His latest appointment to the Fed is depressing and laughable at the same time
There was a time economic policy was set by… economists. Ah, the good old days.
Now, someone’s appointment to an economic policy-making position hinges not on technical expertise but on one’s blind loyalty to Trump. Such loyalty requires a certain flexibility of ideology given Trump’s propensity to reverse positions based upon public reaction. For some people, fortunately for Trump, their ideological commitments are for sale.
Take for example Larry Kudlow, the Director of the National Economic Council — arguably the President’s chief economic adviser. While it is true that he has some industry experience, he never completed any graduate studies in economics or any related field. What apparently qualified him for the position was his role as a spokesperson on CNBC who was relentlessly critical of Obama and a cheerleader for Trump.
It’s worth noting, by the way, that Kudlow published an article entitled Bush Boom Continues, in which he asserted the economy would continue to expand for years to come. The Great Recession started later that month. He has never acknowledged his mistake.
More recently, he dismissed the estimates of the cost of Trump’s tax cuts calculated by the actual economists at the Congressional Budget Office (CBO). Since then, it has become clear that if anything, the CBO was too careful. The Trump tax cuts have resulted in a massive increase in our budget deficit despite Kudlow’s claims to the contrary.
Then there’s the chair of the White House Council of Economic Advisers, Kevin Hassett. He’s most famous for his book Dow 36,000. The Dow, of course, has never reached the heights he predicted, and indeed, the book was written just before the dot.com bubble burst.
With this team, you can practically take their predictions to the bank… that they will be wrong.
At least in Hassett’s case, he has a graduate degree in economics. As a result, he is on the record favoring more liberal immigration laws since, as all economists know, immigration is generally good for economic growth. Apparently he has abandoned that position since coming to Trump’s team. As I stated earlier, all ideals are for sale among this crowd.
Then there’s Stephen Moore, another TV commentator like Larry Kudlow, who Trump announced as his appointee to the Federal Reserve Board. Remember, the Fed, as our central bank, has traditionally been treated as independent from the whims of politicians. It has generally been agreed that the power to regulate monetary policy is too important to be left to politicians.
Trump, of course, wants to change this. He wants to politicize the Fed. That started when he did not follow tradition by reappointing Janet Yellen as Chair despite a stellar record in that position. Now he bemoans the fact that his appointee to that position Jerome Powell has raised interest rates to combat inflation. With re-election just around the corner, and indications of an economic slowdown increasing, Trump desperately wants the Fed to lower interest rates, inflation, apparently, be damned.
Is the Fed giving up its independence?
Is Jerome Powell repaying Donald Trump for not reappointing Janet Yellen?
Inflation, after all, is a concern for the future. Re-election is next year. As we know, Trump is amazingly short-sighted.
Anyway, Stephen Moore is interesting because of how he changes positions as frequently as he changes his clothes. Back when Obama was President he argued that the Fed should be raising rates, not lowering them. That was during the greatest recession in our nation’s history since the Great Depression, a time when economic stimulus was desperately needed. Now that Trump’s in charge, however, he wants the Fed to loosen monetary policy to stimulate the economy, despite the fact that we have been pretty much a full employment for some time now.
For him too, then, ideals are for sale.
But the most startling appointment is the latest: Herman Cain.
Cain has absolutely no degree in economics. To his credit, he is a successful CEO of a chain of Burger King franchises and Godfather’s Pizza. His success is based upon a policy of teaching all employees, including the High School aged ones, to smile. I’m not making this up.
His greatest claim to fame was his run for President in 2011 when he briefly rose in the polls based upon his 9–9–9 tax proposal — he wanted to replace the current tax code with a 9-percent business transactions tax, a nine percent personal income tax, and a 9-percent federal sales tax. The tax plan had brevity as a plus, but it was based upon exactly zero economic analysis.
Cain’s Presidential star dimmed in 2011 when it came out that he had been a serial sex harasser and adulterer. That was back in the days when such behavior disqualified someone for the highest office in the land. Again, those were the days.
But Cain’s greatest legacy might be his comments. I remember a Detroit radio station running a contest of whether a statement was from porn or from Herman Cain. It was surprisingly difficult to tell the difference.
Some examples of Cain comments:
- “The more toppings a man has on his pizza, I believe the more manly he is…. Because the more manly man is not afraid of abundance…. A manly man don’t want it piled high with vegetables! He would call that a sissy pizza.” (Mid-October GQ interview)
- “You want a job, right?” (What Cain allegedly said after pushing Sharon Bialek’s head toward his crotch)
Not terribly surprisingly, Cain has been concerned about inflation and has urged aggressive Fed action to avoid it. Now that Trump’s considering him for an important position, however, he is changing his tune. I guess he was willing to meet Donald Trump’s price.
Cain’s advice for struggling families? Just smile — his same advice for the Burger King employees. That part, I did make up.
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