With spots open on the Federal Reserve Board, President Trump has selected Stephen Moore and Herman Cain. Although it is uncertain whether Moore and Cain will be confirmed by the Senate, this situation demonstrates that the Fed is neither “truly independent” nor “simply a political lackey of the president or Congress.” The article then gives historical examples from the presidencies of Truman, Johnson, Nixon, Reagan, Bush, and Obama, showing how the Fed is “an elastic concept, meaning different things at different times for different reasons,” and that its independence largely comes from its “ambiguity and flexibility.” I believe that having a solid and nonpartisan Board is crucial so that the nation’s monetary policy ensures economic stability and success. The Fed’s job is highly technical, requiring careful consideration of various factors (interest rates, inflation, credit conditions, etc), and having a group of competent Board members is necessary to maintain the US’s reputation and credibility as a world leader.
Questions:
1. Do President Trump’s selections for the Federal Reserve Board signal a shift towards more White House control over the Fed?
2. Do Stephen Moore and Herman Cain have the necessary background to serve responsibly on the Federal Reserve Board of Governors, or do their histories as a businessman and a conservative public-policy advocate, respectively, show otherwise?
3. Although Moore and Cain would be more loyal to Trump than to the Fed, would this be harmful to the Fed and the economy? Do you think they would influence the Fed to make decisions based on presidential and/or Congressional politics, or would their conservative opinions help the Fed operate as a nonpartisan body?
Link:
https://www.washingtonpost.com/opinions/can-the-fed-stay-independent/2019/04/21/edd4e54e-63b5-11e9-bfad-36a7eb36cb60_story.html?utm_term=.6aa246e29538
Link:
https://www.washingtonpost.com/opinions/can-the-fed-stay-independent/2019/04/21/edd4e54e-63b5-11e9-bfad-36a7eb36cb60_story.html?utm_term=.6aa246e29538
I think that Trump's selections are an attempt at greater white house control over the federal reserve. He has requested the fed keep interest rates high, and since they didn't, he's looking to be able to control their policy better. I think that a background in business isn't inherently bad for someone on the federal reserve, but a public policy advocate seems like they wouldn't have enough experience to understand what to do with the economy. I do think that having a fed loyal to the president would be counterproductive, just like Nixon, Trump wants the fed to keep interest rates low so he can brag about the economy before the next election, even if it's economically disadvantageous, so having them act based on his wishes instead of impartial data could harm the economy.
ReplyDeletePresident Trump's selections for the Fed definitely demonstrate a stronger control over the Fed which has never happened before. This increasing amount of control, although helping relieve gridlock, is harmful to the Fed in general. This is harmful because the appointments will only lead to partisan politics being introduced to the Fed, and these partisan politics will lead to unintentional biases that are unnecessary in the economy as they will lead to an increase in the poverty line or other aspects like increasing the top one percent. Thus, I don't think that their conservative opinions will help the Fed operate because these board members will only be concerned with their own economic interests and this selfish nature will lead to an increase in economic gridlock that could be bad for the country as a whole.
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