WSJ Ed Board: The Federal Reserve Needs an Outsider for Chairman, Not Yellen or Powell

Two of Donald Trump’s front-runners for Fed Chairman represent “the monetary policies that have favored the affluent and done little or nothing for the real economy,” says the Wall Street Journal’s Editorial Board. Current Chair Janet Yellen and Fed Board alum Jay Powell are, according to the publication, a continuation of the same failed Fed policies that led “so many working-class voters [to turn] to Mr. Trump in 2016.”

From the Wall Street Journal:

Mr. Trump is considering a mix of insider and outsider candidates. The insiders include current Chair Janet Yellen, whose term expires early next year, and five-year Fed board veteran Jerome “Jay” Powell. The outsiders include Kevin Warsh, a Fed Governor during the financial crisis, and John Taylor, the distinguished Stanford monetary economist. Mr. Trump should know what these choices mean for monetary policy, which as George W. Bush learned can destroy an economic legacy.

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Ms. Yellen and Mr. Powell represent the monetary policies that have prevailed since the 2008 financial panic—and whose consequences Mr. Trump campaigned against. These include bond-buying to drive investors into riskier assets like stocks and junk bonds. This was helpful in the gale of the 2008-2009 panic but has been counterproductive as time has gone on. 

All of this would make it a stunner if Mr. Trump bet on the Yellen-Powell Fed for the next four years. It would be comparable to promising as a presidential candidate to nominate someone like Antonin Scalia to the Supreme Court and then nominating a younger version of Ruth Bader Ginsburg. Mr. Trump needs a Fed Chairman who won’t be a hostage to the Fed staff or at odds with the President’s growth agenda. He needs an outsider who is a reformer.

Read the rest of the article, here.


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