I’d like to keep the blog academic and fact-based, and at the same time, some of the recent economic events are just so surreal and frankly (in my opinion) dangerous that I fear some of my posts start to read like partisan politics (see my posts on Turmp’s trade person, Peter Navarro here, here, here, here, and here). But what has to be said in the name of truth, has to be said.
If you think I am harsh on the people Trump employs to lie about economics, I should note that even arch-conservative magazines like “Fortune,” (to the right of the WSJ) call the Trump’s economic policies “stupideconomics.” (here and here).
It has long been Trump’s goal to dismantle government agencies by installing critics who hate the very agencies they were supposed to lead. These critics then proceeded to dismantle with impunity key agencies such as the US Department of Agriculture, the US Department of Energy, the US Environmental Protection Agency, or the US Consumer Financial Protection Bureau (or 68 minor agencies and programs that are being eliminated directly through proposed 100% funding cuts). While it is difficult for me personally to see these agencies and programs go, I accept that the will of the people (in form of the electoral college) apparently supports Trump’s concept of “instant deregulation” through agency shut down.
But when it comes to the dismantling of the Fed we are starting to talk not just about the dismantling of an agency, but about the dismantling of the very economic foundation of our society. I have written about the two new nominees for the Fed positions before. In a recent New York Times OpEd, Paul Krugman puts it eloquently:
“The Fed’s governing board currently has two vacancies, and Donald Trump has proposed filling those vacancies with ludicrous hacks. If he succeeds, one of our few remaining havens of serious, nonpartisan policymaking will be on its way toward becoming as corrupt and dysfunctional as the rest of the Trump administration. Stephen Moore and Herman Cain are, of course, completely unqualified — I say “of course” because their lack of qualifications is, paradoxically, a key qualification… for Trump…”
As I pointed out before, both Moore and Cain were “Hard Money Men” during Obama’s presidency, meaning both demanded higher interest rates when unemployment was high (to fight inflation they predicted would appear but which never materialized). Now, strangely, both demand lower interest rates while unemployment is at an all-time low — only because it conforms with Trump’s view of the world.
Krugman characterizes Moore and Cain succinctly: Moore “is basically a classic right-wing hack who tries (incompetently) to impersonate an economic expert. Cain, on the other hand, is a spam king whose business model involves making his email list available to direct marketers… Moore has been out there predicting magical results from tax cuts, putting out fake economic numbers, and giving speeches to FreedomFest. At the same time, Cain has been offering a platform for peddlers of get-rich schemes and cures for erectile dysfunction.” This reminds me of Trump’s choice Attorney General, whose prior job was to promote hot tubs and toilet seats for well-endowed men for a scam company that was shut down by the FTC.
Tampering with the independence and competence of the FED by nominating either a pizza exec who peddles erectile dysfunction spam or an unscrupulous economic liar is dangerously undermining the very foundation of the US.