency has had their reputation destroyed. I don't understand why anyone wants a job in this administration.
MAGA: Make America Grotesquely Absurd
50
Quacks, hacks, and loyalists - it appears the best way to destroy America is from within.
50
@Jon T
Not sure it was Khrushchev, but didn't Soviets say the same thing. They may have been correct. After 67 years following politics, I am hoping this too will pass.
8
simply put Mitch McConnell
your political party will dissolve down the drain. The economy will be a political football and all the non thinking supporters of the GOP, as well as the tax scammers, will be left holding the bag with their money in Euros (those commies) held in offshore accounts.
And they'll all blame the Democrats.
In other words, the GOP is in self destruct mode. Let's assist them to help speed it along
18
Play with dynamite (or stronger explosives like Fed policy), and it just might blow up.
9
Here is all you need to know about the Federal Reserve "boys club".
1)Corrupt
2)Non-stop political bickering.
"Founded in 1913, the Federal Reserve sits at the highest echelon of U.S. economic policymaking. Yet in the banking system's 105-year history, only one African-American and seven women have served as president at any of the Federal Reserve banks."
What a surprise huh? Change can't happen quick enough in the U.S.
7
Welcome to the pitfalls of single-party rule. It’s what republicans wants and they’ll trash the Constitution to make sure only their agenda survives, even if it does more harm than good. So the only way to prove them wrong is to let it play out and let it collapse under it’s own dead weight.
11
“In a camp like this, one draws one's menials from a small and brackish pool.”
--- E.B. Farnum (William Sanderson) on the television series “Deadwood."
17
Integrity is very important for this important job. Moore was forced to pay child support after his divorce. he is not fit for the job. Cain had sexual harassment issues. he is not fit for the job.
20
Destruction of a nation by design.
20
Like Bernanke and Yellen didn't pander to Obama and the Democrats for 8 years. Since getting ditched by Trump, Yellen misses no opportunity to criticize him and his policies, proving her hackworthiness I suppose.
3
Read the article again. Nobody is saying the appointees aren't political.
Is there no government agency Trump has not set out to ruin??
37
Money and winning. That's it. There is nothing else. You get money by winning. And you win by any means necessary. That is the shallowness of Donald Trump.
33
Snd in ‘ winning ‘ America and especially him lose BIG
Crony capitalism exhibit A. The rightists and toadies in the Senate will confirm one or both of these men. The Kochs, Mercers, Popes and their fellow royalists will be delighted. We can only hope that their dubious pasts will finally catch up with them before they can do any wrecking. Their tenure will end like so many of the other high level hacks Trump appointed, continuing that stellar 65% turnover of key positions. Aren’t all businesses and organizations successful with that kind churn?
12
We depend on Federal Agencies for clean air and water, good public schools, colleges, universities, and research; we depend on the Federal government to manage public health issues. Americans abroad depend on consulates and embassies for assistance in certain circumstances. There have been times when people came to American consulates for safety. These venues were decades in development and placement. We were never Venezuela, Nigeria, Somalia et al. We are not Saudis with public beheadings, or Iran with public hangings. We were not subject to Russian financial shenanigans. Our Presidents, Congress people, and Cabinet members did not hide their tax returns which would show loans and deposits. Trump is hiding his Deutsche Bank records, because that is his major lender. Look for the New York Magazine issue which followed the paper trail, documented loans etc. It is probably in the Magazine archives. The reporter tracked Trump's loans through Deutsche Bank, The Bank of Cyprus, to Russian financiers in London. No establishment banks would loan to Trump. Deutsche Bank is now under investigation in Europe. Trump has been connected with mobsters, shady apt. evictions, and shady finances for years. He was appointed by the Electoral College; he lost the popular vote by 3M votes. He may be comedy gold; however, he is an ongoing train wreck for the U.S.
33
As far as this unconnected, out-of-the-loop citizen can see, it just depends upon what the global financiers want. They are the people with the power, not us.
If it's in their financial interest for the Fed to be politicized and lose its credibility, it'll be politicized.
If they perceive that their interests are better served by the status quo, they'll find a way to protect the Fed from Trump.
I'm sure, however, they are not fooling themselves that anything Moore and Cain say during their confirmation hearings means anything--that's just silly. Of course those two will bring their hyperpartisan values to the table if they are confirmed.
4
@Karen McKim: This has more to do with Trump wanting low interest rates until November 2020... after that, he doesn’t care. He also doesn’t care what damage this does to the economy long term - the election will be over.
The only thing which could stop this is if Rupert Murdock got worried. Whatever Rupert says, Trump does.
8
Why don’t republicans see this as dangerous as it is? It’s a power grab that will greatly erode the independence, expertise and credibility of the federal reserve. It should not be in partisan hands, ever!
20
NYT reported in a different article on Mr. Cain that Trump was hoping for a big confirmation battle like the one with Kavanaugh to unite his base, and keep them excited and distracted from his other problems.
OK, now we have one reason why Trump is raising "Moore Cain" with his proposed applintments for the FED. He is actively seeking the most controversial candidates possible, with the poorest qualificatins and character defects so the confirmation fight and press coverage will be loudest--creating the most distraction.
Or is it that Trump knows the Repblican Senators and Congressmen hold him in deepest contempt, and Trump hates them and looks for every opportunity to embarrass them. (Say "Hi", Lindsey Graham.)?
Or is it that Trump's ego demands require the whole world watch him 7/24?
Or is it because Trump is lawless, and would like an utterly broken government, equiped soley to collect graft and bribes for him?
Anyway we look at this, we lose.
19
The Trump appointments are more suspicious than simple partisanship. Trump himself has neither the interest nor the expertise to evaluate his picks. But his billionaire supporters do, and they have one overarching goal: to completely destroy all engines of democracy.
It is not Trump’s incompetence and certainly not his “strategy” (a multi-step concept beyond his ken), that decides Trump’s choices. It is an agenda of his backers, clearly stated most recently by Bannon and espoused openly by the Mercers etc.: dismantle government. “Starve the beast” refers today not only to financial starvation of government, but to removal of competent agents and to emasculation of regulation of every kind. In the ensuing chaos, the Oligarchs will prevail.
13
While he makes many good points, Irwin appears to intentionally avoid pointing out the most significant and dangerous implication of Trump's decision to nominate Moore and Cain. Irwin is absolutely correct that other Presidents have appointed Federal Reserve Board members with known political leanings. What distinguishes Trump from his predecessors is that previous Presidents appointed objectively qualified, experienced individuals who also had known political biases. Trump is nominating people who lack the academic and professional experience needed for the job. In other words, they are pure political hacks.
In this way, Trump's approach to the Federal Reserve is no different than his approach to the federal court system. Yes, other Presidents have appointed judges with known political leanings. None, however, have appointed as judges persons declared fundamentally unqualified by their peers.
In the case of the Fed and the Courts (as well as in other areas of government) the real threat is not that Trump is appointing people who have known political leanings. The threat arises from the number of people he is appointing whose ONLY qualification for the position is their political beliefs and perceived total loyalty to Trump.
The lack of consideration or regard for expertise lies at the heart of Trump's approach to appointments and constitutes a fundamental attack on American government.
29
If the Fed because an arm of our politicians, then this country will go back to the days before the Federal Reserve existed. A no holds barred form of run away capitalism, bank failures, savings wiped out, recessions, deflation, inflation, etc.
Trump's attempts to place people like Cain on the Federal Reserve Board so he can have him do Trump's bidding; will be destructive to both the US and world economy. There is a very string chance, the world will drop the Dollar and go with go with the Yuan, as the strong currency of exchange.
Unlike, before the Fed, the US economy is integrated with the rest of the world economy. The Fed provided the stability, when the world was in crises (WWI, WWII, Cold War, etc.). Trump/GOP political manipulation of the Fed will certainly lead to a repeat of the Great Recession, or maybe another Great Depression.
There is a reason why the Fed operates in a vacuum separated by politics. It should remain that way. Congressional Democrats must do their job and stop any form of Trump/GOP politics from tainting the Fed.
5
@Nick Metrowsky: Nick it seems to me that what your first paragraph suggests has already happened, we have been experiencing precisely what you describe since allowing the takeover of our economy by economists from the Chicago School, namely Milton Friedman and his acolytes. “ Runaway capitalism, bank failures, savings wiped out, recessions , deflation, inflation”, that pretty well describes what has happened since Nixon abandoned the gold standard in 1971 to print money to finance the Vietnam War, followed by the ushering in of the previously mentioned era of putting corporate profits and shareholders value before societal good as promoted by Friedman. Was this a tongue in cheek comment, with all due respect to suggest that the Fed is not already tainted after decades of Greenspan, followed by Bernanke, Geithner and company who made a conscious decision to bail out Wall Street as Main Street was kicked to the curb is not how events really unfolded, the Fed has always been a tool of Wall Street except under Volker.
1
These nominations are nothing short of trump wanting more people like him, no knowledge and no expertise in economics or finance.
32
There is already Pressure to replace the US$ as the Major Global Reserve Currency.
Should Stupidity rule, and the FED become politicised, that pressure will increase rapidly, until the $ is replaced, much sooner than later.
Under Nixon, the US was still really the only big currency gun in the room. Not so today.
Politicising the FED, puts the $ in the same basket as the RBL and RMB/CNY. Currencies you may need to trade in, but NEVER hold.
12
What’s at risk?
Imagine having a Fed full of politicos during the financial crisis.
Small government, inflation hawk, laissez-faire policy—or just consternation—would have given us a depression.
17
Ill qualified for the presidency, all of Trump’s nominees are ill qualified for the other important govenment positions. The selection process is no longer a mystery. Trump taps them on the shoulder for what they can do for him. This is not about what they can do for the nation, or for the institution they are being positioned to destroy. There is no lengthy search that turns up a short list of highly qualified candidates. Usually, it’s who Fox digs up for the Excutive Time Broadcast.
I am betting that Herman Cain will not pass the confirmation hearings. But by identifying these people who seek him out, Trump brings them out of obscurity to our attention and he oddly provides us with a public service. They’re now on the public radar.
All of his nominees and appointees and confirmed choices are flawed in the same way that Trump is flawed. For a
moment, Barr had us convinced that he was not one of these, until he proved us wrong with the Mueller Report. They’re all united by a glaring lack of integrity and a willingness to ingratiate themselves with Trump.
Young people must vote. They must elect the brightest young people amongest themselves to
government positions who in turn choose the most qualified to run our institutions. They will be around a lot longer than the rest of us and they have so much more to loose if the country gets it wrong again in 2020. The Democrats have the advantage. Their up and coming young people are whip smart. The GOP is running on empty.
23
Forget politicization--what about competence? Neither Moore nor Cain have demonstrated much mastery of economics or monetary policy.
Moore isn't even law-abiding--a tax deadbeat and somewhat of a quack. Cain is just plain weird--he might know pizza but not much else. His answers to basic questions in presidential debates were embarrassing to the core.
Doesn't Donald Trump know anyone who has basic competence in economics? If he hates Powell (who seems in my view to be afraid of his bullying), he should have kept Janet Yellen whose fiscal ideology more closely matched Trump's.
Trump's demands for loyalty from the Fed to Justice leading to unqualified candidates who might help him get re-elected while they ignore the moves they would need to take to protect the economy long-term.
25
@ChristineMcM
It is absolutely crucial that the Fed be respected around the world. Only professional economists of the very top rank in the eyes of their peer should be considered for these positions - such as Dr Paul Krugman.
11
While these guys don't seem remotely qualified for the position, they are immensly qualified in Trump's mind. They have experience in cheating on their wives, and generally treating women poorly.
29
The whole point of accepting the Federal Reserve 105 years ago was to make sure it was independent of the government, this is merely the first step to essentially nationalise the Federal Reserve, something Trump's base has wanted to do for a long time (thinking somehow a bunch of politicians would be better at understanding the economy than people with actual experience in the industry).
This is probably the best example of "Chopping off our noses to spite our face". The only decent thing for Herman Cain to do is decline the offer; for the sake of the nation and the world economy.
