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The Fed Board Unmoored

Over the course of his presidency, Donald Trump has consistently prized sycophancy above expertise in his selection of advisers and political appointees. But by nominating the right-wing talking head Stephen Moore to the US Federal Reserve Board of Governors, Trump is taking his war on expertise to a new level.

BERKELEY – In December 2015, the right-wing commentator Stephen Moore, US President Donald Trump’s pick to fill a vacancy on the US Federal Reserve Board of Governors, savagely attacked then-Fed Chair Janet Yellen and her predecessor, Ben Bernanke, for maintaining loose monetary policies in the years following the “Great Recession.”

According to Moore, who is not a professional economist, investors had “become hyper-dependent” on the Fed’s “zero-interest-rate policy … just as an addict craves crack cocaine.” This “money creation,” he surmised, had yielded “nada” in terms of “helping juice the economy, creating jobs, or giving the American worker a pay raise.” Worse, the United States had already “tried this before – twice – and both times the story ended badly with a pop of the bubble … in 1999-2000 and ... in 2008-09.” The lesson, he concluded, is that, “Micromanaging the economy through the lever of money creation at the grand fiefdom within the Fed doesn’t work.”

Or does it? Moore himself is probably not the most reliable judge. On December 26, 2018, he savagely attacked Yellen’s successor, Jerome Powell, for raising interest rates to unwind the very approach that he had condemned three years earlier. “If you cut engine power too far on a jetliner,” he warned, “it will stall and drop out of the sky.” Moore complained that after having “risen by 382 points on hopes that the Fed would listen to Trump and stop cutting power,” the Dow Jones Industrial Average had “plunged by 895 points” on the news of another interest-rate hike. This, he concluded, was evidence that “the Fed’s monetary policy has come unhinged.”

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