President Trump has already won his argument for loosening Federal Reserve policy. While Fed Chair Jerome Powell can boast all he wants about the sanctity of the Fed’s independence, the fact is he and his FOMC followers knuckled under to the pressure Trump – and the financial markets – exerted on them to call a halt to any more interest rate increases for a while. Indeed, the discussion has since moved to cutting interest rates, a thought that seemed unimaginable just a few months ago.
Back in October, we were talking about how many rate increases we could expect this year. Now that any rate hikes are basically off the table for the foreseeable future, according to the Fed, the talk has shifted to a potential rate cut, possibly before the end of this year.
So why can’t Trump be satisfied with that? Instead, he’s sabotaging his chance to fill the two remaining seats on the Fed’s board of governors by publicly considering two people – Herman Cain and Stephen Moore – both of whom have way too much political baggage to hope to be confirmed, never mind actually nominated (remember, Cain was never formally nominated before he withdrew, nor has Moore).
While Fed independence is certainly a noble idea, the fact is that every person considered for the board has some political taint to them, expressed or not. Otherwise, they wouldn’t have been nominated in the first place. We all need to realize that and not try to pretend otherwise. Jerome Powell was nominated by Trump because he’s a Republican, while his predecessor, Janet Yellen, was nominated by President Obama because she’s a Democrat. Simple and reasonable. Continue reading "Can't Get No Satisfaction"