It’s not a gold standard, but Trump appointing some so-called “hawks” on the Federal Reserve Board of Governors would at least be a step in the right direction. From Tommy Behnke at mises.org:
Starting in January, President-elect Donald Trump will have a unique opportunity to pack the Federal Reserve with hard money officials.
There are currently two open Board of Governors seats, which will most likely not be filled before the end of President Obama’s tenure. Additionally, both Chair Janet Yellen and Vice-Chair Stanley Fischer’s terms will be up by 2018. Crunch the numbers and you will see that Trump has the opportunity to replace a majority of the Board of Governors and a third of the FOMC with monetary policy hawks during his presidency.
Call me crazy, but assuming that the Republican-controlled House and Senate stands behind him, I believe that Trump just may shock the financial world by shifting this country’s monetary policy in a more hawkish direction.
Yes, this is a guy that cheered on the Fed’s easy-money policies in the years before the Great Recession. And yes, Trump did say in May that he is still a “low interest rate person” who will appoint another dove to head the Federal Reserve. Why in the world, then, am I arguing that the Trump administration might possibly install more hawkish members to the central bank?
Repeated Anti-Fed Campaign Rhetoric
For one, Trump’s occasional dovish comments do not match the passion and enthusiasm of his repeated hawkish campaign trail rhetoric. For the past year, the president-elect has been railing against the “false economy” that the Fed has created, as well as the political influence that runs rampant throughout the central bank.
Perhaps Trump’s most scathing attack on the institution came last October, when he insinuated that Fed actions are crippling the middle class without creating any type of benefit to the economy at large.
“[Chairwoman Yellen] is keeping the economy going, barely,” he said. “You know who gets hurt the most [by her easy money policies]? The people that went through 40 years of their life and saved a hundred dollars every week [in the bank].” He then paused and shook his head for added effect before adding: “They worked all their lives to save and now what happens is they’re being forced into an inflated stock market and at some point they’ll get wiped out.”
These anti-Fed talking points were recycled often on the campaign trail. In September, Trump attacked the Fed for putting us in a “big, fat, ugly bubble” and for keeping rates artificially low for political purposes, points that he again repeated in the first presidential debate. The business mogul has also promised to audit the Fed within the first 100 days of his administration and even included a criticism of the central bank in a recent online video ad.
To continue reading: Why President Trump Will Fumigate the Fed
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Intellectually gratifying though this would be for us Austrians, it will require a large amount of political capital. Since the Fed is the instrument enabling torrential Federal spending, all the constituents for that spending are going to fiercely resist any move to restrict the flow. I think that amount of political capital would buy – and be much more profitable if first expended for – an all out, take-no-prisoners assault on the regulatory vampire, especially the climate / CAFE / eco-fanatic agency-academia-activist mafia incarnation. That would strengthen the real economy, making it better able to withstand later withdrawal of the fiat heroin. If significant monetary restraint is attempted before such improvement, I fear it would produce a depression – with no compensating benefits visible to the public – on a scale which would likely cause, as Gary North put it: “a political sweep in 2020 comparable to Franklin Roosevelt’s in 1932 . . . I have two words with which to scare you. They scare me: Elizabeth Warren. She is the most likely candidate to pick up the pieces. She will become the first female American President.”