Trump’s single, best economic move: reappoint Yellen.

October 3rd, 2017 at 8:57 am

Over at WaPo.

I left one extra-wonky point out of the piece, which deserves mention here. There’s an interesting way in which a more hawkish Fed chair–and most of the top candidates other than Yellen fit that bill–would be a double whammy for Trump.

First, raising rates would slow growth, which presidents never like. Second, higher rates strengthen the dollar, making our exports less price competitive, which this particular president really wouldn’t like.

Yes, Trump is never rational, so no, I don’t believe these sensible (at least, to me) arguments will win the day. But Yellen remains a front-runner, and the huge difference between having someone with her sensibility chairing the Fed versus a much more hawkish chair cannot be overestimated. Thus, this is an important, worthy fight.

 

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One comment in reply to "Trump’s single, best economic move: reappoint Yellen."

  1. JF says:

    Trump will appoint a different person. This person will get this appointment by agreeing that debt redemption payments to the Fed add to the Fed’s surplus making it subject to the remittance law, which would then cause the sums to be sent back to Treasury. The agreement with this new person is that the Treasury and the Fed will coordinate such that some debt is simply erased via offset accounting while some is remitted.

    And both will then take credit for lowering the public’s debt while increasing its revenues.

    An estimated $580 Billion in public agency debt obligations are subject to redemption over the next 12 months. Though you could fund a lot of tax cutting fiscal results with those sums.

    Perhaps Yellin would cut that deal first to keep her job?

    Nutty stuff evolves when you print up money anew to buy public agency debt and you are a central bank.


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