Guest Contribution: “No Moore Golden Era for Monetary Policy”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared in Project Syndicate on April 27th.


Of the two men whom Donald Trump had intended to nominate to empty seats on the Federal Reserve Board, Herman Cain has now withdrawn his name.  This leaves the other one, Stephen Moore.

The Senate would have to decide whether to confirm Moore. He has some problems roughly analogous to Cain’s:  he is considered to be under an ethical cloud and he often gets his economic facts wrong.  Cynics might respond that he would thereby fit right in with the roster of Trump nominees throughout the government.  But Trump’s earlier appointments to the Fed have been people of ability and integrity and have been doing a good job, Chair Jerome Powell in particular. Perhaps Trump did not start paying attention to Fed appointments until recently.

That Moore does not have an Economics PhD is not a reason to oppose him.  Fed appointees have long included people with real experience in the world of business, for example.  Powell doesn’t have one.

The worry, rather, is that Trump wants to put him on the Board as a loyalist crony who would do whatever is best for Trump, instead of what is best for the economy.

Moore pro-cyclicality

Moore has been pro-cyclical in his recommendations for monetary policy – that is, opposing stimulus when the economy needed it and favoring stimulus when the economy did not.  First, when the Fed sought to boost the economy in response to the 2007-09 recession, Moore in 2009 warned of possible hyperinflation and continued in 2010 to warn of the danger of rising inflation.  Needless to say, the inflation never materialized.

As employment rose steadily over the subsequent eight years, one might expect a rational observer’s fears of economic overheating to have increased.  The unemployment rate is now below 4 %.  Yet Moore switched his assessment and started attacking the Fed for excessively high interest rates.  He recently wrote an op-ed called “The Fed is a threat to growth” [WSJ, March 13, 2018].  In December, he even suggested that Fed Chair Jerome Powell should be fired for raising interest rates.

If the Fed had followed Moore’s advice, it would have tightened monetary policy in 2010, when unemployment was 9 per cent, prolonging the great recession, but loosened monetary policy in 2018, with unemployment below 4 per cent.  That cycle of policy would have destabilized the economy.

One is prompted to ask Moore if he turns on the air-conditioning at home in winter and the heat in summer.   Is he so incompetent that he always gets things precisely wrong, as some have claimed?  Presumably, he does not deliberately make his recommendations pro-cyclical.  The most logical explanation of the difference is that he switched to urging monetary stimulus when Donald Trump took office.   (Trump himself made the same switch in the direction of his attacks on the Fed, from 2011, for example, to 2018.)

It has been hard to miss the swing from Republican agitation for tighter monetary policy a few years ago to their now agitating for easier monetary policy.  It fits into a larger pattern of pro-cyclical positions among leading Republicans, not just in monetary policy, but also fiscal and regulatory policy.

Some media coverage, however, treats this swing as a new thing, going against decades of conservatives’ dedication to monetary discipline.  The perception that Republicans have been inflation-fighters is longstanding and widespread.  But far from being a new thing, pressure from Republicans on the Fed to ease monetary policy whenever they are in the White House is a pattern that goes back half a century.

Past Republican presidents and the Fed

Republican President Nixon successfully pushed Fed Chairman Arthur Burns into an excessively easy monetary policy in the early 1970s — leading to high inflation which the White House tried to suppress with wage-price controls.  Nixon also broke the link with gold in 1971 and devalued the dollar, ending the Bretton Woods era of monetary stability.

Republican Presidents Ronald Reagan and George H.W. Bush both tried aggressively to push Fed Chairmen Paul Volcker and Alan Greenspan into easier monetary policy, especially in election years.  This is documented in Bob Woodward’s 2000 book Maestro.  (Some in the Reagan Administration blamed Volcker’s tight monetary policy for the incomplete success of their 1981 supply-side revolution.) Reagan made four appointments to the Fed Board in the mid-1980s with the goal of tipping the balance toward easier money.  The culmination came in the form of a short-lived February 1986 “palace coup” in which the Reagan appointees outvoted Chairman Volcker in an attempt to cut the discount rate [page 328 in Frankel, 1994].

