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Trump Eyes Federal Reserve Reshaping With Herman Cain, Stephen Moore

President Donald Trump shakes hands with then-Federal Reserve board member Jerome Powell after announcing him as his nominee for the next chair of the Federal Reserve, in the Rose Garden of the White House in Washington, Nov. 2, 2017. (Alex Brandon, File/AP)
President Donald Trump shakes hands with then-Federal Reserve board member Jerome Powell after announcing him as his nominee for the next chair of the Federal Reserve, in the Rose Garden of the White House in Washington, Nov. 2, 2017. (Alex Brandon, File/AP)

With Meghna Chakrabarti

President Trump wants his allies Stephen Moore and Herman Cain to join the Federal Reserve. Are politics and monetary policy on a collision course?

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Binyamin Appelbaum, New York Times editorial board member who writes about business and economics. He covered the Federal Reserve from 2010 to 2019 as a Washington correspondent for the Times. Author of “The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society.” (@BCAppelbaum)

Diane Swonk, chief economist and managing director with the consulting firm Grant Thornton. She advises the Federal Reserve Board and its regional banks. (@DianeSwonk)

From The Reading List

New York Times: “Opinion: Stephen Moore Would Be a Loyalist, not an Expert, at the Fed” — “President Trump, who craves low interest rates, has tried to bend the Federal Reserve to his will by tweeting insults and offering unsolicited advice. He threatened to fire Chairman Jerome H. Powell. He invited Mr. Powell to dinner. None of it worked as well as he would like. In the president’s view, high interest rates still are smothering economic growth.

“So on Friday, Mr. Trump tried something new. He said that he planned to nominate one of his economic advisers, Stephen Moore, to an open seat on the Fed’s board of governors.

“Notwithstanding his public outbursts, Mr. Trump previously has nominated six people to the Fed’s board, and all were well-qualified candidates who might have been chosen by any Republican president. With the choice of Mr. Moore, however, Mr. Trump crossed a line.

“Mr. Moore has repeatedly staked out public positions on questions of monetary policy over the last decade. His record is best characterized as inconsistent with any particular set of economic principles, but reliably faithful to the short-term interest of the Republican Party.”

CNBC: “Majority of Wall Street pans Trump’s Fed picks, Stephen Moore and Herman Cain” — “Some on Wall Street are blasting President Donald Trump’s intentions to nominate Stephen Moore and Herman Cain to the Federal Reserve board of governors, with majorities in a CNBC Fed Survey saying the Senate should not confirm either man and many saying both are unqualified.

“In a survey taken Friday through Sunday, 60% of respondents said the Senate should not confirm former Wall Street Journal editorial writer Moore, and 53% called for the Senate to reject the prospective nomination of businessman and former Republican president candidate Herman Cain.

“‘Both Moore and Cain are highly unconventional and politically-biased choices and, if confirmed to the board, would be very disruptive at a time when monetary policy is at an important crossroads,’ Kathy Bostjancic, chief U.S. Financial Market Economist at Oxford Economics, wrote in response to the survey.”

New Yorker: “The High-Stakes Battle Between Donald Trump and the Federal Reserve” — “In Donald Trump’s world, there is always another person responsible for his woes, and, as Kirstjen Nielsen, the departing Secretary of Homeland Security, just discovered, that person often ends up getting fired or forced out. But what if Trump doesn’t have the power to dismiss the object of his anger, or he fears blowback from Congress and the financial markets? Then you get the White House’s current campaign to undermine the independence of the Federal Reserve and its head, Jerome Powell.

“For months now, Trump has been publicly railing against the Fed. In private, Bloomberg reported, he has been asking his aides if he can fire Powell, a sixty-six-year-old Republican banker who was confirmed at the start of last year. (According to legal experts, the question is a murky one.) On Friday, Trump again defied the convention that the President stays out of monetary policy, calling on Powell and his colleagues to cut interest rates in order to boost the economy. Referring to the rate hikes that the Fed introduced last year, which were the source of his animus toward Powell, Trump said, ‘I think they really slowed us down.’ Trump’s senior economic adviser in the White House, Larry Kudlow, has also called for a rate cut.

“In addition to jawboning the Fed, Trump has moved to exert more control over its deliberations by announcing his intention to nominate two of his ardent political supporters to its board of directors: Stephen Moore, a conservative commentator who served as an economic adviser to the Trump campaign in 2016, and Herman Cain, a Republican businessman who ran for President in 2012. Ignoring widespread criticism that neither Moore nor Cain is remotely qualified to sit on the Fed’s board, Kudlow said on Sunday that Trump is standing behind both of them. ‘We have two open seats,’ he told CNN. ‘The President has every right in the world to nominate people who share his economic philosophy.’ ”

Brian Hardzinski produced this hour for broadcast.

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