More High Stakes Appointments to the Federal Reserve

Fed cc

It will still be the Obama Fed long after this president has gone.

The Obama administration has repeatedly complained about Republican blocking tactics in the Senate. In this context, it is worth remembering that the Democrats blocked President’s Bush’s last three nominees to the Federal Reserve Board. The Democrats calculated that a member of their party might win the White House in 2008 and why not wait in the hopes that a Democrat could shape the Federal Reserve for a generation to come.

This bet paid off, in that the seven member board is now comprised entirely of Obama appointees. Moreover Fed member terms are for 14 years, so a president’s choices may influence monetary policy long after he has left office.

Does any of this matter? Yes, the Federal Reserve has more power over the economy than the president himself. But isn’t monetary policy a non-partisan affair? Surely Fed members don’t operate with R’s or D’s on their backs.

Actually the idea of appointing non-partisan Fed members is even more of a fairy tale than the similar idea of appointing non-partisan judges. No one doubts anymore that the appointment of a Supreme Court Justice is about politics. The illusion has persisted a little longer that we just need “good people” at the Fed, regardless of political and economic orientation, but illusion it is. As in the rest of politics, the Fed represents a battle between ideas and special interests.

The pretense of non-partisanship lasted longer at the Fed because until recently both Republicans and Democrats largely agreed about what they wanted from it. With the exception of Ronald Reagan, they were Keynesians who wanted more dollars printed and lower interest rates, because that was seen as the route to getting elected or re-elected, and why worry about the long run consequences, since as Keynes pointed out “in the long run we are all dead.”

This is now changing. Republicans succeeded in blocking Obama’s nomination of radical economist Peter Diamond to the Fed in 2011. After Democrats invoked the “nuclear option” of restricting the filibuster, Republicans could no longer repeat this performance. But 28 of them voted against Obama’s nomination of Janet Yellen to be the new Fed chairman. Only 11 of them voted to confirm: Flake (Ariz.); Kirk (Ill.); Corker (Tenn.); Coburn (Okla.); Collins (Maine); Coats (In.); Chambliss (Ga.); Burr (N.C.); Alexander (Tenn.); Ayotte (N.H.); and Murkowski (Alaska).

Bob Corker (R-Tenn.) exemplifies the confused Republican of today. He grasps that current monetary policy favors endless expansion of government control over the economy, with huge pay-offs to Wall Street and other special interests along the way, but falls for the circular argument that Fed members are “well qualified” precisely because they come from Keynesian university economics departments, government, or Wall Street.

In retrospect, there was something notable about George W. Bush’s last three appointees to the Fed board—the ones that were blocked by the Democrats. None of them had advanced degrees in economics. This was a throw-back to the old days when Fed appointees were rarely academic economists, but a sharp departure from current practice, when most are.

Respected financial writer Jim Grant jokes that today’s Fed has replaced the gold standard with the “Phd standard.” The problem, of course, is not Phds, but the economics departments they are coming from, and the lack of common sense in those departments. The Phd standard has given us the likes of the last Fed chairman, Ben Bernanke, who bet the future of the US and indeed the world on a completely unproven and untested economic theory while literally smirking at those few unintimidated souls who, like Congressman Ron Paul, dared question him.

President Obama has now given us three more nominees to the Fed and the Senate has had a chance to interview them. The first and most important is Stanley Fischer, aged 70, nominee for vice chairman as well as a regular member.

The most curious thing about Fischer’s resume is that, having been born in Zambia, and naturalized as an American in 1976, he accepted Israeli citizenship in 2005 in order to become head of Israel’s central bank. Today he holds dual citizenship. Prior to living in Israel, he worked as a vice chairman of Citigroup from 2002-5, the years leading to the bank’s bail-out, and prior to that was deputy director of the International Monetary Fund, chief economist of the World Bank, and professor at MIT, where he taught Ben Bernanke among others. Somewhere along the way, he acquired a personal fortune of between $14 and $56mm.

We are thus to understand that President Obama, having searched the entire length and breadth of our land, could find nobody better than a 70 year old with Wall St. and International Monetary Fund baggage who had most recently worked for a foreign government.

The second nominee after Fischer is Lael Brainard, who has recently worked at the Treasury as an undersecretary. Ms. Brainard told senators that the Fed should protect “the savings of retirees.” She did not bother to explain how refusing to allow interest to be paid on savings, or seeking to foster inflation higher than interest would do so.

