Trump’s Bizarre Selection Process for the Federal Reserve

This coming February will mark the end of Janet Yellen’s four-year term as the Chairman of the Federal Reserve. As per the Banking Act of 1935, the President is responsible for appointing the next Chairman. Unfortunately our President is Donald J.  Trump and, as expected, he is making a spectacle of the process as he tries to build suspense as if he is driving excitement for one of his Ms. Universe pageants.

Trump in deep deep thought. So deep. So deep
This past July the White House had confirmed that Trump had five ‘finalists’, but recently he has narrowed his selection down to two, perhaps after seeing them all in their evening gowns (Ms. Universe again). Those two candidates have been confirmed as Jerome H. Powell, a Fed governor and John B. Taylor, a Stanford economist. Such a public deliberation of the selection for Fed chairman has never been seen and rarely has there ever been a public declaration of the existence of multiple candidates.

“Tell me who your preference is.” Donald Trump said in a bizarre moment during an interview with Fox Business Channel hack Lou Dobbs.

Perhaps the most incredibly head scratching part of this curious spectacle is the diversity of opinion between the two ‘finalists’ Trump has selected. They are literally on the opposite ends of the spectrum when it comes to Federal Reserve policy. Jerome H. Powell has been a Fed Governor since 2012 and has voted in favor of every Fed decision. John B. Taylor has been one of the Fed’s most vocal critics and is famous for a long running feud with the Fed over what the true Fed Funds Rate should be. The only explanation for the selection of such different finalists is the same explanation we are left with after all of Trump’s odd and unpredictable behavior. The President has no core ideology at all and he is too intellectually lazy to even begin to develop one, especially when it comes to a topic that is as technocratic as monetary policy.

Given that Trump’s cabinet is filled with Goldman Sachs executives, I find it highly unlikely that the Trump administration will appoint Taylor. Wall Street will not react kindly to a chairman that believes the Federal Reserve rates need to be raised and if you follow Trump on twitter, you know how much he likes stock market growth.

Trump will pick Powell. 


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