Trump nominates Stephen Moore to the Federal Reserve

President Donald Trump announced Friday that he planned to appoint one of his former campaign advisers, Stephen Moore, to fill one of two seats on the Federal Reserve Board.

Moore is a loyal Trump loyalist who co-wrote the book Trumponomics: Inside the first US plan to revive our economy. Asset approved the book on Twitter for having "done a great job in capturing my long-standing views and ideas".

Like Trump, Moore has been sharply criticizing Fed Chairman Jerome Powell in recent months and the council's decision to gradually raise interest rates as the economy begins to pick up steam. at the end of 2015 and during the first two years of his term. until here have not been realized.

In an interview with Fox Business on Friday morning, Trump blamed the Fed for not having experienced faster economic growth in the past year.

"Frankly, if we did not have someone who would raise interest rates and proceed with a quantitative tightening, we would have been at more than 4 instead of a 3.1", he said. Trump said.

The Fed hinted in December that further rate increases were planned for 2019, which would have prompted Trump to attack again. But on Wednesday, the Federal Open Market Policy Committee (FOMC) announced that rates would remain stable for now.

Who is Stephen Moore?

Moore is better known for his fierce loyalty to Trump than for his brilliant economic intellect. In December, for example, one of Moore's appearances in CNN raised eyebrows when the Washington Post Columnist Catherine Rampell checked real-time misrepresentations that he had made about the Fed's rate hike that had led to a "deflation of the economy."

Moore, who contributed to CNN's announcement of Trump's nomination in 2017, did not just talk about the economy on television. He also has defended US Senate candidate Roy Moore now failed when he was accused of badaulting a teenage girl, claiming that the Democrat standing against him (current Senator Doug Jones) was as mean as he was defending the right to be. abortion.

Moore also became viral for a laudable interview with Don Lemon's CNN show, in which he was trying to shame Stormy Daniels. In addition, he is a supporter of climate change who once said on CNN that scientists lie about climate science to get "really, really, really rich. "

As Jonathan Chait of New York Magazine points out, Moore's views on monetary policy have fluctuated with the wind of partisanship. During the Obama years, he urged the Fed to raise its interest rates aggressively, citing unfounded fears of hyperinflation. But now that Trump is in power, he thinks the rate hikes are bad.

More chait:

He is able to write entire columns that contain no exact fact. He made so many factual errors that he managed the rare feat of being banned from the pages of a Midwestern newspaper. He sold his political elixir to state governments that quickly experienced mbadive fiscal crises as a direct result of his listening. He believes that what he calls "the heroes of the economy: the entrepreneur, the risk taker, the innovator and creator of what we want to buy" should be put forward, and that the idea that recession could be caused by something else Excessively high rates on these heroes defy "common sense". He was drawn into Trump's orbit during the 2016 campaign and co-wrote a ridiculous hagiography of Trump and his program. Obviously, Moore is opposed to conventional tax theories because he simply does not understand them.

Trump has appointed four members of the Fed's board of directors, including Powell. But while most observers agreed that his previous candidates were qualified for the job, Moore was not. Justin Wolfers, a professor of economics at the University of Michigan, reacted to Trump's announcement tweeting that Moore's appointment "is Trump's first real choice for the Fed."

Moore's nomination illustrates Trump's impulsiveness

Bloomberg's Jennifer Jacobs announced that Trump had decided to nominate Moore last week for lunch after his chief economic advisor, Larry Kudlow, showed him a Wall Street Journal editorial that Moore had co-authored "The Fed is a threat to growth "Kudlow is a friend of Moore and also has a long history of being very bad at economic policy.)

From Bloomberg:

Moore blamed the Fed for slowing the economy while defending Trump's policies in a column in the March 13 Journal, which he co-authored. Trump's chief economic adviser, Larry Kudlow, explained the text of his editorial to Trump at last week's lunch, according to two people close to the issue.

Trump pointed out to Kudlow that he should have named Moore as the Fed's president, he said, and asked Kudlow to call Moore and gauge his interest in a seat on the board. . This week, Trump called Moore himself and asked if he would accept an appointment to the board.

Although Trump was impressed by Moore's opinion newspaper in the Wall Street Journal, George Selgin, director of the Center for Monetary and Financial Alternatives at the Cato Institute, responded by writing a letter to the publication, pointing out that Moore did not seem to know what "deflation" means.

"Deflation, first of all, means an absolute drop in prices, not just a drop in the rate of price increase," writes Selgin. "And despite Moore's claim that" the consumer price index has been remarkably flat or slightly negative, "neither the CPI nor any other popular price index has declined over the last six months. month."

Josh Barro, an editorialist for New York Magazine, said Moore's chances of confirmation in the Senate were uncertain because of fierce criticism from his left and right sides.

Trump has a point on interest rates, even if his motives are interested

As Matt Yglesias of Vox explained, there are good reasons why the Fed should not raise interest rates for now:

Low interest rates are fundamentally very interesting. If you need a loan to buy a house, a car or a big appliance, you can get one for cheap. If your business needs a loan to expand its offices or get more equipment, you can get one for cheap. And these durable goods and cheap commercial investments are not just pleasing to those who buy them directly; they also stimulate production and employment throughout the economy.

If you do not keep rates low forever, it's that too much easy money will result in inflation.

But there is no real problem of inflation in America today. The Fed is supposed to aim for an inflation rate of 2%, but once you eliminate the price of volatile food and energy products, inflation has always been lower than this one.

Moore, however, does not present such an argument. He is trying to do it because he is a loyal Loyalist of Trump, and that is Trump's position. Trump, meanwhile, seems to be motivated by a little more than to be able to claim to have presided over a stronger economic growth than that of President Barack Obama.

Even if Moore's appointment is not successful, it seems that Trump does not have to worry about further interest rate hikes this year. In a statement released Wednesday by the Fed and announced that there would be no rate increases for now, the FOMC said it would be patient before any further rate increases – a comment read by many as an indication that rate hikes The Fed, mocked in December, might not succeed because of fears of a global slowdown.

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