Trump's Historic Opportunity With The Federal Reserve

Tyler Durden's picture

Authored by Tho Bishop via The Mises Institute,

And then there were three.

Yesterday Stanley Fischer submitted his letter of resignation from the Federal Reserve’s Board of Governors, effective next month, the second such resignation of Donald Trump’s presidency. While Fischer’s term as Vice Chairman of the Fed was set to end next year, he had the ability to serve as a governor through 2020. Along with Trump’s decision next year on whether to replace Janet Yellen as the Fed’s chair, this means Trumps will have the opportunity to appoint five of seven governors to America’s central bank.

Given that the position holds a 14-year term, it is unusual for a president to have the opportunity to make so many appointments.

As Diane Swonk of DS Economics noted, “It’s the largest potential regime change in the leadership of the Fed since 1936.”

Of course the question is now whether a change in personnel will lead to a change in policy.

Trump has already taken steps to fill one of the vacancies, nominating Randal Quarles earlier this year. Quarles, a former Bush-era Treasury official turned investment banker, will be taking the specific role of Fed vice chair of supervision. As a vocal critic of Dodd-Frank, and the Volker Rule in particular, Quarles may help relieve some of the regulatory burden on financial institutions, but his views on monetary policy are less clear. He has also voiced his support for rules-based monetary policy, though he has distanced himself to the specific proposal of the “Taylor Rule.” Given the growing consensus building for NGDP-targeting, and Republicans in Congress advocating for rules-based Fed reform, Quarles could become a supporter from within the central bank. All in all though, Quarles is seen by many observes as a bland Fed-appointment.

More concerning are the views of Marvin Goodfriend, who has been reported to be a front runner for one of the Fed vacancies. An economics professor at Carnegie Mellon University and former director of research at the Richmond Fed, Goodfriend has a traditional central banker background and the dangers that comes with it.

 In 2016, Goodfriend made an impassioned plea for the Fed to consider negative-interest rates:

The zero interest bound is an encumbrance on monetary policy to be removed, much as the gold standard and the fixed foreign exchange rate encumbrances were removed, to free the price level from the destabilizing influence of a relative price over which monetary policy has little control—in this case, so movements in the intertemporal terms of trade can be reflected fully in interest rate policy to stabilize employment and inflation over the business cycle.

Since negative interest rates usually coincide with greater use of cash (and personal vaults), Goodfriend went so far as to suggest the Fed should consider devaluing the value of printed bank notes. A $10 bill would buy less than a $10 debit card transaction, opening up a new front in the ongoing war on cash.  

Given his radical views on monetary policy, it’s not hyperbole to suggest that Goodfriend’s nomination would represent a genuine danger to the economic wellbeing of every American citizen – or at least those outside of the financial services industry.

Unfortunately, even if Goodfriend doesn’t get the nod, it’s unlikely Trump will nominate anyone who understands the negative consequences of our artificially low interest rate environment. Though Candidate Trump demonstrated remarkable savvy when it came to how the actions of Bernanke and Yellen hurt Americans, as President Trump he has consistently indicated a desire to keep the “big fat bubble” going. Such a desire obviously fits the self-interest of the White House, but with long-term consequences for the base that elected him.

The only hope for a change in direction from the Administration is for Trump to stop listening to his Goldman Guys and instead lean on the team that helped get him to the White House. As Tommy Behkne noted last November, Trump had managed to surround himself with a number of Fed skeptics during his campaign, and even considered Austrian-friendly John Allison for Treasury Secretary.

Given the historic opportunity he has with the Fed, if Trump chooses to return to those roots, he could do severe damage to the swamp — all without passing a single piece of legislation through Congress.

 

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spastic_colon's picture

Marvin Goodfriend?

 

is that Gutfreund Booker!?

Looney's picture

 

Trump: I’ve never had sex with that woman… Miss Yeller… Yet…   ;-)

Looney

SafelyGraze's picture

jim grant for fed chair

Perimetr's picture

Sorry, the real opportunity is to 

ABOLISH THE FED

appointing new banksters doesn't mean shit

radio man's picture

If Pelosi can punk Trump, what challenge is he for the Fed?

The_Juggernaut's picture

Not getting my hopes up.  One name you can be sure won't come up is Ron Paul.

y3maxx's picture

End the Fed!

First step to draining the swamp.

Money should be dealt with by Congress only.

NidStyles's picture

Here's to getting a non-Jew in that position.

Swampster's picture

You mean a "Fall Goy", as in my recently posted "Fall Goy Theory".....

Swampster's picture

Trump will appoint whoever the globalist 'nazi neocom FED jews tell him to.....