9
This is simply madness. To appoint such incompetent people to the Fed board can destabilize this country & trigger global confusion. These men likely know they are unqualified, but they are relying on Senate Republicans to support them despite their weaknesses.
I hope Senate Democrats prepare for confirmation hearings by forcing these candidates to respond to complex questions of economics & finance, questions that will reveal their lack of expertise. I hope that approach governs the debates. Trump allegedly graduated from Wharton, yet I've never heard him explain any economic policies in the kind of detail I'd expect from a brilliant graduate. Panelists allow him to wiggle off the hook by answering a different question, running out the clock, or attacking them. Time to make these people prove their competence.
I hope Dems take a lesson from this & stop the practice of rewarding wealthy donors with govt offices. We are destroying our govt, the spirit of democracy, and our nation's values.
125
@macktan Senate Finance committee members won’t understand the answers to complex questions.
7
@macktan great comment!
6
@macktan Where would we have been in 2007 and 2008 when the world's financial institutions were at the brink of collapse. It was at the steady hand of Fed Reserve Chairmen and clear minds who prevailed along with the steady hand of a President who understood the seriousness of the situation. At times of economic crises and dire situations this country has managed it's way because of level headed leaders at the helm. Today we are being guided by a fraud who pretends to know things brags, makes up things, down right lies, thrusting us in one direction against the wind and jerking us into another. Who in their right mind says "I love tariffs?" Who in their right mind does any of the things this man does in a day. God help us.
11
The nominations of Moore and Cain provide further evidence that President Trump’s actions often gravely diminish the credibility of American institutions.
“All the world’s a stage.” Trump and the Trumpublicans are the incredible and faithless buffoons cavorting on that stage—and thereby making our nation an object of derision.
14
Excuse me, but the only difference between what Trump is doing and that of his predecessors is that Trump is doing it transparently. Which is oddly refreshing in a way.
Herman Cain is not any less qualified to sit on the Fed than Dallas' Richard Fisher was. Both were salesmen by trade and failed candidates. At least selling pizzas has more integrity than hedge funds.
There is nothing 'non-political' about the Fed just because members pretend as if their positions are based on cold, hard economic science. Alan Greenspan's positions were all political, based solely on his rigid - and as recent history has proven - delusional libertarian ideology. Volker's equally rigid orthodoxy had him repeating the same bad policy of Wm Martin in 1959; driving the economy into unnecessary recessions.
If Trump had reappointed Janet Yellen, he'd have a Fed Chairman today policy-wise far more to his liking. Instead he appointed an under-qualified conservative lawyer to the post as a sop to Senate Republicans. Ironically, Trump, by allowing partisan politics to dictate his appointment, defeated his own self-interest.
1
@Gary F.S. — so pleased that you find Trump’s actions “oddly” refreshing. If you enjoy odd, living through the Trump presidency must be like going to a spa on a daily basis.
2
@Gary F.S.
ahhh the willful ignorance argument I am suere glad we did not elect this sycophant to office
1
The foundation of fascism is the destruction of democratic institutions.
23
Stephen Moore and Herman Cain - two extraordinary and highly qualified upstanding citizens chosen by the genius occupying our White House. Trump agains demonstrates his skill and commitment to building top notch teams who will Make America Goofy (ooops - sorry, I meant Grate Again).
This is about loyalty to "king trump" - kiss his ring and you get the job. Quite simple. See William Barr, see every member of trump's cabinet. See Moore and Cain. See Senate Repubs.
America - we are certainly in good hands, aren't we? Just in case - say prayers for your children and their future. The inmates are now indeed running the asylum.
12
Almost all of Trump's appointments in government have given me cause for concern but his public comments for the Fed to lower interest rates and his recent nominees for board of governors have really struck a nerve. The system is more fragile than people realize and a big part of what is holding it together is trust and faith in our financial system and currency. Trump is playing a very dangerous game here and we could all end up paying a very steep price long after he leaves office. If Americans think that financial and currency crises only happen in foreign countries, they are in for a very rude awakening because the people in charge right now would not be able to deal with a crisis of that complexity and magnitude. Despite the chaos we see daily, we've been relatively lucky. Luck eventually runs out.
44
When he was discussing the end of Quantitative Easing, Jerome Powell observed that QE was subject to the Law of Diminishing Returns and it had become ineffective for its intended purpose. Will he allow politics to overcome what, at that time, were the established facts?
9
When it comes to money, even the most hard headed right winger/Republican/Republican donor should realize that his/her existence is at stake.
Their (maybe paid for) senator should vote for competence over dogma.
14
@somewhere in the prairie
one would think yet they may be too willfully ignorant , and are certainly as cowardly as the W OO Lion, to vote that way.
I wouldn't bet on it
Moore and Cain are clearly incompetent choices for the Fed, which is a major tool in keeping our economy in good shape: monetary policy. This is a big deal. Once upon a time, say before the 2016 election, I would have expected traditional Republicans to step in, protect our economy, and decry putting these fools on the Fed. Not now. As usual, the silence from Trump's Republican enablers is deafening. That leaves it solely to the Democrats to protect our economy.
We see the same dynamic at work on national security. Trump is overriding career officials on security clearances, endangering our national security, and the Republican leadership lets him do it. This week Rep Cummings and the House Oversight Committee began investigation of Trump-issued security clearances and sent out subpoenas. The Democrats are taking the lead in protecting our national security too.
Did I ever expect the Democrats to become the party we look towards for protection of our economy and national security? instead of the Republicans? Who would have thunk it. If you live long enough, you see everything.
27
@DJY
Perhaps you missed the history of FDR and Social Security; and his ability to forge the alliances we needed to prevail in WWII. Perhaps you missed the history of Truman and Korea, and his introduction of Medicare. Perhaps you missed LBJ getting Medicare on a solid footing; and LBJ's fight for the peoples' right to register and vote. Hillary fought for and got benefits for single women with dependent children; she also got medical care for 9/11 First Responders.
Bill Clinton left a jobs program, a full Treasury. Obama finally got access to affordable health care; Democrats will expand it and make it better. Other than Eisenhower's Inter-State Highway system, few Republicans have ever cared about good government, especially if it threatened their cohort on Wall St. McConnell thwarted Obama' attempt to put a respected moderate, Garland, on the SC. Now we have three Justices in thrall to corporate power: Gorsuch, Thomas, and Kavanaugh who is also a Catholic ideologue.
10
@Linda Miilu History is well and good. Ever look at polling? The public perception is that the Republicans do better on the economy and national security, Democrats do better on domestic social programs and civil rights. My point is that these perceptions are changing since the Republicans are no longer doing their traditional roles for our country. They're only enabling Trump and his destructiveness.
2
@DJY
I recently read an analysis of which Party has a better record on the economy; it was under Democrats. I can't recall which Presidents, other than FDR, Clinton and Obama. The economy isn't tied to Wall St. and stocks; the economy is tied to jobs and revenue. High unemployment is not usually good for the economy. We now appear to be in a period where employment is highest in service jobs which do not offer high wages or benefits. Better than unemployment, but not by much. Foreign hires who will work for lower pay and no benefits benefit corporations, not Americans.
1
Commenters have rightly said that trumpists on the Fed will work to induce a "sugar high" economy that will make the republicans look better. There is a flip side to that too in that if/when the democrats are in charge, the trumpists can then wok to derail the economy - much as the Senate republicans did when Obama was president.
20
You are correct sir.
2
I am not an economist. But I have the good sense to know it.
Trump seems to unerringly pick those without the sense to know their degree of ignorance for the role trump picks for them.
“only the best people” .... remember that one?
25
He started with B-list people from the get-go, because the A-listers would have nothing to do with him. He's now down to the C- and D-listers, and even they're churning at an alarming rate. If Trump wins in 2020 and never has to worry about an election again, he'll be so out of control that only the desperate F-listers will work with him, because he won't be able to attract anybody who's utterly unemployable anywhere else.
3
This particular Trump selection is among the most stupid. Then again, the geniuses Rubin and Timmy G were catastrophic. Perhaps the US economy can resist all morons.
8
Like so many other government agencies, Trump has appointed incompetent people with absolutely no knowledge of the departments they were chosen to run. Betsy Devos: Education. Governor Perry: Energy. ( He once wanted to eliminate this department.) The list goes on and on. So why should we be surprised he wants to appoint two bozos to be on the Fed.
22
Having the fed Blow up the economy may be the only way to get rid of trump. I guess maybe a war... no. Americans love war. Gonna have to blow up the economy. Lets roll!
9
Trump is not content unless he’s placed his ruinous stamp on everything.
19
@TheraP
let's place our corrective american stamp of "NO" on him and his party the sooner the better
3
The Federal Reserve is Federal in name only .
It’s a private company with shareholder.
2
Nope. It has no shareholders. Please educate yourself here:
https://www.thebalance.com/who-owns-the-federal-reserve-3305974
2
We need to stop Trump from nominating and the Senate from approving two unqualified sycophants to the Fed Board. Its independence is crucial for us and the rest of the world. Please don’t let him destroy another institution, especially one this vital to our stability.
10
I’ve been saying that for a long time that they need to stop him from nominating, signing bills, making laws, plus anything else he should be able to do (under a normal presidency).
7
I can't see why McConnell would see any advantage to appointing a nincompoop to the Fed.
10
For the same reason they wanted a nincompoop in the Oval Office.
8
Piece by piece, scheme by scheme, the Republicans have sought absolute dominance of America governance. Trump wants a Unitary Presidency along with Republican House, Senate, SCOTUS, a horribly biased Judiciary and now a Fed that would take its marching orders from him.
This is what Hitler, Mussolini, Stalin, Mao, Polpot and every other criminal dictator has wanted for all of recorded history. The more we let a sycophant, incompetent, crooked single political entity control us, the closer we get to total loss of our freedoms and destruction of our Constitution.
Competent governance is always a compromise, an agreement of equals, in a Democracy. With Trump's very scary historically ignorant, detached narcissism and total self-interest we have a disaster in the making.
There is NOTHING I can say positive about Trump or his minions. Any stumbling positives that his administration would seem to have made are far offset by abuses, failures, lack of any long-term planning for America and criminal pursuit of wealth and power for themselves.
Americans are being suckered by this con artist and they are thanking him! How unbelievably stupid. His incitement of hatred, fear and chaos are destroying this nation.
218
@RealTRUTH Nobody's kidding anyone here. This is much less about Fed appointees who are political than about Fed appointees who have the "wrong" politics.
2
@RealTRUTH
Amen. You got it right.
6
Trump is a failure in business and only has what he has due to his ability as a grifter. Appointing Cain (at best, a successful businessman, but questionable human) and Moore (at best, a partisan hack economist who doesn’t seem to understand economics) will be terrible for America. Moore was all in on Kansas’s economic policy which failed so spectacularly even state GOP reps overrode the GOP governor to raise taxes. The GOP the party of economic failure and it’s sad the general population is too stupid to understand this.
14
Trump always appoints the least qualified people for the job. Like he, himself is unqualified, his is clueless to appointing smart and qualified people...As trump continues to tear down government agencies and destroy the foundations of our democracy with is extreme partisan polices, it will take the US many years to recover from the damage of his ill conceived notions.
18
"All" the policies being implemented by the current administration (deregulation, taxes, health care, education, health care, military, foreign, etc.) are about privatizing the wealth and socializing the debt.
Trump (and his minions) care not about the long term financial and physical health of the general public or our democracy. Trumps appointees to the Fed will only do what they can to continue that plan.
He (they) must be stopped..........now!
11
Dictators are never questioned about who they put in charge and they are usually lackeys wearing MAGA hats seems to be the requirement for any job in the Trump regime certainly not expertise or independence. Trump is insecure so he tries to rule like an absolute dictator and the GOP is fine with this as he is their dictator.
9
The Fed deserves what it gets. Bernanke and Yellen initiated and oversaw an effective 100% tax on savers thru ZIRP and QE. That's what it was, pure and simple. Designed so Congress and Obama did not have to out right bailout the banks and Paulson's buddies.
