Protecting The Fed
Mark Thoma has a post up on Facebook. Apparently, Trump intends to nominate Dr. Judy Shelton to the Fed. I knew Trump was bat-sh*t crazy and now he has confirmed he is bat-sh*t stupid too (if you did not already know this). It is hard to know which is worse as they come in a daily stream of excesses.
I do not necessarily agree with my former Econ Prof (not Mark) from time to time; but, he does have a deeper knowledge on the topic than I, to which I listen even though the politics of it may differ from mine. I do get the impression he is deeply concerned as is Mark Thoma and disappointed with the present administration and their impact on the nation, its financial status, and the economy.
Dr. Judy: “How can a dozen … people meeting eight times a year decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?”
Given the alternatives of Congress or the President determining national economic policy, I would stick with the dozen. I can figure out what they are doing. Crazy and/or political people are off the books. I will not get too deep into this as you can read the article “Protecting the Federal Reserve” at Money Banking yourself. Some of Judge Judy (first thought which came to mind), er Dr. Judy’s thoughts:
– “Following the 2007-2009 recession, during the weakest post-WWII recovery on record, with inflation below the Federal Reserve’s stated target, she argued against ‘suppression of interest rates’ (see quote above). By contrast, despite the lowest unemployment rate since the 1960s, in recent weeks she has argued for cutting rates ‘as expeditiously as possible.‘ This apparent willingness to pander to President Trump’s preferences, rather than setting policy to meet the Federal Reserve’s longer-term goals of stable prices and maximum sustainable employment, would diminish the Fed’s independence,”
No comment on my part as either action has a negative reaction given the environment.
– Dr. Judy “argued for replacing the Federal Reserve’s inflation-targeting regime with a gold standard, along with a global fixed-exchange rate regime. In our view, this too would seriously undermine the welfare of nearly all Americans.”
– “Should Dr. Shelton become a member of the Board, and should President Trump win re-election in 2020, there is a chance that she could become the Chair of the Federal Reserve when Chairman Powell’s term ends in 2021. Given her unsuitability for the Board, making her Chair would seriously undermine Fed independence.”
– Dr. Shelton has proposed eliminating the Fed’s key tool (in a world of abundant reserves) for controlling interest rates—the payment of interest on reserves (for a description of the Fed’s current operating regime, see here). She argues that the Fed doesn’t know what the correct interest rate is (see citation). But that ignores the constant learning process—based on observations about the state of the economy and financial conditions—that allows the Fed to make rapid policy corrections to achieve price and economic stability. U.S. central bankers are credibly committed to their legal mandate to promote “maximum employment, stable prices, and moderate long-term interest rates.”
I do not Tweet, I do not read Tweets as they are the lowest form of communication outside of a belch. Trump tweeted his intention to nominate Dr. Judy Shelton to the Board of Governors of the Federal Reserve System.
Saying “bat-sh*t stupid” may be satisfying, but it is incorrect in this instance. You are ignoring the motivation here. Shelton’s reversals have demonstrated absolute willingness to toady, which is what Trump has most valued in all of his appointments.
rick:
I recognize and appreciate your point; however, my railing was about Trump’s excesses.
(1) I did not know Dr. Thoma was on Facebook. Got to check out his posts more often.
(2) That Money-and-Banking link you provided was excellent.
(3) I was wondering if anyone could get past the Financial Times firewall so we can read in full context Shelton’s latest babbling about the “cost of capital”. Something tells me: (a) her discussion was a bait and switch; and (b) she herself does not understand the basic financial economics behind a company’s cost of capital. Most MBAs don’t.
I did read the FT article; but, I can not C & P you a link to it. As you can see, it dumps you into the “how much page.”
Thoma’s blog has two other links re Shelton. One is from Krugman. The Uneasy Money post is a MUST read as he has tried to educate this imbecile but she is not listening.
Run,
Mark Thoma is your former prof? You disagree with him a lot? He is pretty reasonable most of the time.
Barkley:
A different one, who is a fresh water economist. We exchange emails all the time. Since 1980, we have talked. I am usually invited to talk to his 4th year students on travel in Asia, how to prepare, how to blend, and how not to be an Ugly American.
I have no problem with Mark.
Shelton isn’t a idiot, she serves the de Rothschilds. Just like Donnie boy.
Bert:
You can disagree all you want with what people say as long as you are not wearisome. The Rothchild – sh*t has to cease.
I agree.
Very shut it with anti Semitic crap. I vote you banned.
Look:
Are you talking to Bert?
Trump’s slogan should be,
“Make America Hate Again”.
How can a committee of teachers who meet once a month know more about improving schools than a cafeteria full of kids having a food fight every day?
i love the logic by which we are guided by our thought-leaders on the right.
ooo. here goes
i don’t know if bert was being anti-semitic, but the Rothchilds have played a significant role in world economics for a long time. on the other hand most of the jews i know do not.
trouble is, now, you see, that we don’t have the jews to kick around any more, Trump has discovered a vast liberal socialist commie conspiracy to destroy america and our beautiful way of life,. and a lot of them have dark skin. suspicious.