 

Disobey and be JFK'd

Paul Kersey's picture

Up until Cohn pissed off Trump, by complaining about Trump's love for the alt-right in Charlotte, the former Goldman Sachs President was in line for Yellen's position. For Cohn and Goldmanite Dudley, President of the FRBNY, it would have been set and match for a complete vampire squid overt takeover of the US economy. However, since the Fed has only one mandate, and that is to protect the major bondholders and klepto-corporatists, until every last debt-serf dollar is in their offshore accounts, it doesn't really matter who is in charge of money changing, wealth extracting machine.

Cheyenne's picture

Never count the squid out, especially now. When Yellen steps down in February, the squid will have Mark Carney at the BofE and Mario Draghi at the ECB. The "right" appointment to chair the Fed would make that a trifecta that runs all the way through June 2019 when Carney steps down. Preety fat window for a global currency reset, no?

Sir Edge's picture

... 

I Think It Would Be Nice and Polictically Correct If We Could AVOID Having Another Anti-Gentile Dual Citizen Fed Chairman...

Like The Last Three Including VP Stanley Fischer...

How About Putting In A Pro American.. A Pro Constitutional American who was NOT loyal to A Foreign Power first and only... 

Just Sayin...

NidStyles's picture

Here's to getting a non-Jew in that position.

venturen's picture

here is to 1 in million

Radical Marijuana's picture

The actual numbers are closer to 1 in a billion.

YUNOSELL's picture

No one is asking why they are retiring? That is the real question here. Personal reasons my ass, they know the ship is sinking and there are not nearly enough lifeboats. 

You Only Live Twice's picture

Correct. The petrodollar system has been unravelling with a year of low Oil prices, and the recent steps by the BRICS. They know that once the GCC abandons the Petrodollar, the debt will come back to roost in the US (instead of spread abroad) and hyperinflation will ensue. Then, the public will come hunting for heads and their won't be there for the hunt.

new game's picture

avoid blame for the reality they created. denial is a serious mental condition. ask the mistro or any one of these ovory tower fuks...

Jimmy Jimmereeno's picture

Have you been drinking or do you just not know how to spell and to run a spell checker?

spieslikeus's picture

Did you go full retard or are you an ESL student?

WillyGroper's picture

how about secretary of the treasury instead?

yogibear's picture

That's it. Trigger hyperinflation. Where the currency is worthless.

Mr. Universe's picture

Kind of eliminates the public pension crisis doesn't it?

spieslikeus's picture

Unpossible! Quarles doesn't sound Jewish.

wisebastard's picture

just sucking on satans cock

grunk's picture

Ron Paul for Chairman.

Cynicles II's picture

You think he wants to found dead with a pillow over his face?

HRClinton's picture

Ron Paul?  You pansy!  What The Fed needs, is...

The Electric Chair

No more half measures, all designed to keep the (((Ponzi Casino))) going.

Yog Soggoth's picture

Ron Paul is the electric chair for that group.

Blacksunday3's picture

he should nominate a jew.

jews are good with money

spastic_colon's picture

.........other people's money

Gorgeous's picture

...which then becomes their money.

political_proxy's picture

they view all money as "their" money

Oliver Klozoff's picture

They invented copper wire fighting over a penny, so give 'em props for that.

Xredsx's picture

The people who was responsible for the 16th amendment are still in control to this day. They are pure evil. Greed corrupts a man's soul. That's ancient wisdom.

Elmo Blatch's picture

I think we're all Fed up.

icm63's picture

CHINA and RUSSIA leading the way on trade (Blockchain, gold, silver, oil) TRUMP needs to appoint a FED chair that accepts the changes coming.

political_proxy's picture

$20 trillion debit would work out well with a gold standard, yup....

Rubbish's picture

The dollar is done, everyone senses it. Dump your dollars.

 

I'm soo glad were going to $10,000 then a MILLION

 

Gold Bitchez.....I pick up pennies

Paul Kersey's picture

It's been said that George Soros is good with currency, so make one of his Trump puppet partners, like Mnuchin or Kushner, a Federal Reserve bankster. Financial incest should be kept in the family.

Octagon's picture

so we can expect Jared and Ivanka as board members. winning!

RedDwarf's picture

Trump is unlikely to rock this particular boat, even though it should be outright overturned.  Still, he's gone off script before, so I'll keep my fingers crossed.

Kurpak's picture

Dear Mr. President,

End the Fed

hugs,

America

 

PrivetHedge's picture

"relieve some of the regulatory burden on financial institutions,"

 

Oh dear..

rejected's picture

I'm sure he will appoint one that will drain the swamp!

ETF.

messystateofaffairs's picture

Trumpet is the Swamps poodle and he will appoint the usual Jews.