The final nominee, Jerome Powell, would be a reappointment. Although not a Phd economist and nominally a Republican from the George H. W. Bush administration, he fits the Obama mold in other ways, notably by being from Wall Street, and by being willing to keep quiet and go along. His most daring moment came when he called the Fed’s money creation machine under Bernanke and now under Janet Yellen “innovative and unconventional” and added that “likely benefits may be accompanied by costs and risks.” He has been a reliable vote for Bernanke and likely will be for the Yellen/Fischer regime as well.

Senator Corker waxed enthusiastic about this group of three, saying “I’m impressed,” and leading bond manager Mohamed El-Erian describes them as a “dream team” together with Yellen.

This does indeed seem to be a “dream team” for Wall Street, for corporations boosting profits to record levels with the help of government deficits, for other special interests feeding off the stimulus trough, and for government employees. For everyone else, it just promises more and eventually even worse economic misery.

44 comments
gringott
gringott

As long as dual nationals control the levers of power, this is America run for the benefit of other nations. Who could possibly think it is a good idea to have an Israeli run our monetary system? Isn't this treason by any other name?

Erick Mixer
Erick Mixer

Dennis Gagorik needs to post the 8 everyday on every site till every person on Fakebook reads it. He spelled it out for you

Erick Mixer
Erick Mixer

Needs auditing by a outside unbiased group

Christopher Clark
Christopher Clark

Then let's clean house on any who ever sided with that sorryass potus ,,,

Joe Sawvel
Joe Sawvel

We the people have to pay Them so we can send out cut they pay off

Ray Cote
Ray Cote

Actually Fischer has been one of the few voices of sanity in the FED.

Dennis Gagorik
Dennis Gagorik

You must be a dim. They like to call names. Yes where is the mid point? Yes also I believe in the 2 amendment and you don't have to own a gun to support it. Saul David Alinsky(January 30, 1909 – June 12, 1972) was an American community organizer and writer. Look him up he is Obuma's hero.

Patrick Jenkins
Patrick Jenkins

It would be much easier to go along with all this if you didn't come across as someone yearning for the gun toting old west. Where is the mid point between having a respectful and responsible society, and your utopic vision of anarchy?

Patrick Jenkins
Patrick Jenkins

So is ACC about hating Obama, or about Crony Capitalism in all of its forms? Democrats and Republicans are equally guilty.

Mark Lampman
Mark Lampman

The federal reserve has been bleeding us dry for years. It's set up to make us all go broke.

Sohan Calebephratah
Sohan Calebephratah

Wall Street cash bonuses highest since 2008 crash & third largest on record The increased payouts came as Wall Street posted a fifth consecutive year of profits after record losses during the crisis. Profits for broker-dealer operations of New York Stock Exchange member firms, however, fell 30 percent to $16.7 billion in 2013, the report said. Wall Street accounted for 22 percent of private sector wages in New York City in 2012 but only 5 percent of private sector jobs, according to the report. http://www.reuters.com/article/2014/03/12/us-usa-bonuses-idUSBREA2B0WA20140312

Larry Baumgart
Larry Baumgart

All ill say to this is QUIT Putting in the OLD FARTS In Our Goverment,Lets get FRESH BLOOD an NEW IDEAS for America!!

Gini Garcia
Gini Garcia

2007 vice chairman board of goveners "david koch "

Robert Traverso
Robert Traverso

Obama's pen should be taken away from him until he has learned how to use it properly!

Jason Luther
Jason Luther

I wouldn't say those are the only places to find diligence in the media. Not sure if I agree wit "then" either, definitively not now, and that gets reaffirmed daily when I see the " gullible" posting republican this or democrat that statements. At this point is there really any difference outside of the " distractions" ?

