Donald Trump promised to hire the best people. By and large, he’s done a lousy job.
Setting aside the indictments of Paul Manafort and Michael Flynn, he blew through three communications directors (Dubke, Spicer, Scaramucci) and a chief of staff (Reince Priebus) pretty quick. He then dumped his chief strategist (Steve Bannon) and lost his health secretary (Tom Price) to scandal. I’ve argued his education secretary should be next to go.
And of course, he often doesn’t hire anyone at all — the federal government still has a record number of vacancies coming up on a year into his term.
But, credit where it’s due: Jerome Powell for Fed chair wasn’t an awful choice. It was just a lazy, vaguely sexist one — with potentially serious economic consequences.
Don’t fix what ain’t broke
The Federal Reserve is responsible for managing inflation — keeping the price of everything from spiraling out of control as we’ve seen in Venezuela. In a larger sense, it’s responsible for the health of the economy by managing financial policy in a way to “promote maximum employment, stable prices, and moderate long-term interest rates.”
These are the people meant to steer us out of, and away from, recession. It’s a huge responsibility, so you want experienced hands. Jerome Powell is that — which is why President Barack Obama nominated him to the Fed’s board of governors in 2011, coming out of the Great Recession.
However, there was no reason to put him in charge of the board, as Trump has done. He largely agrees with current chair Janet Yellen, and he has far less experience than she does. She’s been on the board since 1994. While not continuously, she still has about 15 years more experience in directly dealing with national monetary policy than he does.
In demoting Yellen, the first woman to ever hold her position, Trump said she was “a wonderful woman who’s done a teriffic job. She is absolutely a spectacular person [who] served with dedication and devotion.” It’s also the first time a Fed chair has not been renominated for a second term.
Trump was against her before he was for her. During the campaign, he criticized her management of interest rates and said she was holding the economy back. When he took over, however, and the stock market continued to climb — at much the same rate it had been while he complained — suddenly he was a fan. Until he wasn’t.
“You like to make your own mark,” Trump said. Unfortunately, now he’s going to have to do just that.
A lot of empty chairs
The board of governors for the Federal Reserve is supposed to be seven people.
It was at five when Trump took over. One, which The Wall Street Journal called “the regulatory point man,” announced his resignation a couple weeks later.
Trump only recently replaced him. And no sooner than he did, another member, the vice chairman, resigned for “personal reasons.” We don’t know if those reasons were “I hate Trump” or “I want to spend time with family” or something else, but that left us still at barely half capacity.
There are four people now. And since Trump is replacing Yellen as chair, she plans to resign early next year resign when her chairwomanship (but not her board term) is formally over.
Then there will be a dangerously small Fed board — three people — at a time Republicans are shaking up the economy with proposed sweeping tax changes and entitlement reform. Shuffling the deck chairs is easy enough, and Trump can pretend that’s “making a mark.”
It’s not clear he is up to the task. But one way or another, he’ll definitely leave a mark — if not a smoking crater.
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Article last modified on December 15, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Making Jerome Powell Fed Chair Was a Mistake - AMP.
Article last modified on December 15, 2017. Published by Debt.com, LLC .