So your parents in their 70's and beyond had to use the principle of their life savings to live on while deadbeats, debtors, wall street, and the U.S. Government feasted on free $$.
This was a 5th amendment taking without just compensation. Folks like Trump saw the value of their real estate sky rocket due to the lowering of cap rates.
The Fed should be taken down and returned to its original
mission, providing liquidity to SOLVENT FDIC insured banks,
not corporations.
The destroyed what the function of interest rate levels and assumed risk are supposed to entail. Instead, once again, the lobbyists, wall street and the idiot economists took over the economy.
5
@phacops1 And you think Moore and Cain are the two people to do this? Really?
Obama isn't the President now.
Professional economists and those of us that have served at the Board of Govenors know well that the Fed’s reputation primarily depends on its well recognized professional staff. Not the individual Governors appointed often for political reasons. With few exceptions most Fed Govenors would not be able to pass graduate exams in monetary economics. That’s not their requirement. Possessing sound judgment and contacts with the greater business and financial community are their functions. Which is why Fed Governors frequently make speeches before business groups. In a word the Fed like all other Central Banks is a politically directed body staffed with professionals .And its the professionals who give the Fed its credibility. Many of the comments attached to this section seem politically motivated by those not familiar with the workings of the Fed. On the whole it has been and will remain an admired institution. But one always subject to both the Congress and the President. Doubters ought read the FRAct of 1913.
3
@Peter I Berman This is a half-truth. The entire Federal government runs on the expertise of the permanent staff - an expertise, by the way, that the Trump Administration hates and derides with the imaginary concept of the Deep State. But the political echelons have to be in good faith, at least most of the time. The permanent staff are a flywheel. They can resist the drag of a bad political echelon only for so long. And a bad political echelon is still who makes the policy. Also, sometimes the flywheel needs to be energized by the political appointees. A good crew can compensate for a bad captain only up to a point. At the end of the day, the captain points the ship and the crew have to keep it from sinking, if they can. Sometimes they can't.
6
Trump wants the Fed to be the scapegoat if the economy weakens, to make his re-election more likely. Trump is America's Erdogan.
7
Exactly! Nothing keeps going straight up. Life doesn’t work the way Trump wants it, because he says so.
1
One chilling thought: Is Trump hoping to bankrupt the USA then have Russia or China bail us out--and take over? Otherwise this is the free-wheeling nonsense of someone with larceny in his heart who wants to enable any criminal he can.
1
I believe THE ONLY reason for these nominations is to skew the Fed into a more politically active institution. Neither man has the education, experience or (apparently) any integrity that is needed for this position; they are, simply, 45 sycophants, willing to do his bidding PERIOD
7
The Republican Party, as an institution, has become a danger to the rule of law, the integrity of our democracy and viability of our economy.
The problem is not just Donald Trump; it’s the larger conservative political apparatus that made a conscious decision to collaborate with him.
12
Moore cannot exercise fiscal responsibility in his life. He owed his wife 300K+ for back child support and violated a court order. How can the economic genius manage the country's economy?
8
@RS
Oddly enough many "Economic Geniuses" have disastrous personal finances.
However neither of the Two in question qualify as "Economic Geniuses"
1
I love the way Moore blamed his tax delinquency on his accountant. Right.
8
The Trump Maladministration is irredeemably and unashamedly false and corrupt in everything it does, says and touches. Nothing is true, nothing is for the public interest, nothing is based on facts or expertise and nothing is in good faith. Let's just say that get past the hand-wringing. It isn't complicated. This is how fascist dictatorships operate, from giant Russia and China to medium-sized Venezuela to little Nicaragua. Corruption and personal control by the wealthy and the Big Man, through the Big Man's lackeys.
6
Who in the world is the least bit surprised at Trump's picks? Most of them are just as corrupt as he is. Being a sexual or financial predator is the top of the list of qualifications in Trump's administration. Being a racist and a misogynist are also plusses. Hating and wanting to destroy the agency you are going to head is probably the most important qualification.
8
Isn’t it pathetic that Mr. Trump has nominated these two Republican luminaries for Fed Board?
He has the right to nominate any one to Fed, but international entities also have a right to stop trading in almighty $. We may have to go to war to enforce $ as the international trade currency, just like W did in Iraq, when Saddam Hussein threatened to barter oil instead of pricing in US $.
If US Senate confirms them and allow Fed to become a branch of the Executive, the Country is headed down a slippery slope, as politicians decide the monetary policy for short term electoral gains, rather than long term economic stability. Is there anyone left in Republican Senate to stop this madness?
Otherwise, take over of the Republican Party by Trumpistas will be complete. Russians will win the war without any gun being fired. Mind seems to be winning over Matter and Greed!
Trump’s base claim that Almighty God has sent Donald Trump to fix the country, but only the first part of that claim may be true. Looking at the continuous ineptitude of this administration, it seems more like God sent the Don to bring US down from the high pedestal and pass on the torch to some other Country. Historically, every power that went up came down, although the underlying factors in their downfall may have been different. We may be no exception to that Rule!
5
No decency at all with this clown. Seriously this is all part of the plan to unravel our system of government.
6
Just another hastening toward the "Fall of the American Empire" which is preceded by the removal of the dollar as the world currency of choice. The American system is totally corrupt. It happened to the Brits in the 1950s and it will happen again.
3
After Trump is gone (hopefully soon) it will years to repair all the damage he’s doing to our Democratic institutions...
4
Credibility? Simple competence and having any trace of qualification for the job? Not being beholden to "politicians," especially the *most* corrupt president the US has ever seen?
ALL gone with Trump!
And not just in terms of absurdly unqualified toadies like Moore and Cain! Pretty much any and all appointees, including his kleptocratic children and family members!
And doesn't anyone remember Cain's blustering, blundering comments when he ridiculed the basic competence of a president who would even know the names of other countries of the world and be able to pronounce the names of their leaders? ( "I Don't Know The 'President Of Ubeki-beki-beki-stan"!) The main's an idiot--and he's PROUD of it!
"The credibility of the Federal Reserve around the world has been built over decades. ... deep technical expertise and an inclination to keep political dimensions out of Fed debates."
5
...President Trump's approach endangers just about every tradition this country has ever believed in, to name just a few here: civility, thinking based on fact, even handedness, a humanitarian approach, fairness, and the rule of law.
Of course it can readily be pointed out that historically the citizenry of this nation has not always adhered to what we professed to believe in--and in those moments there have usually been factions which have risen up to speak out against that error.
Mr. Trump seems incapable of understanding that traditions in this country, including the leadership and function of the Federal Reserve, are backed up by reality--apparently a notion that is foreign to this president.
2
Stephen Moore, the bumbling fool for the opposition on CNN panels, for FED Gov seat ; this is golden, it just get worse and worse.
5
Alex Jones is looking for work. And Donald Trump has expressed the view that Mr. Jones ‘has a fantastic reputation’ and ‘is doing great things.’ What the heck, let’s stick it to ‘the elites.’ Put Alex Jones on the Fed. He’ll keep the international Jewish banking cabal from taking over the good ol’ USA, am I right?
After that, maybe Cramer needs a break from hollering his head off like a hyperactive child on meth. He could use a second career on the Federal Reserve Board, too. That’d take a load off his larynx, for sure.
And then there’s poor, persecuted Bernie Madoff. Like Paul Manafort and other federal felons, I’m positive ‘he’s a very good man, a great patriot.’ Sorta like Sheriff Joe, ya know? I say let’s cut Bernie loose and put his talent to work for the American people on the Fed.
Only the best people, believe me.
5
I note the GOP's only worry about Cain is regarding accusations of sexual misconduct, but apparently everything else is all copacetic. (Laugh emoji here!)
2
Why can't you just say it? They are not economists. They have no knowledge of economics.
5
Yes, Trump is spiteful, ignorant and narcissistic but I don’t see him as cynical. Who put these ridiculous names into his head? I would bet on Stephen Miller. Clearly they could have found people supportive of easing with better economic credentials.
1
In 25 years, as history looks back on this era, we will be judged by our success against an assault on our constitution, rule of law, financial system, monetary policy, environment, foreign allies, and basic humanity. All being assaulted by one sociopathic, narcissistic, con-man for his own gain. Our test as a nation will be if we re-elect the crook or take back our country from the brink. The year 2020 is the fork in the road. The ball is in our court.
4
The quickest way to turn the US into Venezuela is to populate the Fed board with political clowns.
9
The current cadre of ring-kissing, often-incompetent ideologues put in place by the current White House has made me lose all faith in any "non-partisan" aspect of any federal entity. The Supreme Court Justices, the Fed, heck, even investigative bodies such as the NTSB and FBI have become grounds for partisanship, not professional expertise.
The current occupant of the Oval Office values loyalty and fealty above all else. Competence is irrelevant since he is not competent in anything other than sowing hate and chaos.
6
Stephen Moore is the hackiest hack who ever hacked. The only benefit of putting him on the Fed is not having to see or hear him on cable news anymore.
3
This is how you destroy faith in our political institutions. Consistently appoint horribly unqualified political hacks whose only qualification is allegiance to the Supreme Leader.
It’s also how you establish a dictatorship.
4
You left out the part about how Moore and Cain have deeply flawed personal character and are devoid of economic acumen. What else can one expect from a deeply flawed moron who confuses disruption with destruction?
6
Stephen Moore's publishing history:
Bullish On Bush: How George Bush's Ownership Society Will Make America Stronger (Madison Books, 2004) ISBN 1-56833-261-0
Crash Landing: How Bush, Bernanke, Pelosi and Obama Have Wrecked the U. S. Economy (And How To Salvage America's Future)(Audio CD)(Blackstone Audio, 2014) ISBN 1482923874
Trumponomics: Inside the America First Plan to Revive Our Economy Hardcover – October 30, 2018
Note a trend?
Moore was "Bullish" on Bush until the world economy collapsed, then threw Bush under the bus with Pelosi and Obama (in a book apparently canceled for print because it was such nonsense). Moore is a partisan hack, he is also a child support scofflaw. In 2012-2013 he was $330,000 behind in child support payments causing a Virginia court to have officers break into his house to sell off his property to satisfy a court order on him paying up. He also owes $75K in taxes from 2014.
If the "borrow and spend" Republican Party loads the Fed with partisan shills, a run on the dollar, and the collapse of the US dollar, will be the end result as debt becomes unsustainable, and inflation skyrockets.
7
I think I am starting to understand the Fed’s concerns. Is it an accepted fact in the community of economists that Nixon pushed for lower rates created the high inflation of the 1970s? The UK, Germany and many other countries also experienced high inflation after the October 1973 oil embargo. Higher energy prices should also be considered. I would be extremely disappointed if the 1970s inflation is the reason economists to advise us to dismantle unions, to cut government spending and the funding of social programs. Is there any research on if high interest rates have stifled real income growth since the 70s/80s?
If we no longer are as dependent on volatile energy prices and the Fed still is not at their 2% inflation target then why worry? What if the high inflation of the 1970s due to energy price swings created a digital revolution to maximize automation efficiencies. More efficient use of energy would decouple GDP growth from energy consumption.
http://i.imgur.com/MBpVFhe.png
"During the global financial crisis and its aftermath, for example, the Fed could feel comfortable pursuing efforts to stimulate the United States economy without a loss of faith in the dollar and Treasury bonds by global investors."
the very thing that saved the global economy from going over the precipice and why we are all not scavenging food from dumpsters and county landfills and gives Trump and the GOP opportunity to crow about the robust economy that exists today despite them Trump's picks for the Fed would make more difficult if not impossible.
3
I think the markets will have the last say on Trumps Fed appointments. They may be muted at first, but at some point if they lose faith in the Federal Reserve investors will flee.
5
@iflytoo
The whole point is to PREVENT that from happening. ALL of Trump's failed and ill-conceived dementia will fail, but we must stop any further destruction of our nation. As it is, it will take us years to undo the harm that he has done, and our children will suffer greatly.
