Source: FoxNews

By Lloyd Ellison

For the past few weeks there has been a lot of discussion regarding who will be the next Chair of the Federal Reserve. Jerome Powell has officially been nominated by President Trump. After receiving a Bachelor of arts degree in politics from Princeton University, Powell went on to receive a law degree from Georgetown. In the 1990’s he was appointed as an undersecretary in the Department of Treasury by George H.W. Bush, before returning to the private sector for much of the 2000’s.

In 2011 he was recommended by Barack Obama to nominate two members to the board of governors with bipartisan support. Powell will be the first Federal Chairman since William Miller, who resigned in 1979, to have no formal academic training in economics. Greenspan, Bernanke, Yellen, previous chairmen and women, all have PHD’s in economics. Many view Powell’s appointment as what the Wall Street Journal is calling “a safe gamble.”

Throughout the vetting process, the White House has always been stuck between two sides, the wise and conventional side, consisting of Janet Yellen and Jerome Powell, and the side consisting of outsiders, Kevin Warsh and John Taylor. Before Trump was elected as President of the United States, he often criticized the Federal Reserve, mainly targeting Janet Yellen and her monetary policy decisions.

When Trump entered the Presidency, he shifted his tune and Yellen was apparently in the running for reappointment until the very end. Republicans would prefer a hawkish appointee like John Taylor and Kevin Warsh as Chair. Both of these men strive to make more aggressive Federal Reserve policy decisions. Currently, Powell is very unproven.

In the few speeches he has given, he has agreed broadly with the current policy enacted by the Federal Reserve. Additionally, he has never dissented in an Federal Open Market Committee meeting, which on one hand could depict loyalty, but on the other could mean that he is simply agreeable. Powell has been complimented for his tendency to look for expert advice when not understanding specific economic issues. This is an important attribute for someone who will be leading the Federal Reserve.

Regardless, Trump is taking a gamble. The economy is doing fairly well, which was done under an Obama Appointee. If the economy turns for the worst in any way, it will be blamed on the Chair, and he will be criticized about how he should have done more to prevent the economy from crashing, causing Trump to be on the hook for whatever executive decisions Powell makes.

In many ways this pick gives Trump the best of both worlds. He can claim that he has picked an outsider with real world financial intellect pleasing many republicans who were not a fan of Janet Yellen. He can also claim the opposite, because Powell does not have the same economic background as other Chairs is anything were to go South. Hopefully we can ensure that the Federal Reserve will operate similarly to years passed. We will see how this gamble turns out for Trump, but first Powell must be confirmed by the senate.

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