Ed Burrell
Ed Burrell

I pray to follow God and the path God shows to all. The USA Constitution was written by people who had lived with Kings & Lords, thus having the knowledge of what & how a "protective" USA Constitution should contain. Having been instituted in 1776, the USA Constitution still protects us USA "FREE" citizens. BUT if George Soros with his $$$Trillons is left alone, & the millions of puppets Soros owns can continue to erode the USA Constitution, the remaining millions of "passive & uninvolved" USA citizens will wind up in the internment camps awaiting execution or slave labor!!! Puppet Obamacare has destroyed my middle class "earned" pension medical benefits!!! But this is just the TIP. Of the "iceberg" plan that puppet master George Soros has for the USA people!!! Every one prepare for the upcoming destruction of America!!! There is tons of information available explaining the USA destruction to be done by George Soros & the puppet Obama administration; coupled with the Democrat Congress, which Soros also owns. When the masses of USA citizens have finally been slaughtered or enslaved, the puppets & Soros will OWN the continental USA!!! Puppet Obama does well with his master George Soros writing has speeches for the tele-prompter. We who see the truth, have pity For the fools who believe puppet Obama is working for the citizens of the USA! We who see the truth know that those fools will be on the same buses with us on the way to the DEATH camps Soros is building to exterminate the masses of our USA

Louis C Carl
Louis C Carl

What media diligence, then or now. Outside of a few Libertarian/Conservative/Tea-Party & the financial press sites, all of this does not exist.

Chris Heckert
Chris Heckert

Its a jewish Fed... Rothchilds, Morgan Stanley, Goldman Sachs, Rockefeller, etc. Remove it & the income tax if you want America back

Terry Owens
Terry Owens

The right doesnt either so thats why we are basically screwed.

Terry Owens
Terry Owens

Why is it that we never get this in the corporate news or we hear the left hollaring about stuff like this? Its like they just dont want to accept reality I guess.

Jason Luther
Jason Luther

Tamera Rednose a decade ago? The current spend more print more gained its roots from the Regan/ Volker era. This has been a long time coming. The money that was " created" from Reganomics was used to buy the majority of politicians in the form of lobbying. By 1987 the elitists were able to do away with the Fairness doctrine so now we have propaganda centers like Fox and MSNBC that are short on facts and long on diversionary tactics and spin doctoring. While most of society argues about abortion, welfare, or whatever the spoon fed flavor of the day is, the Elite have been slowly stripping away our rights, liberties, jobs, and money. Now we have a government of the people by the cash for the corporation.

Dennis Gagorik
Dennis Gagorik

This needs to be reversed!!!! There are 8 levels of control that must be obtained before you are able to create a social state. The first is the most important. 1) Healthcare – Control healthcare and you control the people 2) Poverty – Increase the Poverty level as high as possible, poor people are easier to control and will not fight back if you are providing everything for them to live. 3) Debt – Increase the debt to an unsustainable level. That way you are able to increase taxes, and this will produce more poverty. 4) Gun Control – Remove the ability to defend themselves from the Government. That way you are able to create a police state. 5) Welfare – Take control of every aspect of their lives (Food, Housing, and Income) 6) Education – Take control of what people read and listen to – take control of what children learn in school. 7) Religion – Remove the belief in the God from the Government and schools. 8) Class Warfare – Divide the people into the wealthy and the poor. This will cause more discontent and it will be easier to (Tax) the wealthy with the support of the poor. Any of this sound familiar?

Bill Kline
Bill Kline

And so you guys can keep doing this so your cronies can take over

Bill Kline
Bill Kline

Oh then anything to elect more who will get rid if this!

Bill Kline
Bill Kline

Good. Now let's see the Obama Supreme Court. Now you guys want smaller government so cronies can operate more freely less regulation more cronies, how about renaming yourselves for cronies capitalism! is this where you guys get your money

Lerman Huffman
Lerman Huffman

This is AWFUL!! Rid this country of the sssssatans!!

John Hunter
John Hunter

who owns the fed? do you think those owners actually let that bozo du jour pick their employees?

Marti Rundus
Marti Rundus

Audit the Fed to see how much they have stolen from us and then get rid of them. U.S. can issue it's own money without the Feds and it would be interest free. Our money can be backed by our resources, not the Saudis.

Joel Henson
Joel Henson

Gimme a break.Its a Rothchild fed.Always has been.Always will be.

Tamera Rednose
Tamera Rednose

I just wish the media would have been this diligent a decade or so ago then we wouldn't be in this mess. I just hope it's not to late and people stay awake.

Javier Antonio Quinones-Ortiz
Javier Antonio Quinones-Ortiz

Crony Dumbocrats ain't no different than crony Repugs, we are and will be stuck in the same scheiße with those two. Then again, every country has the government and economy it is fit for...