The White House succeeded in making life unpleasant enough for inflation-slayer Volcker that he eventually declined to be reappointed, prompting Treasury Secretary James Baker to exult “We got the son of a bitch!” (page 24 in the Woodward book).  [Baker is also the man credited with the Plaza Accord and the associated 50 % depreciation of the dollar from 1985 to 1987, which was eminently defensible policy, but not consistent with a hard-money philosophy.]

Volcker’s successor was Alan Greenspan.  George H.W. Bush complained that Greenspan failed to ease monetary policy sufficiently in 1990-91 and blamed him for costing him re-election in 1992 (page 44).

Have the Democrats done it too?

Surely Republicans are not alone in wanting lower interest rates when they are in the White House?  Surely “everybody does it.”  Actually, no.  Each of the three Democrats to serve as president in the last 50 years refrained from pushing the Fed to ease monetary policy. Jimmy Carter is the one who originally appointed Volcker as Fed Chairman in 1979, with a mandate to conquer inflation even at the cost of recession and reduced chances of re-election in 1980.   The administrations of Bill Clinton and Barack Obama, for their parts, scrupulously abstained from commenting on US monetary policy at all, reinforcing the norm of Fed independence.

The Gold Standard versus a Commodity Standard

A century ago, the gold standard was considered a guarantor of monetary stability.  That golden era is long-gone, if it every really existed at all.

Moore (like Cain) has said several times that he favors a return to a gold standard.  In true Trumpian fashion, he recently denied having said it, despite the clear video evidence.  In any case, he now says he favors having monetary policy focus on a basket of commodities, not just gold alone.  This has brought him some ridicule.  It is true, however, that a price index based on a variety of commodities would attenuate the volatility of the gold market.  There was a time, in the 1930s after FDR took the US off of gold, when leading economists Benjamin Graham and John Maynard Keynes weighed the advantages of a hypothetical commodity basket standard.

In the case of a country that specializes in exports of mineral or other commodities, one can make an argument for targeting an index of those export commodity prices, as an alternative to the option of targeting the CPI.  Proposing a commodity price target for the United States, would be foolish.  But commodity prices  are sensitive to real interest rates, and so one could make a case for including them alongside stock prices and the exchange rate in a financial conditions index. Real commodity price indices correctly reflect that US monetary policy began tightening in 2013-14, while still remaining loose by historical standards.

In the late 1970s, the supply siders who hitched themselves to Ronald Reagan’s 1980 candidacy famously campaigned for large tax cuts (which, they said, would pay for themselves).  But they also tended to have a particular view on monetary policy: that the US should consider returning to the gold standard. The movement achieved the creation of a high-level official Gold Commission, but lost some momentum after it submitted its report in 1982.

In the 1980s, supply siders like Congressman Jack Kemp continued to campaign for a return to the gold standard, arguing that this would allow an easier monetary policy, which they thought was the only thing holding back the success of the supply-side strategy. (The price of gold was declining in 1981-1984, coming off a record high in 1980.  Thus, it was a time when stabilizing the price of gold might indeed have implied an easier monetary policy.)  It was noted then, as now, that to have a small-government populist arguing in favor of the gold standard stood on its head the history of American populism.  That history was memorably represented by William Jennings Bryan’s campaign for the presidency during the deflationary 1890s, on a platform declaring that farmers and workers would refuse to be “crucified on a cross of gold.”

On this, Bryan was ahead of his time.   The crude handcuffs of a standard based on gold or other mineral commodities may have played a useful role in preventing chronic inflation in the 19th century.  But that era is no more.  The Fed in recent years has shown that it can do better on its own, with competent appointees working under the protection of institutional independence.  The Senate should think about that, if and when it is called upon to vote on Stephen Moore’s confirmation.

This post written by Jeffrey Frankel.

