High Stakes for 2016: Judy Shelton for Fed Chair to Make America Great Again

The Federal Reserve headquarters in Washington, DC (photo credit: Dan Smith, CC BY-SA 2.5)

In The Daily Caller, freelance writer Johannes Schmidt writes “On November 8th I’m Voting For Our Next Fed Chair.” It’s an especially astute column.

While many commentators correctly have focused on the effect of the election outcome on appointments to the Supreme Court, too few have focused on the next president’s appointments to the Fed. This also is of capital importance. Schmidt writes:

The policies implemented by the Fed are especially important (albeit often insidious) because money is our society’s most basic medium of exchange. The manipulation of its value affects every day citizens both in the short and long terms. Decisions taken by central banks–be it to toy with negative interest rates, engage in endless rounds of quantitative easing, or pay banks to keep loanable funds in sterile depository accounts—inevitably impact the value of the dollars we use to buy groceries today or pay off our mortgages over the next couple of decades.

Perhaps more daunting still is the fact that a lack of rules or central bank predictability makes international trade and cooperation difficult, at best. Without central bank coherency, monetary disorder will continue “to undermine the logic of competitive markets and the notion of free trade,” as was previously noted in The Hill.

But do our candidates understand the gravity of their 2018 Fed chief appointment? Are they satisfied with our current discretionary regime and adherence to the failed dual-mandate, or do they think that a return to a rules-based monetary system is critical?

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Good Monetary Policy Is Too Serious a Matter to Be Left to the Fed

Photo credit: Kurtis Garbutt via Flickr (CC BY 2.0)

US News and World Report‘s Andrew Soergel reports that “With White House in Sight, Trump, Clinton Plan Fed Renovations: No matter who wins the election, times are likely changing at America’s central bank.”

“The Fed” really is a synecdoche for monetary policy. Monetary policy used to be, off and on, a significant factor of presidential campaigns. In this election cycle, the monetary policy issue has only arisen occasionally and has not become a major issue of contention.

Pity. It really deserves to be front and center.

What is widely regarded as the most striking speech in presidential campaign history was William Jennings Bryan’s 1896 convention speech concluding:

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.

Read the full speech here. It electrified the Democratic convention and propelled the young Bryan to the 1896 Democratic presidential nomination and two more. He lost all three times — including in 1896.

As economic historian Brian Domitrovic observed, at Forbes.com:

In 1896, Bryan opposed the gold standard because it had coincided with the 1-2% per year deflation that the country had been experiencing since the 1870s.

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Donald Trump, the Politicized Fed, and the Golden Rule

Donald Trump (photo credit: Gage Skidmore)

Left-leaning thought leaders have been unfairly scalding Donald Trump for his recent observations that the Federal Reserve is politicized. Therein an inconsistency, verging over into naked hypocrisy, by the left is revealed.

The LA Times summed up the story in an article headlined “Is the Fed Politically Biased“:

Every four years, the independent Fed faces the same predicament: how to try to manage the economy without appearing to favor either party’s presidential candidate.

The sly phrase is “without appearing to.”

Which, of course, is a very different thing than “without.”

The politicization of the Fed is one of Washington’s biggest Open Secrets.  As I wrote in Forbes.com, “Dear Chair Yellen: Mend The Fed“:

As journalist Steven Solomon wrote in his indispensable exploration of the Fed, The Confidence Game: How Unelected Central Bankers Are Governing the Changed World Economy (Simon & Schuster, 1995):

Although they strained to portray themselves as nonthreatening, nonpartisan technician-managers of the status quo, central bankers, like proverbial Supreme Court justices reading election returns, used their acute political antennae to intuit how far they could lean against the popular democratic winds.  “Chairmen of the Federal Reserve,” observes ex-Citibank Chairman Walter Wriston, “have traditionally been the best politicians in Washington.  The Fed serves a wonderful function.  They get beat up on by the Congress and the administration.  Everyone knows the game and everyone plays it.  But no one wants their responsibility.”

Why, then, gold?  As Virgil wrote in the Aeniad: Facilis descensus Averni. 

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Memo to Donald Trump: The Gold Standard Will Guarantee 4 Percent Growth

Donald Trump (photo credit: Gage Skidmore)

In calling for 4 percent growth, Donald Trump hit a home run.

He has the right instincts. If he follows them he can turn this home run into a grand slam.

When Jeb Bush declared his candidacy, he did it in a speech demanding no less than 4 percent growth:

Growth above all. A growing economy, whether here in Detroit or throughout this country is the difference between poverty and prosperity for millions. If you want to close the opportunity gap, grow the economy. This is a principle that concentrates the mind.

