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Moore Problems for the Fed?

Summary:
US President Donald Trump’s intended nominee for the US Federal Reserve Board, Stephen Moore, may end up doing whatever Trump wants, instead of what is best for the economy. Moore’s views on the Fed’s interest-rate policy, and his support for returning America to a gold standard, are disturbing. CAMBRIDGE – One of US President Donald Trump’s two intended nominees to fill vacancies on the US Federal Reserve Board of Governors – Herman Cain – has now withdrawn. Trump’s other potential pick, Stephen Moore, is also under an ethical cloud, and often gets his economic facts wrong. By contrast, Trump’s earlier appointments to the Fed have been sound choices, in particular Jerome Powell, the current chair. Capitalism’s

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US President Donald Trump’s intended nominee for the US Federal Reserve Board, Stephen Moore, may end up doing whatever Trump wants, instead of what is best for the economy. Moore’s views on the Fed’s interest-rate policy, and his support for returning America to a gold standard, are disturbing.

CAMBRIDGE – One of US President Donald Trump’s two intended nominees to fill vacancies on the US Federal Reserve Board of Governors – Herman Cain – has now withdrawn. Trump’s other potential pick, Stephen Moore, is also under an ethical cloud, and often gets his economic facts wrong. By contrast, Trump’s earlier appointments to the Fed have been sound choices, in particular Jerome Powell, the current chair.

Although Moore lacks an economics PhD, that is not a reason to oppose him. Fed appointees have long included people with business experience. Powell, for example, does not have one, either.

The big worry, however, is that Moore would be a Trump crony who does whatever the president wants, rather than what is best for the economy. Moreover, Moore’s views on the Fed’s interest-rate policy, and his support for returning America to a gold or commodity standard, are disturbing.

Moore has favored pro-cyclical monetary policy – opposing stimulus when the economy needed it, and favoring stimulus when it was not required. When the Fed sought to boost the US economy in response to the 2007-2009 recession, Moore initially raised the specter of hyperinflation, and

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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