126 thoughts on “Guest Contribution: “No Moore Golden Era for Monetary Policy”

  1. JBH

    Virtually at the trough in 2009 Beck brings up the topic of hyperinflation. Beck one of the all-time incompetents on the air. Moore responds hypothetically, hardly with a forecast. In 2010 in another interview, Moore predicted gold going to $2000. The following year gold hit $1895, not a bad prediction at all. Few understand why gold broke and then plunged from that peak. But it had to do precisely with government policy reversing which was what Moore was beating the drum about. In that 2010 interview, What we’ve had for the last year from the Fed has been pretty good policy – very low interest rates, and we’ve had no inflation, he said. But this idea of the federal government pouring money into the economy as if we can print money and then print jobs, that’s a fantasy.

    I’m not for going back to gold. I’m not for a commodity standard. But I am for taking control of money creation out of the hands of the Fed. The value of a dollar bill has shrunk to around 2 cents since 1913. And the Fed was responsible for the Great Depression, the Great Stagflation, the Great Recession, and the longer-term but equally horrific enabling of now record debt-to-GDP. Moore knows all that and Frankel doesn’t. Moore sees the forest whereas Frankel is scrabbling about on hands and knees amongst the bushes and the trees. With an ax to grind no less.

    1. Menzie Chinn Post author

      JBH: Right on, brother JBH. In fact the resale value of my Motorola flip phone has gone to virtually zero. I’m for reasserting my control over the producers of microchips!

      1. Moses Herzog

        “Beck [sic] one of the all-time incompetents on the air.” <<——-possibly the first accurate statement by JBH ever made on this blog. And attacking a Republican and former member in good standing of Roger Ailes' junkyard dog stable?? Menzie, treasure the small miracles of life when you find them.

        Before we knew about Roger Ailes, the "family man". Thinking about the glory years of FOX news, I'm getting verklempt now.

        That’s the power of on-air sincerity kids. I haven’t been this emotionally moved since roughly 2 days ago I was up late and caught a Tom Selleck infomercial for reverse mortgages. Good times……..

    2. Willie

      Wait, what? Who would be responsible for monetary policy and creation of money if it’s not the Fed? And, if it becomes political, then what’s to prevent the kinds of gyrations that have plagued certain other countries over the last century or so? And, how did the Fed cause any of the “Great” problems we have had over the past century? I see words-words-words-talking points-words. No content. Just talking points that fall apart even when given a cursory look.

      Going back to the article, I will happily admit to having been a benefactor from the tail end of the Reagan era easy money policy. My wife and I were not married yet when we bought our house in the late 1980s. I had a summer job and was finishing up a masters. She had just graduated with a BFA and was looking for work. I wouldn’t have given us a loan. No sane lender would have, but a Savings and Loan did. That was right before the SandL crash took out most of the Texas economy. Texas was lucky to have the subsidy at the time, but that’s a different story. We don’t live in Texas. We do still live in the same house.

      I suppose JBH will say the SandL crash was also caused by the Fed. And maybe Clinton or Obama or something.

      1. Barkley Rosser

        You had better be careful what you say here, Willie. JBH is an official standin for Q and can probably get you onto the apparently massive list of people with sealed indictments against them who will be shipped off to Gitmo the minute those indictments become unsealed, which is any minute now. I am clearly already on the list, having established myself as an evil “Trump hater” as well as somebody guilty of “prying, prying, prying” into the sacredly secret private life of JBH, which he regularly brags about, but then does not follow through to answer obvious questions arising from what he brags about.

        So, be very careful. The unsealed indictments will soon be unsealed, and you may find yourself no longer living in that nice house you bought with your wife way back when.

        1. Barkley Rosser

          On that last sentence, obviously I meant to say that the “sealed indictments will soon be unsealed.” Eeeeekkkk!!!!!!!

        2. Willie

          I am pretty sure there is an orange jumpsuit sized for me already. Plus, my wife’s citizenship got delayed for unexplained reasons in 2004, before that election. We had been married for 15 years at the time, for whatever that is worth. So we are clearly undesirables. We probably were meant to be evicted and deported years ago. Thank goodness for the incompetence of corrupt entities.