If a law or a rule doesn’t contribute to growth, why do it? If a law subtracts from growth, why are we discussing it? And for what it’s worth, I don’t think the US should settle for anything less than 4% growth a year – which is about twice our current average. At that rate, the middle class will thrive again.

I applauded Bush’s declaration at the time in Forbes.com. But Governor Bush never provided the credible plan to get there which he also promised. He soon drifted off to other issues… and drifted down in the polls. Trump focused in on a commitment to job creation and making us rich again, and he rode this pledge to the nomination.

Trump now has unveiled such a plan. His commitment to 4 percent is highly credible. There are credible components in his proposed tax rate cuts and in peeling back oppressive and pointless federal regulations that stifle economic growth. Continue Reading

Fed Up! Hillary Clinton in Cahoots with Attempted “Hostile Takeover” of the Fed

Fed Up activists assemble outside a Congressional hearing (photo credit: Ralph Benko)

I’m fed up with the Fed too, with its chronic policy failures. A lot of evidence shows the Federal Reserve to be a prime cause of lackluster job growth and sluggishness in wage increases.

That said, sometimes a cure is worse than the disease. Now the left, with the support of Hillary Clinton, is threatening to take us, to mix the metaphor, out of the frying pan and into the fire.

Last week, about a dozen arch-progressives from “Fed Up” attended a hearing of a subcommittee of the House Financial Services Committee, “Federal Reserve Districts: Governance, Monetary Policy, and Economic Performance” in Rayburn House Office Building. I also attended.

The title of the hearing sounds boring. What was really going on was anything but boring.

I wrote about this hearing at length in my most recent column at Forbes.com, “The Left’s Fed Up Makes A Naked Power Grab For Control Of The Fed“:

In scope, the left’s plan makes trivial by comparison Auric Goldfinger’s “Operation Grand Slam” to contaminate America’s gold holdings at the US Treasury Depository at Fort Knox. Goldfinger planned to turn them radioactive. Those holdings amounted, in 1964, to about $14 billion. They are now valued at close to $200 billion.

Either way, a tidy sum. Yet it’s just a nickel compared to the Fed’s more than $4 trillion holdings.

Most impressive. The left is undertaking its own Operation Super Grand Slam.

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Hillary Clinton Elevates the Federal Reserve to God-Status

Former Secretary of State Hillary Clinton (photo credit: State Chancellery of Latvia via Flickr, CC BY-SA 2.0)

On Monday, Donald Trump stated what is essentially a fact to anyone who follows financial markets — the Federal Reserve has created a “false economy” that has artificially inflated the stock market.

Via Reuters:

“They’re keeping the rates down so that everything else doesn’t go down,” Trump said in response to a reporter’s request to address a potential rate hike by the Federal Reserve in September. “We have a very false economy,” he said.

“At some point the rates are going to have to change,” Trump, who was campaigning in Ohio on Monday, added. “The only thing that is strong is the artificial stock market,” he said.

This isn’t controversial. The financial media constantly speculate about whether the Federal Reserve will raise interest rates and how that will impact the markets. It is generally understood that higher interest rates spell trouble for equities — and that would be especially true given the historically overbought status of the stock market.

Hillary Clinton certainly knows this. She’s not stupid. But, whether out of loyalty to Goldman Sachs or out of political expediency, Clinton responded to Trump’s comments by defending the Federal Reserve as an institution that should be above reproach:

Democratic presidential candidate Hillary Clinton criticized Republican rival Donald Trump on Tuesday for making comments about the Federal Reserve’s monetary policies, which she said should be off-limits for U.S. presidents and presidential candidates.

“You should not be commenting on Fed actions when you are either running for president or you are president,” Clinton told reporters on her campaign plane.

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The Fed Needs Adult Supervision. Time to Pass This Bill.

Photo credit: Kurtis Garbutt via Flickr (CC BY 2.0)

After meeting with progressive lobbyists at the Federal Reserve’s annual Jackson Hole retreat, Fed policymakers declared on Friday that the Fed needed new “tools” to manage the economy, including the ability to buy non-government-backed assets like corporate debt, which would add to the Fed’s historically gargantuan $4.5 trillion balance sheet.

On Sunday, The Wall Street Journal editorial board responded by calling the Fed a “political body” and, for the first time, endorsing the Centennial Monetary Commission Act:

One place for Congress to start would be to pass Rep. Kevin Brady’s idea for a monetary commission to consider the role and structure of the Fed in its second century. Commissions can be political evasions, but in this case such a body with the right members could ignite a debate about the Fed that the monetary priesthood and most of Washington don’t want to have. In a healthy democracy, no body can accumulate power as the Fed has without more accountability.