2
1. Credibility is earned, not bestowed
2. The Fed engineered two previous recession, the collapse
of the tech bubble, and the collapse of the housing
bubble by providing cheap credit. The Fed has yet to
learn, that EVERY financial bubble in history was fueled
by cheap credit.
3. The cheap credits it pumped into the economy after its
failure to supervise the US banking system properly was
overwhelmingly captured by the credit worthy rich (Mark
Zuckerberg used it to refinance its Palo Alto Home at 1%)
whereas the non credit worthy home owners with under
mortgages could not get their hands on it.
4. Companies used the ultra low interest rates (negative in
real terms) to buy back their own stock, to expand (as
e.g GM) in Asia, but did not add factory jobs in the US
5. The Fed lost the rest of its credibility with its recent zig
zag course. The Fed STILL has not formulated a
coherent policy on how to wind down its position and
deflate the stock bubble it blew
Time for the Fed to modernize and to realize that the old theories its leaders learned (Phillips curve, Taylor rule) do not work in a modern economy)
Best new appointment would be an MMT expert, such as
Stephanie Kelton, not because MMT is necessarily correct, but to shake up the dusty thinking of the Fed's governing board
See the NY Times, today
"Modern Monetary Theory Finds an Embrace in an Unexpected Place: Wall Street"
4
The so-called credibility of the Fed is joined at the hip with the credibility of the dollar. Ironically, both candidates - by linking interest rate policy to gold - are revealing a truth about the monetary standard. That the current system, which creates new bank reserves from previously created debt, is not only circular, but is indeed vulnerable to a day of reckoning when the curtain in this scheme is pulled back. The currency really is a receipt for goods and services that is fungible. Store of value? Only if you buy into the circular reasoning.
Linking it to a floating price of gold is not really that outlandish when viewed through this lens. Which is to say that the price of gold and other commodities should be taken quite seriously.
6
@David Gunter
Gold is just a metal. It has no magical powers but it does have some industrial uses.
The history of gold standard currency is dismal. This country only escaped the clutches of the Great Depression by dumping the gold standard. People advocating for a return to hold standard currency don't understand the nature of money (as opposed to currency) and are driven by a mistaken nostalgia.
If you want to destroy advanced economies overnight, implement a gold based currency.
3
@David Gunter
well now that is a classic example of "damned with faint praise" for the harebrained notion of returning to the gold standard.
1
@teoc2 and Some Dude. I'm not advocating a fixed price at all. I am distinguishing between fiat money, created at will by the banking system, and an asset that has taken labor and capital to produce and by convention embeds those values. Gold - and silver to an extent - preserve the value of labor needed to mine and refine - without being vulnerable to forces of decay, which in monetary terms is inflation. In natural terms, it's just rot, the reason why other substances are inadequate.
Why a boatload of bananas, for instance, is no substitute.
Further, revaluing the 8,200 tonnes held by US Treasury may be necessary to both balance national accounts and help economies that are dependent on mining precious metals.
At the end of the day, valuing gold is valuing the labor needed to produce it.
1
It is hard for me to believe that Moore & Cain are the two best people to appoint to the Federal Reserve.
IMHO, the call for lower rates is nothing more than political.
I'm always amazed that people who lack the staff and research of the Fed who work full time trying to discern the correct policy think they know better.
21
@Bob in Pennsyltucky
You are correct - they are FAR from the best, or even barely competent, candidates for the Fed. They are Trump lackeys and do not belong there. We need more candidates like Ben Bernanke who actually know stuff, regardless of prejudiced political persuasion. Trump will ruin the Fed too if we give him a chance to do so. Just remember who the Republican Senators were who approved these insane nominations!
3
Herman Cain would be aweful, but what makes you think partisanship skipped the Fed???
Critics of the banking system have long criticized those that move to and from the Fed to the SEC to the private sector and how they tip off those that are doing illegal things.
Sell this story to someone else. I'm not buying
3
I think Trump plans to win by manipulating the stock market, and these outrageous Fed picks are examples. It also seem to this observer that he is using the China trade talks in a similar way. His administration will make a slightly negative statement that the talks aren't going well and the Dow drops 100 points. Then, five times over the next 3 weeks they say that maybe talks aren't going that badly and the Dow goes up 300 points each time.
14
@UrbanRider
Trump has to repay all those dark money contributors in some fashion and he isn't giving anyone discounts at Trump International Hotel DC.
3
The federal reserve, the Supreme Court, and many other institutions are being exposed as "shams" made up of special interest individuals, political hacks, uninformed, unqualified people. The idea that these were the best of the best has ben exposed as a myth. We now see they are used to get the ideas and interests of certain people not the interests of the total citizens. This has happened on a subtle scale for years but Trump has exposed the reality of how weak our democratic system of government is. He has shown how one person can take over and there are very few ways to stop him.
28
A politicized Fed would hold Democratic administrations to a different standard than Republican ones. We have seen this with regard to Republican attitudes towards budget deficits. This would seriously impede the ability of Democrat presidents to fix the economic messes their Republican predecessor invariably leave them.
17
The Fed is not infallible. They clearly over reacted in raising the the interest rates last year. Credibility is earned by past performance and lost with poor performance. The FED should be criticized when they get it wrong. They got it wrong!
1
@Beetle
Yeah, but by raising rates they were doing trump’s bidding so that he could please Wall Street bankers. Without admitting his error he now wants to reverse course to boost his re-election bid. He certainly has Powell trained.
1
So here has been my biggest fear of a man who has declared bankruptcy multiple times: he's pushing the debt and deficit up to unprecedented limits and he will just decide to default on the debt. Oh, and who has billions of our T-bills? China. I bet Russia and Saudi Arabia have significant amounts, too. Think about that. He has no concept of how important our monetary system is around the world. Oh, and about the immigrants coming across the boarder? If you really cared you focus on prosecuting the employers. If supply side measures are not working, maybe try demand side.
17
The president lies about everything. But one thing he didn't lie about was when he said no one knew better how government works and only he knew how to fix it. If his objective was to surround himself with toadies whose main purpose was to protect him.......mission accomplished. And he's not finished.
10
The simple solution would be for at least four GOP Senators to have some guts and vote against the nominations of Moore and Cain, both of whom are clearly unqualified to sit on the Board of the Fed.
Not getting my hopes up, though....
23
Herman Cain is a business man way out of his depth. Stephen Moore isn't an economist, he just plays one (badly) on TV. I wish Trump was as obsessed with keeping his promise to hire only "the very best people" as he is with his promise to build the wall.
25
If Moore and Cain are in favor of returning to the Breton Woods System I am 100% behind them as personally repugnant as they may be. Anyone who believes fiat money has produced better lives for all but the wealthiest among us is living in an alternate universe. The moment we abandoned the gold standard is the moment stagflation set in and except for bust periods has never let up. We have had fifty years of asset appreciation, in stocks, real estate even more esoteric investments such as art and collector automobiles, this exacerbated by the feds policy of zero bound rates for a decade that punished small savers to bail out Wall Street. The post war years right up to the time we got involved in the Vietnam war were unbridled years of prosperity that saw America’s middle class rise, when Nixon, Burns, Conally and tangentially Paul Volker convened at Camp David to “ restructure” Breton Woods” heralded the entrance of an era of cheap money and wage stagnation lasting today, an era that saw the rise of The Chicago School and takeover of society by corporate America and Wall Street. Every fed head with the exception of Volker has been a tool of Wall Street, I would give a chimpanzee a turn at the wheel if I thought it might bring back fiscal responsibility, and after trying to interrupt Greenspan’s remarks for decades I don’t think the chimp would be any less informative.
5
Remember when Bernie’s babies and bullies were saying there was no difference between Trump and Clinton? Yep.
5
RE: The credibility of the Federal Reserve around the world has been built over decades.
Surely this comment is April's fools 5 days late. The Fed is nothing but smoke and mirrors. Eventually all fiat money reverts to its intrinsic value. Pretty pieces of printed paper.
2
@Reader In Wash, DC
The Fed's creditability was destroyed long ago with the advent of ZIRP and QE. Mechanisms of taxing savers 100% to bail out deadbeats, debtors, banks, and
juicing the U.S. deficit even higher with cheap $$. Folks at the Fed back to 2008 should be put in jail.
2
Yet another "chaos" ploy by Putin's puppet. 2020 can't arrive fast enough.
6
King Trump is out to rule the world. What better way to this end than to seek control of the most respected financial institution in the free world, the Fed. What stands between this happening is his total ignorance of how economics and banking works. Hence his nomination of a pizza maker and a broken down, always wrong pseudo economist.
6
Mr Trump is determined to weaken
all the institutions that could restrict
his authority or counter is decisions.
This is the hallmark of fascist seeking
absolute power. He followed the
similar thinking in appointment to EPA,
HUD, FCC,etc. He constantly harrassed
Jeff Session for not looking out for his
interest. If gets reelected somehow
all the institutions will be totally
compromised. Every head of these
institutions will have to take oath of loyalty to Mr Trump. Eventually dollar
will come under pressure as the world
loses faith in Fed and view it as another
political institution.
7
Stephen Moore is a lobbyist for tax-cuts-for-the-rich and deregulation. He’s a political hack who advocated higher interest rates under Obama after the Great Recession but now hypocritically wants to lower rates with 3.8% unemployment under Trump. Like Trump, he has no integrity or competence. The Senate can’t take him seriously.
6
@Doug Lowenthal
he was right about higher rates. All the Fed did was mint more billionaires.
Partisanship will become a problem but not as much as Trump appointing people with little or no experience in the field. He seems to think you'll call a plumber when you need an electrician. He knows as much about job placement as I know about milking a duck.
3
Almost all presidential appointments have an element of politics and with Trump it’s the only element. The thing that distinguishes Moore and Cain from other presidents’ Fed appointments is their utter incompetence. They belong on the Fed as much as Trump belongs in the White House. They don’t. They are shameless partisans without an ounce of gravitas. In that regard they fit perfectly with virtually every other appointment that Trump has made. In early 2021, the new president is going to be very busy draining the swamp that Trump built.
12
More important than Mr. Moore's political engagement is the fact that every time he has taken a stand on the economy he has been wrong. Ask the folks in Kansas.
He has also been known to use bogus data to support his stands, to the point where a mid-western newspaper said it would never again print anything he wrote, not because they disagreed with his position but because of his dishonesty.
Of course this won't bother those who have drunk the Trump kool aid. How exactly they mentally deal with Trump's incessant lying is quite a mystery to me. I imagine it may be a combination of denial and an attitude of liking anything that riles up us liberals.
5
I think it is an illusion to believe that there is no politics in "technocrats," the preferred choice among the still reigning Neoliberal establishement. I include Paul Krugman and Larry Summers there. They believe that markets always know best and that there should not be a guiding role for elected public policy, such as in the New Deal, and directly relevant again today with the Resolution for the Green New Deal.
The two nominees here are deeply political to the Right side of the Neoliberal consensus, which is fraying around the edges but still the closest we have to an economic operating system. Neoliberalism loves globalization, sides with lower debt and deficits most of the time, except in extreme crises, like 2007-2008, but it cannot come to grips with its challenger, Modern Monetary Theory, which indeed takes a pounding here at the Times, without its chief authors being given a chance to preach - and it is preaching, just like Alan Greenspan and Ben Bernanke did.
What passes for technocracy hides the reality that Yanis Varoufakis knows, and has put in four books over the past ten years: issues of debt, deficits, money, the financial system are all deeply political, or better, have deep political implications.
As were the decisions by the technocrats to de-industrialize, break labor, and send productivity gains to the top 1% in extravagant doses.
Green New Deal? You bet. It would be a different type of capitalism, as the 1950 version was from the 1920's.
2
There are two prongs of macroeconomic policy— fiscal and monetary. Fiscal is in the hands of Congress and the executive. For the time being, monetary is perceived as independent and involves little more than shifting interest rates. Let a couple of politicians in the door and it would shake things up. But 2 out of 11 governors. would have minimal effect.