        3. noneconomist

          I have that number now, conservatively, at 309,008. It would be more, but when JBH’s guru—Phil—emerged from his bunker Feb. 2, he saw his shadow and scaled back the then humongous numbers.
          But you-can be assured—the great one has spoken, right?— that there will be a whole bunch of middle of the night rousting goin’ on.

      2. 2slugbaits

        Comrade Willie Who would be responsible for monetary policy and creation of money if it’s not the Fed?

        Don’t you know? Of course, it would be the Great and Mighty “Q”, who knows all, sees all and, from his secret hideaway, controls all. I heard that “Q” even brings toys to little children every 25th of December, and leaves gold coins for children who lose a tooth. JBH will be attending the QAnon summer retreat in the jungles of Guyana. “Q” makes a delicious Kool-Aid.

        And Happy May Day from Comrade 2slugbaits.

      3. JBH

        Treasury Undersecretary Paul Volcker looked sternly over the shoulder of Richard Nixon. The fox persuaded Nixon to cut the dollar free of gold, insanely making the medium of exchange in this country pure fiat. The Fed gleefully raced the printing press. Something out of nothing, the liberal’s delight. The resulting inflation led to a discount rate hike in 1979 from 9½ to 12%. The fox had been promoted and was back. Thus S&Ls were unable to fund their fixed-rate long-term mortgage assets and the industry collapsed. Of course the pristine lily-white Federal Reserve gatekeeper of the temple that can do no wrong had absolutely nothing to do with the demise of the S&Ls.

        1. pgl

          “The resulting inflation led to a discount rate hike in 1979 from 9½ to 12%.”

          Your knowledge of economics is pathetic. We left Bretton Woods in 1973 not 1979. We had endured those Ford WIN buttons in 1974 – an era of tight money that did lead to lower inflation via a modest recession. We had a return to full employment later. To suggest that the Volcker tight money of 1979 was due to him forcing Nixon to do the right thing in 1973 is stupid even for you JBH. BTW – the first Volcker induced recession was brief and mild. We were recovering from it until Volcker freaked out over the Reagan fiscal fiasco. But I realize Q’s minnie me has no clue about actual economic history.

    3. Moses Herzog

      When I saw this image, it made me think of JBH because he specifically mentioned in a prior comment thread that he had a personal fondness for this style humor.

      Now, some may call this “low brow” humor. And I don’t think anyone should insult an important plumbing fixture in people’s homes in such a debasing way. But if JBH sees some similarities there, it’s really hard to argue with that.

    4. pgl

      We are living with this myth that no one can be dumber than Stephen Moore. JBH proves us all wrong with this:

      ‘The value of a dollar bill has shrunk to around 2 cents since 1913. And the Fed was responsible for the Great Depression, the Great Stagflation, the Great Recession, and the longer-term but equally horrific enabling of now record debt-to-GDP.’

      I do declare that this is the dumbest statement of ALL time. Impressive JBH!

    5. ilsm


      US Constitution: “From Article I, Section 8, there is “Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin.”

      Why the FR comes talk to congress every so often.

  2. pgl

    Stephen Moore and racist humor!

    President Donald Trump’s prospective Federal Reserve Board pick Stephen Moore once joked that President Donald Trump’s election booted “a black family out of public housing,” just the latest in a long string of damaging comments.
    “I just love that one,” Moore said at the time in 2016, laughing. “It’s a great one.”
    PBS’ Margaret Hoover pressed him on the joke during an interview released Tuesday.
    “So, you know, that, that is a joke that I always made about, Obama lives in, you know, the President lives in public housing,” Moore said, stumbling over his words. “But I didn’t mean it like a black person did.”
    He dug the hole deeper.
    “I just meant that, you know, you know, being in the White House, you know, for example, when I was working with a lot of women in families who were involved in the education voucher program here in DC, and people would say, well, you know, these were blacks who would say ‘why does Barack Obama get to send his kids to any school that he wants to and we can’t?’ And they’d say, he lives in public housing, and it was just kind of a joke,” he continued.

