Early on the campaign trail, Donald Trump stumped on his reputation as a businessman. His nomination for chairman of the Federal Reserve highlights what Trump has learned over that career: how to recover and grow business.
His choice of Jerome Powell to steer the monetary policy of the United States delivers on another campaign promise: hire the best.
We usually don’t know about the “Fed” until a financial crisis unloads. What you should know is his background combines both theoretical economic work and real life experience.
Powell worked in George H.W. Bush’s White House as Undersecretary of the Treasury. If you don’t recall, this was at the height of the savings and loan crisis. He worked on financial institution policies that worked to right the economy.
He goes from the White House to Wall Street. Powell hung out the shingle as both a lawyer and an investment banker. Since 2012 he has been a governor on the Federal Reserve Board.
What he lacks in a PhD, Powell makes up for with 20 years of top-level economic policy decisions. He has seen what works and what doesn’t. You’re going to find that experience helpful to you.
Where he stands on deregulation
After every financial crisis, the term “deregulation” sounds so sinful. It’s like the idea of proposing it is, inherently, evil.
This is a simplistic view, but periods of wide economic growth have seen a degree of repealing of regulation. There’s a healthy balance between a wide-open capitalist market and one that protects, you, the consumer. (You want bad examples of both? Look at what led to the “Great Recession” and Japan’s “Lost Decade.”)
Take a look at Jerome Powell’s stance on banking regulation. Brace yourself, he’s a Republican. But you can put away your pitchforks.
Powell’s view on deregulation is mild for a Republican and healthy to grow an economy. He supports most parts of the Dodd-Frank Act, which regulates banks.
But he does have a problem with the undue burden it places on small community banks. Many of those provide the backbone of lending in the U.S. economy.
(Anecdotally, I opened my first account as a kid in a community bank. In the last four years that bank and several others in the county have consolidated or sold out to national banks. The small town banking industry is getting crushed.)
It’s the level of deregulation that Powell will look at with a sharp eye — not blanket responses to financial crises.
What will he do with interest rates?
It’s hard to predict where the Federal Reserve will go with interest rates. This is uncharted territory. The current policy is that interest rates remain low because recovery is slow and (thankfully) inflation hasn’t risen.
Most fiscally conservative Republicans would advocate a hike in interest rates. In most economic recoveries that would be the next course of action.
This economy is growing, but not the way that economists would like to see it before hiking rates.
Powell knows that. He has voted with the current chairwoman Janet Yellen (an Obama appointment) in every gradual rate hike. It’s not about party lines; it’s about doing what’s right for America.
It’s a smart policy to continue on this path, and Jerome Powell knows it. People can still afford to make large purchases and investments. The consumer economy will move forward, despite the lagging wage growth.
That’s where Powell is an independent. He isn’t swayed by the monetary hawks of the Republican Party. He wasn’t made in a conservative think-tank mold. He will be a Federal Reserve chairman who brings experience to the table. Powell is a rare combination of a chairman who worked on federal financial policies and in the stock exchange.
This is a pick who will be hard for leftists to fault. It’s one of the independent streaks that Trump brings to the White House. It’s a good thing.
Business is different than politics. The president is learning that. But, in this instance his business acumen is spot on. Do what’s best for the growth of the business, not what the party thinks.
The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the opinions and/or policies of Debt.com.
Article last modified on November 14, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Trump’s Fed Chair Nominee Isn’t Just A Hit, It’s A Home Run - AMP.
Article last modified on November 14, 2017. Published by Debt.com, LLC .