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Let’s face it … Cain ain’t able.
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As many of us who follow the Federal Reserve have already suggested we’d like to see even less of Stephen Moore, President Donald Trump plans to nominate pizza executive and former presidential candidate, Herman Cain, to the Fed’s Board of Governors.
While the Fed is already threatened by increasing politicization with the nomination of supply-side acolyte Moore, Cain may know his way around a pizza pie, but he doesn’t have the chops to find ways to make the economic pie bigger for one and all.
Cain is a die-hard “hard money” guy. In other words, he has often stated his belief that the U.S. should return to the gold standard, a monetary construct that is outdated as the buggy whip.
Assuming that argument has long since been put to rest may be as premature as Mark Twain’s once purported passing.
Given the size and complexity of the domestic and global economy, the Fed needs visionary thinkers who not only understand the history of American growth and prosperity, but also its future.
That future involves further digitization, 5G, robotics, machine learning, artificial intelligence (of that there is no shortage in the nation’s capital), regenerative medicine and other emerging technologies.
Backward-looking businessmen and quasi-economists who push half-baked tax policies that benefit the very few, are plentiful. We need ideas and economic policies that push progress forward, not into some romanticized past period.
If that’s not enough, progressive Democrats have been advocating “Modern Monetary Theory,” a neo-progressive policy that transfers the responsibility for controlling inflation to Congress through tax policy as opposed to the Fed through monetary policy.
While that’s an oversimplification of so-called “MMT,” there other aspects of Modern Monetary Theory that are, at least in my opinion, are outright dangerous.
The arguments in favor of MMT in so-called “academic literature” are both specious and entirely untried, except in Weimar Germany, among other nations that tried to devalue their way to prosperity.
Printing money to finance unlimited government spending is hyperinflationary and impossible to stop once it starts.
That aside, the more immediate concern is President Trump’s attempt to “pack the Fed” with yes-men.
Despite singing the praises of an unprecedented economic boom, President Trump wants the Fed to lower interest rates, overheating be damned.
One should note, as a sidebar to this story, that the Trump Organization has somewhere in the neighborhood of $340 million in adjustable debt, something rising rates would adversely affect this president’s personal fortunes.
(Bloomberg News reported on November 2, 2107 that the Trump Organization owes Deutsche Bank $340 million, which could be made more costly by raising rates.)
The lone steady hand at the economy’s wheel has largely been the Federal Reserve. One can argue about how successful the Fed has been in identifying risks, or even managing them. But the Fed is the only gold standard we have as far as policy is concerned.
If someone doesn’t wake up soon, the far wing nuts in both parties are going to be steering our $20 trillion ship of state directly right onto the rocks.
If you think you’ve already seen the “Cain Mutiny,” you ain’t seen nothing yet.