    1. PeakTrader

      You mean racial humor.

      What’s racist is keeping blacks on the plantation.

      Anyway, Trump did Obama, and the country, a favor kicking him out of public housing.

      1. Menzie Chinn Post author

        PeakTrader: I concur with pgl. It’s *racist* humor. Trump did not kick out Obama – if you recall, there is an amendment to the constitution (22nd) which prohibits more than two consecutive terms served as president.

        1. PeakTrader

          Menzie Chinn, that doesn’t prove it’s racist.

          It could be a bad joke, which wouldn’t be surprising.

          1. pgl

            Moore tells a lot of bad jokes especially when it comes to allowing women to participate in sports and have coaching positions. Most sensible people do not make a joke out of such things unless they could care less about the rights of women or minorities. That’s the point which of course you would never get.

        2. PeakTrader

          I recall one day in Oakland.

          There was a long line – for two blocks – and noticed only black people were in line.

          Then, I saw, a one day sign up for low income housing.

          Is that racist?

          1. PeakTrader

            It’s possible there may have been some whites, Hispanics, or Asians standing in the low income housing line I didn’t see.

            But, if you doubt there would be any Asians in line or that is most unlikely, would that make you a racist?

          2. pgl

            I lived in Oakland. If you were really there – which I doubt – you’d be all SCARED that some darky might touch you.

          3. Moses Herzog

            This video was before she had cosmetic surgery and turned into a big fat phoney. Nonetheless it bears pointing out this woman I’m pretty sure is of mostly Anglo progeny.

            And I don’t have the figures handy—but if you look at the numbers from absolute terms, as in total figures, white trash Americans suck up way more in welfare benefits than African Americans do. If someone wants to press the issue on that I’ll hunt down the numbers, but I am my usual lazy self at the moment.

            For whatever it’s worth, I’d like to point out my Mom got more than one Pell Grant while she was attending college, and also my family lived in on campus “married housing”. Both of which had she not received she never would have graduated college. The Pell Grant program is a program Republicans have tried to kill off for years at the same time Republicans are happy to hand out government loan money by the truckloads to morally vacuous people like Betsy Devos. I was roughly age 11 when my Mom graduated from college and it drastically changed my family’s standard of living. Again, we never would have gotten there without the Pell Grants or the “married housing” benefits for poor families like ours was at the time. For the record, everyone in my family is about as “white” as it gets. In actuality, if you ignored my nuclear family’s literacy levels, which were pretty high for our income bracket, in all other senses we qualified for the description “white trash”.

      2. Barkley Rosser

        This is a racist remark, PT.

        You are worthless pond scum.

        Of course it is well known that racists deny that their racist remarks are racist.

        Sorry, but that is you. Deal with it, racist pond scum.

  3. Paul Mathis

    Prof. Frankel Dances around the Truth

    In 1971, after closing the gold window for international payments, Nixon said, “I am now a Keynesian in economics.”
    Reagan was Keynesian too: He tripled the debt and ran record deficits for many years to end the bad recession of the early 1980s. His recovery produced GDP growth averaging 4.9% for 6 years (1983-88).

    OTOH, Democrats have been fiscal conservatives: Clinton raised taxes and balanced the budget for four years. Obama reduced the federal budget deficit by 75% (as a percent of GDP) from FY 2009 through FY 2015 causing the slowest recovery in the post-WW II era.

    Moore was just following the GOP’s cynical script — Throughout the Obama presidency, Republicans in Congress were deliberately sabotaging the economy with government shut downs, debt ceiling crises and austerity in fiscal policy. Their goal was stated by Senate Majority Leader Mitch McConnell: make Obama a one-term president. GOPers hated the Fed back then because it thwarted their sabotage with its Quantitative Easing (QE) programs.

    The GOP understands that fiscal stimulus in the form of deficit spending is fuel for economic growth. Starving the economic engine of fuel is simply smart politics when a Democrat is in the WH, but now with Trump, GOPers have abandoned all pretense of fiscal restraint and are full speed ahead with spending and deficit finance. They are utterly shameless, but Dems should wise up about their brazen cynicism.