1
Currently, the biggest risk to the Fed is not partisanship, but the severity of the US bankruptcy. Partisanship could become a factor, if America elects a government that legislates the Fed immediately print trillions. But in that event, the partisanship will only be primary becasue it supersedes any current BK-initiated printing demands. Currently, political wrangling only need be a minimal factor in Fed direction. As reason suggests it will be increasingly guided by the demands of the US debt.
Mr Trump just does what he wants and says to himself, what are you going to do about it? Trump forgets one thing. The system is bigger than he is. Sooner or later we will be saying goodbye.
4
Wake up folks, Trump, with the help of the Republican Party is turning our country into a legitimate dictatorship. This is just another step in that direction. The Republican Party does not care about anyone but the rich and they support Trump.
12
The risk is that the function of yet another key institution of public policy will be directed to serve Trump and his cronies' interests and not those of the public.
5
How does this benefit the Russians? Chaos in the international economy would be desirable to Putin in the abstract but it is his money too, so maybe Trump is acting on his own which, in a way, is even scarier than if there were some real design.
1
If the US enjoys the preeminent position of world's largest and number one economy today it is mainly because the Federal Reserve has effectively made the required monetary policy intervention to make up for the fiscal policy deficiency and thereby contributing to the management of currency and inflation. The increasing interference in the working of Fed by Trump will only cause trouble for the economy apart from undermining the institutional autonomy of the Federal Reserve.
14
US corporations used to make stuff to grow the economy.
Trump truly believes that the Fed grows the economy by mining gold.
1
Perhaps the best way to evaluate Mr. Cain is to look back at his radio show, its commercial sponsors, their "products," and the particular target audience they were paying to reach.
4
Currently, there is no currency that challenges the dollar as "world currency" and that basically allows the US to amass almost unlimited amounts of debt. I don't see that will change anytime soon, but what Trump wants to do will be seen as "cheating" by the rest of the world and it will certainly cause chain reactions. As usual, when the balance is unsettled, money will flow faster in the direction poor => rich. That is why rich people like to rock the boat.
13
A similar article in the Washington Toast pointed out a much greater danger: that Trump might try to make Moore or Cain chairman of the Fed. While Powell shows no fear of being fired just now, it's a risk. Trump could be re-elected and out-wait Powell. Both these appointments are therefore unacceptable.
16
The job of the Fed is not to do the expedient thing.They are generally economists who take an overview of world and national economic growth.The dollar has retained its status because we have had a judicious and non political Federal Reserve.Trump’s appointments are two people with flawed reputations, to say the least.Trump’s handling of money is questionable-he has had five bankruptcies plus such a reckless reputation with New York banks that they would not lend to him so he had to turn to DeutscheBank.The Senate needs to assert some semblance of judgment and reject these nominees who have skirted the law and have deep, dark clouds over their behavior.
23
Nice job filling the swamp and weaponizing yet another US US supposedly independent department with Trump sycophants - aka sickophants - even more with two men who carry numerous baggage from their past, including plain nuttiness such as Cain's hmmm Libya, Libya and 999 tax plan.
Sexual misconduct and harassment by one, cheating on their wives, non-paid spousal, child support and tax fraud by the other, the one having hooked up with women on-line. Yet now the spontaneously warm and cuddly Joe Biden is suddenly accused of misconduct against women?
And not to forget that their educational background in economics is greatly lacking.
MASA - Make America Sane Again. Although I am afraid that will take quite a long time.
19
Before the Gods destroy empires, they make them go insane.
1
Trump has made a mockery of governance, appointing the least qualified to positions that require expertise, experience and dedication. Amateurs are everywhere in this administration, anyone who believes there will not be consequences for their level of incompetence, must be wearing a red hat and hates the idea of a competent government.
17
Then Trump's and the Republicans destruction would be pretty complete: the presidency is a joke, their congress is widely called Trump's spineless senate, the supreme court lost its legitimacy with bro Kavanaugh and Gorsuch, and now the Fed becomes a Chuck E Cheese. We're now pretty much run as well as a Trump airline. Or did I mean casino? Or did I mean school?
77
Trump has corrupted the White House, the Justice Department, the EPA, Education, Interior, the FAA, NASA and God knows how many other scientific and regulatory agencies. Now he's corrupting the Federal Reserve. Will no one stop this man from destroying our government?
16
@Christy
There is one and only one way to stop him. Vote him out. No Mueller Miracle. No Southern District Savior.
No time to nominate another identity candidate. There is too much at stake. Nominate the candidate who will change things. Then vote Trump out.
2
In this case, there is more to it than appointing excessively partisan hacks. These particular hacks have a record. Stephen More is constantly changing his uninformed opinions and predictions. Furthermore, he is simply wrong most of the time. This is not surprising since he is not an economist.
Herman Cain is not only not an economist, but has no training at all in economics. Here is how Wkikpedia describes him:
"Herman Cain (born December 13, 1945) is an American politician and author, business executive, radio host, syndicated columnist, and Tea Party activist from Georgia."
Look, I thought Alan Greenspan was a horrible FED chairman. Although I do not think he was responsible for the financial crisis of 2008, by allowing banks to become way overleveraged (too much in outstanding loans for their amount of reserves) he insured that when the crisis arrived, it would be very deep. Nevertheless, Greenspan was an economist. He could give economic reasons (which happened to be wrong) for his actions.
These two candidates have no redeeming economic graces. They are simply partisan hacks.
40
@Len Charlap Economists are very good at telling us why their predictions didn't materialize, with graphs, charts and with lots of regression analysis. It is almost as if it is in their job description along with the moral justification for selfishness that Galbraith spoke of, of course.
5
@Steve Bruns - But there are are economists such as Nouriel Roubini, Ann Pettifor and Steve Keen whose predictions (including 2008) have been accurate. How many owners of Pizza Parlours have done as well?
PS I am not an economist.
6
we have a president who brags about assaulting women and supreme court justices who have been accused of sickening behavior while consistently holding and writing opinions that are blatantly political so why not a pizza guy on the Fed who will do the bidding of our number one suspect.
11
"What makes Mr. Trump’s approach to the Fed so unusual...."
No, it's not "so unusual." It's time opinion writers for The Times start calling out his decision making processes for what they are: the result of emotional disturbance. You don't need a medical degree or a doctorate in clinical psychology to see it for what it is.
51
Americans should be alarmed at how ineffective our Constitution is at checking an inept President who is hellbent on destroying good government, apparently for no reason other than to gratify his ego and satisfy his basest needs. The American system is no longer working. We need to fix it or our democracy will be lucky to survive another decade or two.
16
@617to416
I would argue that it’s not the constitution that is ineffective, it’s primarily the elected officials in Congress. They already have all the power they need to rein in the president but they don’t. They cede one power after another to the Executive Branch and the unelected and often unaccountable bureaucracy...and then the bemoan that reality as if they didn’t create it and won’t stop it.
Then the electorate compounds it all by returning the same people to power time after time, often for no better reason than partisanship. Members of Congress think it’s their job to support “their” president if they’re of the same party (sorry, not just Republicans with Trump - they just happen to be doing it now, but the Democrats did the exact same thing with Obama) - their job is to support the constitution and the country not a party.
Trying to rewrite the constitution may temporarily solve one thing or another but could likely cause even more problems and result in a real loss of liberty. The American system can work just fine, thank you...we just need to put the people in place to do it!
3
I don't blame our system so much as I blame the Republicans in Congress who sat on their hands for 2 years and did nothing.
4
There is no way to fix a presidential system once the people elect a criminal and make him president. There are no checks or controls on behavior from this level. This problem is much more serious than the media let on, it is capable of ending the system itself. If Trump wanted to he could end our form of government tomorrow. Luckily he either does not know how or he has chosen not to do it yet. In either case someone else will not too far down the line.
4
Another day, and another Trumpian poke in the eye to the fabric of institutions that have kept the country on an even keel for decades. It’s hard to believe he is NOT working for the Russians.
13
Is Wall St. really going to risk suicide for our economy by allowing the Republican senators it owns and operates to put Moore and Cain on the Fed board? Maybe Trump has told the Wall St. fat cats not to worry because he'll alert them soon enough for them to short the market before the crash and make more money that way than they have in their entire lives before. But if he can't give them that guarantee, why would our investment bankers allow Trump to cause total economic chaos in America and the world by wrecking the Fed?
11
Because they are insulated from the economy and don’t care what happens?
1
@Fred White Look at their behavior in the twenties and thirties. Or the overreach that flourished during the Gilded Age. Greed can easily cause stupidity.
1
Despite the fact that a delusional Donald J. Trump is the POTUS because even less intelligent people voted for him, he knows less about the Economy than the average Wharton school undergraduate. Nevertheless like most sophomoric clods, he thinks he knows more than he does about everything. He is a great danger to the future of our country and in the process of destroying the foundations upon which this country has thrived. Now, in his ultimate ignorance he has chosen the former CEO of a pizza company to sit on the Fed and make decisions about monetary policy. Wake Up America! before it is too late. The last thing we need is a TV "reality show" host running the government as though it was just another TV show. The real world does not run the way Donald Trump thinks in his very very delusional mind.
19
Who are you talking to? The only people who can change this now are the Billionaires and they are doing fine.
@RLW
A pizza guy on the FED? Makes about as much sense as a coffee boy thinking he is qualified to be President. Which makes about as much sense as a real estate developer being President.
God save us from business dweebs.
3
Trump’s other people’s money is really the taxpayer’s.
3
Here we go - the real beginning of trump's destruction of the global money market.
7
Why would these appointments differ in any respect from any others he has made. They are based solely on self interest. Whether it will increase the adulation and support of his base, personally enrich him,keep his command of the news cycle, oroptimally all three with one tweet, Trump is always and only about Trump. George Conway was not wrong. Trump suffers a significant, and for America, a very harmful personality disorder. His narcissism, always a predominant feature in his life, grows daily.
9
As long as right-wing free-market true believers have the slightest credbility, they will find their way into the cracks and seams of economies wherever they can. They will always have a following for the same reason pyramid schemes will always have takers: it's much easier to sell something that's too good to be true, rather than something that requires factual information, rational thinking, objective analysis, and deliberation.
Unfortunately for us, we have a catastrophically incompetent president, unwilling and incapable of rational thinking and welcoming of menace.
5
I guess Herman Cain makes sense as an appointee if Sarah Palin or Louie Gohmert weren't available.
3
Our president doesn’t care if the economy tanks, our democracy crumbles, or our entire nation goes up in flames, as long as he’s not in office anymore and thinks he can escape blame.
3
Like a termite, Trump will eat up our institutions from the inside over time.
Everyone has been saying after Trump’s election: now we will see how strong our institutions are.
Well, turns out the presidency has power that goes beyond the “phone and the pen.”
Before Trump, I didn’t know that the Fed wasn’t independent and that the president thought it answerable to him.
Before Trump, I didn’t know that you could launch a war on Truth and make people believe that truth doesn’t matter.
Before Trump, I didn’t know that a president could interfere with his own investigation and have the premier law enforcement agency determine that he couldn’t be indicted for the crimes he committed - not because there isn’t evidence. But, because he’s president.
Trump thinks he can pack the judiciary and pack the Fed with his people, his “Roy Cohns”.
Resist. Save our institutions.
Vote. In every election.
6
The End of the World is being previewed every single day with the Trump Administration.
He didn't want to win. He doesn't know how anything works. He is going to burn down the whole world so he doesn't have to admit it.
3
This man is the opposite of king Midas. He turns everything he touches to rot. Yeah, this is mind-boggling, that a single man would be so selfish as to willfully destroy an institution just for the sake of his own personal gain, not even for the gain of his party or in the pursuit of a goal outside himself. He would do this for no loftier reason than that he wants to win, he himself, him alone.
2
Trump systematically defiles everything he touches.
4
with a tame-cat GOP majority in the Senate, Trump can appoint anyone he wishes, and they will be confirmed. Even Caligula's horse must have occasionally snorted in disgust. Not these Made Men
7
Excellent article to warn us, and anybody listening, of the dangerous and stupid politization of the Federal Reserve...by an unhinged brutus ignoramus totally devoid of scruples, and surrounded by far-right minions unable to understand the absolute benefit of independence from an executive gone berzerk. Can't we see that vulgar Trump is destroying this democracy, and any chance in cutting down the rising inequality afflicting this capitalistic system? Trump's trampling on this society is hard to take without shivering in thinking of the harm it shall cause to future generations; ours, lost already.