Ralph Benko, a major advocate for the Centennial Monetary Commission Act and a senior economic advisor to American Principles Project, called The Wall Street Journal’s endorsement a “big deal” in a post yesterday:

This is a big deal. The monetary commission actually has been passed by the House and now is pending in the Senate… This is a high-power, and historic, piece of legislation. This commission is the optimal way to raise the issue of monetary integrity and determine the best method to achieve it.

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The Fed’s Surrealistic “Melting Clocks” Monetary Policy Is the American Dream Killer

Salvador Dali with Babou, the ocelot and cane. 1965. (via Wikimedia Commons)

Houston, we’ve had a problem here.” With those low-key words, command module pilot Jack Swigert of Apollo 13 revealed that, in the later recollection of mission commander James A. Lovell, its “oxygen tank No. 2 blew up, causing No. 1 tank also to fail. We came to the slow conclusion that our normal supply of electricity, light, and water was lost, and we were about 200,000 miles from Earth.” NASA’s heroic and successful effort to return the crew safely home is part of national lore and history.

Washington, we’ve had a problem here,we, the voters, are saying, far more emphatically. The most recent government measure shows that America’s economic growth rate slowed, in the last quarter, to a rate of only 1.1 percent, about one-third of normal American economic growth rates.

This may not sound like a big deal. But it is. It means that job creation, including our ability to get better jobs, raises, bonuses and promotions, has vanished.

It means the death of the American Dream. Poor growth compounded over time is the prime cause of the collapse in people looking for work, the ballooning of the federal deficit, and the weakness in our social insurance programs, Social Security and Medicare.

Breaking News! There’s a solution, and the Wall Street Journal editorial board finally, for the first time, has weighed in to advocate that solution (or at least the process from which a solution can be derived):

One place for Congress to start would be to pass Rep. 

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The Federal Reserve Just Joined Facebook. Here’s How the Internet Reacted.

The Federal Reserve recently decided to create a Facebook page to interact with the American people. So far, the page has received very little attention — just 11,250 likes. It has, however, received the attention of a committed group of anti-Fed activists, and the results have been pretty hilarious.

How did the Internet respond to an innocuous post defining the FOMC (Federal Open Market Committee)?

Well…

It gets worse:

Somewhere Fed Chair Janet Yellen is banging her head on her desk…

This goes on and on for hundreds of comments. And, even more ridiculously, it is happening on EVERY. SINGLE. POST.

Some people are even using Facebook’s “report” feature to try and take down the page:

The anti-Fed trolling isn’t limited to the Federal Reserve’s official Facebook page. Check out this unofficial page that presumably existed prior to the launch of the official page. It includes a rating system, where Facebook users have given the Fed an average rating of 1.4 out of 5. Here are some of the reviews:

Yikes. Welcome to the Internet, Janet Yellen.

Jon Schweppe is the Communications Director for American Principles Project. Follow him on Twitter @JonSchweppe. Continue Reading

Could Trump Re-energize the Conservative Movement?

Jeff Bell, the American Principles Project’s Policy Director and occasional contributor to The Pulse 2016, was recently featured in an interview with National Review writer Neal Freeman about the 2016 election and the rise of Donald Trump.

Although some conservatives have strenuously opposed Trump’s nomination as the Republican Party’s standard-bearer in 2016 and have refused to support him, Bell believes that Trump’s success may ultimately be a “net plus for conservatism” — if he can get the GOP’s economic agenda back on track. And to do that, Bell sees one policy item as absolutely critical:

Donald Trump (photo credit: Gage Skidmore)

FREEMAN: … In what way could Trump wind up as a net plus for conservatism, with the latter defined for this purpose as Buckleyite conservatism?

BELL: The key political development in the post-Reagan era is the decline of conservative economics. Beginning with James Carville’s “It’s the economy, stupid” strategy in 1992, Republicans have not won the economic debate in a single presidential cycle. Moreover, as weak as the Obama economy has been, economic growth in 15 years of Democratic presidencies has been superior to the twelve years of Bush presidencies.

Voters continue to blame George W. Bush more than Barack Obama for the economic hard times that began in 2007. Conventional conservative economics of the type espoused by Jeb Bush, John Kasich, and Marco Rubio lost every primary this year but Ohio and Puerto Rico. They barely mentioned wage stagnation or work-force decline and offered what sounded like trivial and incremental fixes.

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