    1. Willie

      Actually, it’s the electorate that needs to wise up. If cynicism were punished at the ballot box, it wouldn’t be so common. I’m not going to hold my breath.

    2. ilsm


      Putting a lid on the wild spending in the pentagon is more innocuous than attempting a coup.

    3. PeakTrader

      The GOP Congress and the Greenspan Fed helped balance the budget. Congress wanted a balanced budget amendment and the Fed believe the economy could grow faster without fueling inflation.

      You’re right about Democrats wanting to tax and spend. The GOP wants a smaller government with lower taxes.

      Obama’s economic policies failed. So, why throw good money after bad money? The GOP wanted tax cuts and deregulation, but Democrats prefer a bloated and intrusive government.

      Now, they want to take away choice, along with freedom, and give us one-size-fits-all big government socialism.

      1. PeakTrader

        LBJ wasn’t a fiscal conservative. Carter was. Reagan didn’t get the promised spending cuts from the Tip O’Neill House. Bush 41 raised taxes. Clinton also raised taxes and was pragmatic and moderate. Bush 43 inherited a recession, 9/11, and wars. Yet, his expansion was on top of the 1982-00 economic boom and mild 2001 recession – the budget deficit shrunk to $163 billion in 2007. Obama racked up trillion dollar annual budget deficits and should’ve got a much stronger recovery.

        1. pgl

          “Reagan didn’t get the promised spending cuts from the Tip O’Neill House.”

          WTF are you babbling about now? N o Tip O’Neill never promised to eliminate Social Security benefits. But he and Reagan did agree to the sensible 1983 Social Security reforms.

          Come on Peaky – we know you are both dumb and a liar. Stop trying so hard to prove the obvious!

        2. Barkley Rosser


          As so often you have your facts wrong. Reagan got basically the aggregate spending he wanted. What the Dem-contolled House (GOP had the Senate) did was to lower his DOD requested increases, which were offset by not engaging in some of the social spending cuts he wanted. These approximately balanced out.

          RR was clearly demented by the end of his term and never did figure out that the huge deficits he ledt behind were due to his own fiscal policies. In his final speech he described an “Iton Triangle” of Congress, special interests, and the press. The Iron Triangle is/was an idea that had been around for along time, and he messed it up. Instead of “the press,” the third leg is “the ececutive branch.” Actually this is the sort of error Trump would make, and you would probably just suck right up after Hannity spewed it out.

          1. PeakTrader

            Barkley, again, you don’t know what you’re talking about.

            You’re showing again, you’re the one “demented.”

            “…the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) — was $3 in spending cuts for every $1 in tax increases. It sounded persuasive at the time. Believing it to be the only way to get spending under control, most of the president’s colleagues signed on. He disliked the tax hikes, of course, but he agreed to it as well.

            You don’t have to be a Washington veteran to predict what happened next. The tax increases were promptly enacted — Congress had no problem accepting that part of the deal — but the promised budget cuts never materialized. After the tax bill passed, some legislators of both parties even claimed that there had been no real commitment to the 3-to-1 ratio.”


          2. Barkley Rosser

            Oh gag, PT. Looking at one round in 8 years does not tell much. Reagan cut income taxes, although he raised fica taxes. He got big DOD spending increases and some cuts in social spending. He largely got what he asked for in terms of the aggregates over the full 8 years.

            As it was, I supported the 1986 tax reform, which was revenue neutral.

            If your story about 1982 indicated what went on in most of the term, we would have seen lower budget deficits coming out of the Reagan admin. But we saw much higher ones. Deal with that reality, PT, and stop making a big deal about minor episodes. 1982 was not where the main fiscal policy action was.

          3. PeakTrader

            Barkley, you’re just making things up.

            The point of tax cuts is to raise economic growth and when the economy is booming, taxes can be raised to slow growth to a sustainable rate.