7
Trump is like a rogue elephant—
Blindly smashing, reeling, flailing.
And the three ring circus where he’s on display, is our government.
5
@srwdm
I have read another description:
A bull that carries around his own personal china shop.
1
As to Moore and Cain, well Moore is a deadbeat dad and that says all you need to know about his character and trustworthiness.
The first problem with Cain is first of course and the easy one, the accusations about sexual predation. The second is that his credentials as an economist are slim, his experience relative to the Fed nil and his knowledge purely claptrap.
But the real problem with Cain is that he has no credential for the position, none whatsoever and is simply an ignorant, uninformed ideologue.
Trump would not reappoint Janet Yellen but will appoint these two to the Fed.
Help!
6
You have to hand it to Trump: I knew he’d literally picked the two stupidest economic types in the United States, but I now see he’s also picked two of the very sleaziest.
8
Only in Trumpworld would two such undistinguished men be nominated for such a high honor and huge responsibility. This is yet another massive plot to upend our Democratic institutions. Trump is pure evil.
8
Cain and Moore: Extreme vetting anyone?
1
Welcome to Trump World where your gut and the beliefs of what “they” are telling you are always superior to reasoned analysis and fact-based decision-making. Why waste a lot of time thinking about things when your last meal of cheeseburgers tells you what to do?
3
trump wants to be Big Rocketman with a "rocketship" economy. With the Russians essentially neutralized to swing the election for him, he looks to the economy for help. But is a recession just around the corner?
Anything for instant gratification.
2
Once again it's hard to tell if the president is merely ignorant or is intentionally trying to tear down our critical institutions. If I had to guess I would say that he's ignorant and self involved, that like every other decision he makes he's merely trying here to advance the cause of DJT, unaware of and indifferent to the consequences to the country it's his job to lead.
2
The article rather conveniently fails to mention that Herman Cain was Chairman of the Federal Reserve Bank of Kansas City from 1989 to 1991.
1
@BD
Cain also was a vocal proponent of raising rates in a good economy. He criticized the Fed for "artificially low" rates during the Obama years
If it were up to Cain the rates would be much higher. That is contrary to what "Rocket-Man" trump wants.
Perhaps because it was the Omaha branch, not KC’s, which in did in fact chair for one year in ‘95-‘96. Or perhaps because that was over 20 years ago, and he’s only been thumping Bibles and selling himself since then.
Or perhaps it’s because Trump wants to put him there to goose the economy via the same QE that he attacked.
@BD I don't really understand the structure of the Fed but I do know that Fed Governors are more important than regional Chairmen.
1
Why are old school Republicans waiting for Grima Wormtongue's spell over the Republican party to be broken?
Denial ain't just a river in Egypt.
1
Everyone knows that you don’t mess with the Fed.
It doesn’t take a financial genius to know that interest rates are historically low and that lowering them now will only give us one less tool to fight recession in the future.
That leaves us with the understanding that our president wants to goose the economy to make it grow during an election year, since his tax reduction doesn’t seem to have had a lasting effect.
Trump’s only motivation now seems to be re-election. Those of us who value our country must be even more motivated to see that a Democrat wins the White House in 2020.
7
The problem with Stephen Moore’s candidacy is his lack of expertise with interest rates’ effects on the economy.
He has not written even one peer-reviewed research article related to interest rates—or anything economic at all (see Econbrowser Mar 22, 2019).
You don’t have to be an academic or have a PhD to serve at the Fed, but you do have to be an authoritative expert when it comes to understanding rates. Our country has thousands of such experts, and this is not one of them.
281
He also doesn’t seem to have ANY professional publications: it’s all newspaper articles and pop books.
Even funnier (if you have a morbid sense of humor) is that if Paul Krugman’s right, Moore has singluarly managed not to get ANYTHING right. Every single one of his cheerful, confident, somewhat manic predictions has turned out wrong.
59
@Ames Brown. And you are perhaps expecting intelligence and not subterfuge from this President?
19
In short, Moore is an economist with ZERO understanding of economics, but because Fox and CNN pass him back and forth as an ‘expert’ he has a pulpit that allows him to spout his moronic views.
42
Our government is increasingly being taken over by a "business friendly" supreme court and lower courts, federal agencies led by straw men for corporations and the military/industrial complex, and an executive in the white house with the instincts of a mafioso.
It gets worse by the day. So it's not surprising to see this latest nomination.
The only remedy is at the ballot box (I wish it were a box for paper ballots thoroughly watched by all parties from the pen to the tally) in November 2020.
8
OK, something needs 'tweaking' here; Herman Cain may actually convince a fellow Fed board member of anything? The author suggests that partisanship may prevail if Trump's two nominees convince someone of something. Again, Herman Cain will actually sway a fellow Fed board member of anything? Serious, highly educated people are going to be convinced of anything by a YouTube meme? Serious, highly educated people are going to convinced by a self promoting ringmaster? At least we're safe from that happening.
2
What this Presidency is revealing is how much of a dictatorship the supposed Three Branch system has already become. Can’t blame it solely on a corruptible political party. The founders knew partisan politics were a danger. In this case it’s more than that. The structure is way more fragile than we have been led to believe. All it takes is one Executive willing to challenge the house of cards. Until 2016 the country had not grown such a candidate — who won, anyway.
4
Both men lack the background necessary to be effective at the job. One of the most pernicious consequences of Trump's election has been his disregard of expertise and skill in selecting appointees for various jobs in favor of Trump's personal barometer of whether he likes the person and whether they will do his bidding. He is incapable of viewing any decision except through the myopic lens of what is in his short term personal interest.
8
Stephen Moore wrote a book on how the wonderful the Bush economy would turn out because he lowered taxes and relaxed regulations.
Mr Moore is apparently undeterred by actual outcomes as he continues to advocate this approach
6
This may effect the worldwide reputation of the Fed? When will writers find the courage to use the English language in a way that reflects reality? This will definitely effect the worldwide reputation of the Fed but what country really takes anything we do seriously any more? The reputation of all parts of our country are now suspect and the world will not change its opinion after Trump leaves office. He has exposed a troubling defect in our electoral system and a corruption in our politics that has been developing over a long time span and to which there seems no easy cure. The suspicion of the world is that we have become a failing state, and that we can cause serious damage as we flounder due to our systemic malfunction. The rest of the world is going to keep their distance and keep their guard up for a generation.
1
Let's be clear.
The only reason it may become a partisan battlefield is if congressional Republicans continue to refuse to do their oversight constitutional duties, and refuse to join Democratic leadership in finding the facts about all this mess.
And if they think Democrats will decline to do their duty, they are clearly wrong.
If congressional Republicans had performed their constitutionally required oversight duties these past two years, rather than try to cover up this administration's corrupt actions, then Republicans would be in a very different, and much more honorable place, right now.
6
The only duty a Republican has is to himself. They care nothing about their fellow Americans.
1
Why is Trump doing this now? Because it’s almost April 15th. My tax bill went up, and so did my share of the federal debt. Blaming The Federal Reserve his distraction from his tax cut fiasco.
5
We could be in for a rough ride if the Fed sets monetary based on the whims of Mr. Trump whose main # 1 concern is being re-elected, the health and vitality of our economy is clearly on the bottom of his list.
2
The most important thing one can do with government financial institutions is to prevent them from being pulled in random political directions by the changes in the executive office. These institution must have long term stability and a free hand in spite of political winds or wind bags. Trump wants to up the option of executive power, but like much of what he does, there's a spoiled brat aspect to it.
The president is not making America Great Again, he's turning it into a personal exercise of pure whim. Four years of Trump will do much damage; eight could sink the ship.
4
Trump isn't just appointing political hacks. He is appointing incompetence. These two should not be anywhere near any kind of administrative position anywhere. They certainly have no business occupying a seat at one of the worlds most critical operations.
What Trump wants is loyalty, not proficiency. Trump likes these guys and believes they will do his bidding. Trump doesn't care what happens to our economy long term or the world's for that matter. He just wants high ratings. If Trump can goose the economy with irresponsible tax and monetary policy, he's all in.
So these two appointments represent something much worse than partisanship. They represent the destruction of merit, of skill, of expertise. Trump has done this exact same thing to his cabinet. We can't let him do this to the Fed. The stability of the global economy is at stake. The faith and trust the world has in the US dollar is at stake.
The only thing stopping this debacle is the Senate. Will they stand up to Trump for something this critical?
9
Mr. Trump has said for many months that the Fed had raised rates too fast, and now even the Fed seems to think so and has signaled a pause in both rate raising and selling off its portfolio. So, would two more Trump appointees have led the Fed to that conclusion months earlier? Is the concern raised in this article really one of getting the monetary policy right, or a veiled shot at the President?
The threat comes from Trump. But if the Fed becomes the lapdog of the president, the blame belongs on Powell, not Trump. Powell has been quiet and gutless in the face of Trump's threat. Powell should publicly emphatically reject Trump's public pressure to determine Fed actions. It Powell who is to blame because Powell has essentially just handed over control of the Fed to Trump.
However, the Fed made itself a fraud at least since Bernanke. Congress gave the Fed the following mandate:
"maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates."
Bernanke declared that the goal of the Fed is 2% annual inflation. He thus publicly declared that the Fed's goal was to violate the Congressional mandate goal of stable prices. Bernanke, then Yellen, and now Powell have all declared that 2% inflation is the Fed's goal. And the Fed's behavior since has emphatically demonstrated that 2% has been the goal because whenever inflation was below 2% they tried to increase inflation, even when the other mandated goals of employment and interest rate level were being met.
1
Trump has endangered the nation and the planet, why not destroy every bit of our government, he is well on his way with help from the rest of the GOP.
2
stimulate the economy more? we are already at low unemployment. God help us if we have fired all the financial tools when the economy is strong then have a real recession.
1
Is it time for the House Speaker to think again about impeachment proceedings against the President? How much harm will he have to do to our nation before Congress acts? Is sheer incompetency grounds for impeachment?
2
The entire premise of this article is absurd, and illustrates the disconnect between the elites and the real people.
The confident assertion that the Fed has earned respect over the course of decades is based on the false assumption that the Fed is actually respected outside of the Acela corridor bubble.
The "cautious, careful language of the Central Bankers" is part of the game that is played in Washington that people are in the early stages of revolt against.
And Greenspan's famously obtuse testimony did absolutely nothing to prevent the greatest economic crisis in a century. Indeed, his flawed monetary policy helped to cause it.
And all that highly sophisticated technical analysis led Bernanke to reassure us that there was not, in fact, a housing bubble iin the years leading up to the collapse of the global economy in 2008, but even if there was the damage that it's bursting would do would be "contained".
The Fed is a group of dinosaurs who have no understanding of the 21st century economic landscape, which is why they have repeatedly been "puzzled", "perplexed", and "disappointed" over the past decade, when pulling the economic levers no longer worked like they used to back in the post-war years.
And the policies of the Fed, from the bailouts in 2008 and continuing for a decade now, have poured fuel on the already raging wildfire of inequality that has this country on a path to violent social unrest.
But yes, Moore and Cain are both embarrassments.
3
"“People around the table did have political views, and I did, too,” said Alan Blinder..." An honest statement worth considering for the Fed, and in a corollary, the courts as well.
Both sides routinely accuse the other of seeking to appoint partisans, left or right, to such positions, which are meant, if they are to function well and in the best interests of our country, independently and without partisan purpose or "to support the president". But we often delude ourselves that this means the individuals involved are neutral and have no opinions of their own, blank slates upon which the issues of the day will impose wisdom upon them. Well, that, of course, is nonsense.
As illustrated, the point is not that such men and women do not have a political slant one way or the other, voted for this or that candidate, or have religious or moral views of their own, but that they are mature and smart enough to be able to encapsulate that to a sufficient degree in order to act officially in their appointed roles. This is where the fine line comes in - it should be irrelevant if a Fed appointee voted for Hillary or Trump in 2016; I hope they voted for someone. But when they actually engaged in political action like running a fund raising/re-election group, then sufficient doubt is reasonably raised as to how free of influence they will be. Not a guarantee one way or another, perhaps, but actual conduct merits far closer scrutiny and consequence.
2
Donald Trump continues to reveal the fragility of our democratic institutions as he extends his autocratic, executive control over them. First, he attacked the F.B.I. essentially decapitating its top leadership thereby putting the "rule of law" in jeopardy. Now he's doing the same to the other supposedly major independent agency, the Federal Reserve, in an attempt to manipulate the economy in his favor. What this amounts to is a form of "crony capitalism" that corrupts both our economic and social stability moving the nation ever closer to one-man rule.
7
S partisan as in Democrat v. Republican is bad but partisan .1% v. 99.9% is good? Something tells me I won't see a difference down here.
The Fed has always been decidedly partisan, fully staffed and managed by overtly quiet Republican conservatives. The Fed's public rituals are for the public's consumption.
Only by force of a change in public law was the Fed brought to act as if the level of employment was also a monetary policy determination factor. Remember Newt Gingrich calling for repeal of that law a couple years ago? The Fed's partisan support for banker and broker welfare has been unwavering. Our Harvard and Yale educated multi-millionaire Democrat presidents have been reliable friends of the Feb clubhouse rules.
The only thing non-partisan about the Fed is its disregard for the economic underclass. It has a strong regard for but one side of the partisan divide.
1
Herman Cain was chairman of the KC Fed. You may not like his politics, but he is qualified and was on the Fed system before he ran for President. Check your politics. Elections have consequences, all I see is an elected president putting up qualified people for posts. Nothing new here.
@Sean
There are 12 regional Federal Reserve Banks. Each has a nine-member board of directors, composed of three commercial bankers (Class A, in Fed jargon), three people from non banking sectors of the economy (Class B), and three captains of industry from the region (Class C). Cain was Class C.
In 1992, he joined the board of directors at the Kansas City branch. In 1994, he was chosen to chair the board.
What does the board of directors actually do? Every month that Cain was there, board members would meet, talk through the economic developments and data in their areas, and offer some advice. Fed economists would listen. The research would be taken up to Kansas City Fed President Tom Hoenig, who could use it however he deigned to use it. “They’re a source of economic information for the bank,” explains Bill Medley, public information director for the Kansas City Fed. What’s their single biggest contribution? They recommend the discount rate, or what the Fed charges for loans. “But that has to be approved by the board of governors.”
Cain is not a qualified economist. Not even close.
https://slate.com/news-and-politics/2011/10/herman-cains-fed-years-what-did-he-actually-do.html
3
How about the dollar as a reserve currency and all the power and privilege that affords Americans?
1
By itself, the politicization of the Fed is cause enough for concern.
More concerning is that it is part of an overall norm-breaking strategy that is damaging our democratic systems, bringing them ever closer to the breaking point. Politicizing the courts, ousting uncooperative Justice Department members, installing unqualified and politically extreme cabinet members and staff, vilifying allies and edifying autocrats, casting the media as enemies, denouncing entire opposition political parties as treasonous, endorsing racism and nationalism, restricting the voting rights of the opposing party's electorate, and calling for investigations and violence against political adversaries--these are of a piece with politicizing monetary policy. All of these actions move the executive closer to autocracy and the country further from democracy.
2
Timing is everything. It is not simply lowering or raising interest rates but when. There are some like Powell who understand the delicate balance needed to avoid crashing our economy and others like Moore and Cain who are out for themselves in true Trump fashion. As usual, Trump deliberately picks the worst of the worst to do damage to our governmental institutions. The whole notion of vetting has gone out the Window, but then it went out the window when we elected Trump. We know there are much better choices than Moore or Cain but Trump runs our country without any checks.
1
The whole time Democrats ran around bragging how President Obama fostered such a great return to prosperity in America, his hand-picked, highly partisan chairman of the Fed, Janet Yellen, and her Democratic colleagues only raised interest rates ONCE! They spent his whole administration protecting Obama from the realities of a real marketplace.
So now that Trump wants to bring one or two different ideas on board, including those of people who worked in REAL businesses (not just perpetual government regulators and academicians) the NY Times runs a column about "partisan warriors" infiltrating the Fed?
Where were such erudite columns when partisan Democratic members of the Fed were trying so hard to protect Obama?
The Federal Reserve, the EPA, the FDA and other bodies that are supposed to be highly professional and non-political should really be choosing their own replacements. Congress would still have the power to impeach and should do so where politics have been introduced. Also, these bodies should be allowed to impeach their peers where politics have been introduced. I truly hope we can soon de-swamp all of this corruption endorsed by the GOP.
1
That these two unqualified people are even in the conversation as candidates for Fed is distressing at best. This discussion illustrates how Trump has debased standards and lowered the bar for so many things in American political life. For many institutions - cabinet posts, for instance - lowering the bar is probably not an existential threat because they are essentially political and change with administrations. But the Fed sets a global standard for integrity, transparency, solidity and intellectual horsepower. Subjecting this to doubt further weakens - I fear for the long term - US economic leadership and preeminence in the world with irreversible long-term consequences. Unfortunately, the hordes of the uneducated in the US don't even see this as a problem and likely wouldn't care if they did understand it.
4
The nice thing about zero or near-zero interest rates is that you can borrow virtually unlimited amounts. The interest on the national debt hasn’t risen as the debt has doubled. Lesson? “Deficits don’t matter,” but you better keep those rates low.
I think of the fiscal situation similarly to that of climate change - it’s going to end badly; as in catastrophically. But we don’t know when or how. So, as Charles Prince said in the lead-up to the last financial crisis, “as long as the music is playing, you gotta keep dancing.”
1
What’s at risk if The mass media becomes as partisan as Donald Trump? Indeed, It can work both ways.
1
These folks voted him in to take control of the message. It does not matter how true it is. Herein lies the danger to republican’s move toward fascism. We have a leader who will make it harder and harder to distinguish the truth from fiction. What other federal institutions are already in on the fix?
1
You can sum up this whole story in one sentence:
Lower interest rates mean easier borrowing for Trump and family.
2
Trump politicizes everything. His appointees are never chosen for expertise, work ethic, honesty, or adherence to the public interest. Cain and Moore are but two of the latest examples of craven subservience being the only Trump job requirements.
Our next president will have an awful lot of clean up to do.
1
Trump is endangering everything that was good about America. The United States of America is NOT the name of a company. It's an idea, an ideal, we the people...
1
As author Rick Wilson penned: "Everything Trump Touches Dies". Why should the Federal Reserve be an exception?
That said, the idea that the Fed has any credibility is suspect. Since Alan Greenspan bailed out Wall Street bankers after the 1987 crash, the Fed has been owned by Wall Street. Three successive Fed chairs have used zero interest rates and quantitative easing to do little more than inflate bubbles for the sole benefit of Wall Street.
Ironically, Trump's appointment of Jay Powell was a step in the right direction after three decades of mistakes. His tenure as an independent Fed Chair lasted until the October-December stock market sell off infuriated both Trump and Wall Street bankers.
Powell's dovish pivot at the January meeting will go down in history as one of the most sycophantic displays ever.
Moore and Cain are unqualified clowns, no question. But the damage has already been done. The Fed has already lost any credibility it could have had under Powell's leadership so doubtful partisan hacks make any difference.
2
Apparently the only people who should be appointed are those who adhere to the teachings and beliefs of the Eastern US economic schools of thought. Someone who was educated at Arizona State or the University of Missouri is unacceptable.
What do you mean "if"? It always has been partisan. Politics is the source of all human problems and woes.
1
Why not make the Fed a partisan battliefield? We are far down that path with the judiciary.
The failure of the Republican party, particularly in the Senate, to protect critical national institutions sickens me.
Mitch, Cory, et al, it is time to step up to protect our form of government.
Consistent with Trump-policies in alignment with Putin's desire to break American credibility around the world.
1
It’s well documented that moore has never been right about the economy, cain has absolutely ZERO expertise in the area. They are both thoroughly UNQUALIFIED.
1
Trump ruins everything he touches. Everything. If it goes on long enough, his destruction of our government and its institutions will be total.
We’d better all work together toward 2020 to make sure this doesn’t continue.
4
If it somehow would result in a major profit or cash injection into the Trump businesses, Donald would become an extreme Democrat overnight.
1
In the Presidents selection of these two gentlemen, he once again illuminates his lack of understanding how the Federal Reserve or any Government Agency functions. It is true that this group should be void of political motive and acts in the best interest of the United States and our banking system. That does not mean that thery do not belong to a political party of have a record of voting. In the case of Mr. Moore his defense of "all things" Trump on Fox, CNN and his recently authored book should immediately disqualify him. Mr. Cain as a radio talk show host and Tea Party Activist where his views appear to be in direct conflict with the mission of the FRS, the Board of Governors and the Open Markets Committee. (where one is given information for analysis and act in the interest of our monetary system, banks and consumers.) When the FRS has acted with what appears to the influence of the President in the 1940's, 1970's , 1980's , 1990's and 2000's , we witness inflation that has slowed and has had long term impacts upon the economy.
75
@Michael the court ordered Moore to pay his ex wife child support. he is amoral and should not be placed in this position.
6
There appears from existing reporting about the controversial backgrounds of these two Trump nominees that there are sufficient and compelling reasons, on both competency and character bases, to sink their chances for positions on the Fed. As in case of many other previous questionable Administration nominees however, the decisive factor will be whether Senate Republicans will merely rubber stamp whatever unqualified candidates the entirely self-interested Trump sends their way, or whether they will truly exercise an institutional independence in the important vetting process. Will these Republicans themselves show some “spine”, or surrender to the further consolidation of authoritarian power by their party’s leader?
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@John Grillo
Exactly right. The personal histories of both of Trump's 2 recent Fed nominees are disgusting and by themselves disqualify them from service on the Fed board. We need people with integrity, and if the White House has to stoop this low to pack the Fed with easy-money wingnuts, it shows how ominous things have become.
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Ironically, the good job the Fed has done with price stability and low unemployment has cast a brighter light on the President and, in a sense, transferred some of it's "independence" over to the White House. Conversely, both Arthur Burns and Carter's replacement G.William Miller, fell victim to a Fed that lost control of inflation; in a way, the Fed's independence was restored by Volker only because it needed that credibility and a public consensus to tame inflation. Then, of course, Volker was "outsourced" as the Reagan economy took off. In sum, "good"economy, weak Fed; bad economy with inflation, "strong" Fed.
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I've seen both of these people argue their points in various venues (Steve Moore is a frequent guest on Bill Maher's show) and I can tell you that the arguments never change, no matter the circumstances, the consequences or the historic facts. Both are more interested in sound bites than sound fiscal policy.
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I am going to put this administration and it's appointees in the simplest of terms: 1. Individual 1 has a role and that is to create chaos. 2. The purpose of this administration is to dismantle our Democracy. 3. Each appointee is chosen to undo the branch of government he/she is in charge of. For instance, Sarah H. Sanders, Press Secretary, no longer holds press briefings. Zinke was Secretary of Interior but was really an oil lobbyist, etc. 4. The wealthy want no rules, regulations or taxes and have paid now through Citizens United to take the government apart. Once the public understands the above and begins to look at individual 1's behavior and decisions through that eye, they may understand that they have been intentionally divided to create more chaos and can easily predict what kind of people will be chosen as judges and Cabinet officials and so on. As always: KEEP HIM AWAY FROM THE BUTTON.
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You had me until “once the public understands...”.
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@lulu roche. The part of the public that put this miscreant into office wouldn’t know Truth if it hit them on the head. They like the feel of Do-Do Donald channeling their resentment and anger at what they feel is “big government” and other social “groups.” Democrats are hoping to play out the time until the next election because impeaching this dog would make him a martyr, which is a roll he relishes and which you can see by the glee he takes in making himself the “victim” whenever he can.
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@lulu roche
And possibly by design, the ordinary citizens of this country are at each other's throats while the fabulously wealthy and their minions are dismantling this government.
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If the Fed losses credibility the USD might well have the same fate or worse. I don't know about everyone else, I happen to get paid in USD and my savings are in in USD. If you need a lot more USD to buy stuff your poorer.
Oil prices are starting to rise at a very fast rate. More to follow...
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The Billionaires have already moved their money offshore and into other currencies, gold, and real estate. They will be ok when the USD is worthless. In fact they will be able to buy the country for pennies on the dollars. Here comes the boss.
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The Federal Reserve Board was created as part of the Federal Reserve Act under the presidency of Woodrow Wilson in 1913. It was motivated by the need to stabilize prices, interest rates, and the economy in general. In the post-civil war era, the economy grew swiftly with few controls and was subject to periodic booms and crashes.
The president appointed experts on banking and finance to the Board, who had fixed terms so they could make decisions free from political control. Over the years, there have been excellent chiefs, such as Mariner Eccles and William McChesney Martin, but others not so good. From time to time, they were pressured by presidents to lower interest rates, usually about a year before an election, so that the economy would boom in the run-up to the election.
Even a chief as knowledgeable as Arthur Burns succumbed to such pressure from Richard Nixon. After Nixon left office in late 1974, his successor Gerald Ford ordered the distribution of WIP buttons. Remember them? Wip Inflation Now.
The current chairman, Jerome Powell, seems to have more backbone than Burns, but even he is caving in a bit to Trump's constant pressure and bullying. Lowering interest rates was an important tool in getting us out of the recession of 2008-9, but now with unemployment low and a shortage of skilled workers, it would be like giving heavy doses of aspirin and warfarin to a patient who has bleeding of the brain.
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@Diogenes ... Inflation sagging, why raise rates? Maybe we have an opportunity for some wage catchup.
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@BD Inflation is not sagging. It is steady.
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@Diogenes ... check trend over the past six or seven months.
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For several months the President has been saying that the Fed raised rates too fast, and now the Fed has said it will pause in its program to raise rates. Would a little more influence from the White House be perhaps a good thing?
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Except, Trump is only interested in looking good, not in the economy.
No it would not. The White House is politically motivated and not looking objectively at the long term.
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@david g sutliff
trump is the "Costanza 'president'" - whatever instinct he has to say or do something, the exact opposite is what should be done or said.
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It is clear by his actions in many areas that President Trump has little to no concern about the long-term effects of his policies, statements, and appointments. His horizon seems to be November 2020 and his audience is those who chant inane things like "Like her up." Not a good recipe for the health of our country and economy in the years ahead.
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Overextended QE & ZIRP made income inequality spike. There's plenty of inflation in the high end markets: stocks, real restate, art. There is zero need to goose the economy further for the Investor Class. Since Greenspan we've had too much easy money, sometimes for Joe Sixpack, sometimes for Jeff Bezos, but always for Wall St, and it never ends well when it implodes. Raise rates. Back the dollar with gold. Make Money Real Again.
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@Ned Gold is not "real" as an asset. Its "value" is psychological; can't eat it or plant it, can't burn it to move your car or heat your house. Further, you can't control either the supply of or demand for gold so you can't control its price. A value mirage.
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...crash the world economy! Stifle investment forever! MAGA!!
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Good luck with that. Since Greenspan we have had a funny money monetary policy. The actual rate of inflation that included real estate and the stock market is very high, so they just don’t measure it. The actual amount of unemployment and under employment is very high so they just measure the short term change which does not measure unemployment. Funny money and funny statistics. Who do they think they are fooling? People without job prospects know the truth and they are going to demand change, any change they can get. Trump is in office today because he was the only voice of change in the last election. The people are desperate and want to cut through these establishment lies but the blunt tool of elections is a course way to effect change. Maybe as the presidency cycles through four year side shows we might accidentally find a leader who can get something done. But our system is not biased toward expertise or vision, it is biased toward the arts of con men and computer hackers who have no answers for any of us. This is what a broken system looks like.
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The Senate should take a dim view of Trump's two latest political choices for the Fed and his calls for cutting already low interest rates. Particularly after the lackluster economic results of a debt-financed multi-year 1.5 trillion dollar tax cut, increasing private debt through force-Fed credit is a downhill road to be avoided: exhilarating at first, but virtually brake-free and destined to crash. The Senate should fence in the public risks here of a President who bases much of his economic vision on his bankruptcy-ridden career as a real estate developer relying on Other People’s Money. Easier credit is vital in a depressed economy. In a growing economy, however, easier credit is an invitation to a wide array of borrowing companies to chase opportunities without due regard for the constraints of their staffing, their product, their competitors, and likely markets.
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The Senate has no view except the one through the rear mirror. They are rubber stamps for their owners and they do not have our interests in mind.
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Trump's appointments are only about one thing: Trump winning reelection. Fearful that his tax cuts are not producing the 3 and 4 percent growth promised, he wants to induce yet another "sugar high" to bring back a robust economy for 2020.
Calling for more quantitative easing begs the question why? Are we in a recession? Is the economy ready to tank? I thought his tax cuts were supposed to lead us to long term prosperity. What happened?
As for Stephen Moore, he is a dedicated, life long shill for trickle down economics, who might be one of the few people who can claim to out prevaricate Trump.
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Yep. I’d only add that this is also part and parcel of Trump’s neverending effort to develop new alibis.
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@JohnM
" ... induce yet another "sugar high" to bring back a robust economy ... "
By definition, a "sugar high" is not a robust economy. The sustained investment in e.g. infrastructure and education, needed for a robust economy is entirely out of Trump's and his acolytes' (sycophants') lexicons.
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@JohnM Moore was forced to pay child support after his divorce. he is amoral and is not fit for the job.
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Perhaps we can invite admired former Fed leaders such as Alan Greenspan, Ben Bernanke and Janet Yellin to jointly publish a letter with their wisdom on what makes for sound Fed leadership. From their respected positions, maybe they could help educate the public, empower the Senate and coach Trump into some more enlightened nominations.
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@Dan K. I wish there were examples of the President making enlightened nominations. When the nominees must agree in detail with the President's idiosyncratic beliefs, I suspect that possibility is gone.
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Governance of the Federal Reserve must lean toward sound monetary policy, not the whims of political patronage.
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@David Behrman
Interest rate reductions in times of low unemployment and rising wages such as today would most likely trigger inflation. (If the Fed has data pointing to an economic downturn on the horizon instead, then it might be different, however that doesn’t seem the case.)
Controlling inflation is among the Fed’s nominal objectives, so normally the Fed would resist interest rate reductions right now.
If the fed were politicized, it might be pressured into taking such inappropriate economic decisions.
Let’s be clear, Trump’s nominees were selected for their ability to overstimulate the economy and hence support his re-election bid. Not for their long-term economic thinking.
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@David Behrman
Where are the financial titans that prop up the Republican party? An incompetent Fed is more a treat to them than anybody else.
One more sacrifice at the altar of low taxes and extreme deregulation. "It's worth it" they tell themselves. Then 2008 happens all over again, and they'll be too blind to realize their own role in it.
I am confused by this thought process. Currently the US. Is at "full employment" 3.8%. If the interest rates are lowered, that will increase the demand for money through private and business investment. The more that money is demanded while the supply stays constant (we would need more households to save money....that's funny, the average American can't pay a $400 emergency bill with borrowing), then interest rates will increase and ultimately yield investment. All this is "if" the dollars are used for investment of capital...machinery, buildings things that make the economy grow, not stocks. What if interest rates are kept low by policy, the salaries remain low because instead of investing in capital, the investment is personal in buyback of stock. And there you have it, money to the top 1%, while the bottom 99% remain in jobs with wages that don't keep pace while healthcare and childcare costs skyrocket.
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Do not overlook the fact that both Cain and Moore have favored the idea of returning to the gold standard, thereby obviating the need to have a Federal Reserve. While the Fed has not been perfect, it surely beats relying solely on politicians and the general market situation.
While he made a few mistakes in the beginning, we might still be in a new ‘Long Depression’ if it wasn’t for the leadership of Chairman Bernanke. While the executive and legislative branches argued over an approach to treating the market collapse in 2008, Ben knew what to do.
Neither Cain nor Moore should be allowed to have a seat at the Fed.
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@Charlie
While your argument is sane and prudent, we unfortunately have a spiteful vindictive chief executive who will do whatever he pleases. The people thought they elected a president subject to the constitution and the laws of the land. Instead the got an emperor who considers himself above the laws. After all "he's president" as he often says and his critics aren't.
30
Yes, he knew what to do. He saved the big banks, inflated the money supply, and encouraged financial manipulation to be the new business of America. In the short term it papered over the problem and brought the market back up with inflated dollars. It also sent industrial business overseas and forced new jobs into the low paying service sector locking in the damage of 2008 for generations.
But we have a soaring stock market and low unemployment numbers so what could be wrong? Fake news economics may work in Washington DC but out in the country the anger and pain are still building. If you think Trump is the worst lesson the disaffected voters can send you are in for a big surprise.
5
@Bobotheclown...your understanding of monetary policy is woefully lacking.
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I think the Fed should have a razor focus on one thing: maintaining a stable value of the pieces of paper that we are required to use for money. Inflation getting out of hand wrecks everything else. It should be as apolitical as any focus of power can be.
The politicians have other means to manipulate employment levels, which are harder to measure and can be a measure of shifting values of the people as well as the economy.
18
In January 2018, President Trump told the American people that his Tax Law would make U. S. Corporations more competitive everywhere. How? Due to the tax cut, corporations could lower their prices and maintain their after-tax margins, competing for market share. The declining prices would cause the Federal Reserve to lower interest rates to offset the deflationary pressure. So, Mr. President, where’s the competition?
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@Thomas F. J. Bieber You will find that competition in the same place as St. Ronnie Reagan's-in the alternate universe where their lies begin.
9
There is one possible disastrous consequence of lowering the interest rate at this time. The US economy is humming alone quite well now, and the stock market is near or at its historical peak. A cut in interest rate would probably do less to move the economy to higher level than create opportunity for financial engineering like corporate stock buyback. This may lead to stock prices to become way above their fair values and a consequent market crash which could be a lot more severe than the crash of Christmas 2018.
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@JC
A cut in corporate taxes had already led corporations to stock buyback, while not putting the billions of saved money back into to the economy.
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@JC Speaking of possible disastrous consequences, money managers around the world will not fail to notice that inflating away the real burden of the vast mortgage debt owed by the Trump and Kushner families would be very convenient for their personal fortunes.
It's true that for the time being Moore and Cain would be only two of twelve. But if they appear to be the wave of the future, we could see a failed Treasury auction well before they're in the majority.
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@JC
There are many bad consequences to lowering interests rates now.
1) Higher inflation
2) For decades the welfare state has discouraged saving causing more people to end up dependent upon government from cradle to grave. Low interest rates on savings and correspondingly low dividends on stocks (which reflect inflated stock prices) further discourage individual saving.
3) Retired persons living off their savings have suffered for the past 11 years able to earn only a trivial rate of interest on their savings (much less than even the rate of inflation during those 11 years).
15
Greenspan’s decades long assault on regulation was deeply political w serious repercussions that continue to be felt today post 2008 meltdown, yes this is more overt but it’s time we evaluate the past more honestly too. And on deregulation — the same guys who pushed for that were all too happy to bail out the banks in 08, while homeowners were scolded about the “moral hazard” of the risky mortgages they’d taken on. I’m just saying...this isn’t really new, just in form not substance.
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@sue denim well said.
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@sue denim not new but on a whole new scale. The walls are now tumbling down.
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@sue denim True enough. And Trump's political "innovation," if you want to call it that, has been to say out loud what politicians used to obfuscate in coded dog whistles. He confounded the legal process by obstructing justice out in the open on Twitter, when everyone knows the proper form is to do it quietly behind the scenes, and via proxies.
11