            Reagan got a V-shaped recovery and then raised some taxes.

            Domestic spending cuts didn’t go far enough to shrink government and make work more attractive.

      2. pgl

        “The GOP Congress and the Greenspan Fed helped balance the budget. ”

        JBH has been Trumped as this is clearly the dumbest sentence EVER. The GOP tried to block the 1993 tax increase. And Greenspan had nothing to do with the Peace Dividend. It was these two dramatic fiscal moves that lead to the surplus in the late 1990’s. The rest of the babble is just lies designed to confuse morons like PeakStupidity.

  4. Steven Kopits

    My uncle, who spent five years on Hungary’s equivalent of the FOMC, was as I recall the only non-partisan member of the Monetary Council, as it is called in English.

    He observed that partisanship tended to dissolve during actual policy deliberations, as the non-experts were loath to make a mistake. I’m going to guess the FOMC meetings are pretty similar, with some sharp staff economists presenting detailed data and analyses and asking some pretty pointed questions (‘clarifications’) of committee members, which would tend to disarm the less technically competent of them. I am not so worried.

    While I am at it, if we are looking to add names to the list, I think my uncle would be an excellent candidate.

      1. Steven Kopits

        Read his bio. He is eminently qualified.

        If you’re looking for an established, respected macro-economist with multiple years of experience serving in a capacity essentially identical to the FOMC (and is not a FOMC alum), he’s near the top of the list in the US. True, he’s better known as an emerging markets macro guy, rather than a monetary economist, per se. But he’s been there, done that. He was approved to both the Monetary Council and as the first head of Hungary’s Fiscal Council unanimously in Hungary’s otherwise fractious parliament. Now, he’s a center-of-the-road, show-me-the-numbers guy who would give you policy pretty close to Yellen or Bernanke on most days. He’s not an MMT guy. So, if you’re looking for DC-based macro-economists with extensive experience setting in monetary policy, he’s probably top ten in the US. There are other economists, several more specialized on monetary policy. But if you want someone with hands on, real world experience at the job who’s an easy confirm in the Senate, he’s an excellent choice, in my opinion.

        1. Barkley Rosser


          Once was OK and sort of amusing. But this going on and on about how your uncle would be great for the Fed is becoming really ridiculous. Maybe he would be, but he will not be appointed, and your repeated ranting on this is just silly, if not downright pathetic.

          Your visa scheme is much more reasonable, even if you went on a bit more about it than was really wise.

          1. Steven Kopits

            List the other economists in the US who have had real experience setting monetary policy outside the FOMC.

            Stan Fischer comes to mind. Who are the others? They should be included on a list of potential candidates. Ordinarily, job experience matters. I think it is a meaningful criterion here, too. If I’m Trump, I’d like someone who is easily confirmed and is not particularly identified with a political camp.

          2. Steven Kopits

            As for going on about market-based visas, I find that ordinary people understand it quickly and intuitively. If you say ‘Costco membership’ or ‘day pass at Disney’, the average person gets it. They understand the right to work in the US has a market value — just as does a day pass at Disney — and they’re willing to make a deal on that basis.

            Economists, though, are thick-headed. And, indeed, academics in general. You know why? Because they are mostly lefties, and they don’t want migrants to pay the market value of entry. They want them to pay less. But if they don’t pay market, then the number of visas issued will be too few, and the black market will continue unabated. And so Menzie is a de facto apologist for the Menzie Counter because the alternative is to grant legitimacy to the market. So he won’t write about it at all. I get that.

            That means Menzie is in effect irrelevant for purposes of the discussion. But it also means that I can finesse Menzie, and indeed, the Democrats more broadly, if the Republicans take up the mantle. Menzie can not write about it, but if the proposal is in circulation, he can’t really oppose it, can he? And that’s equally true for Pelosi. And curiously, I would not be at all surprised if AOC embraced it outright. True, it’s a liberal mechanism mounted under a conservative objective function, but it checks a whole lot of egalitarian boxes. It’s a real policy change — a huge and historic improvement over the current system.

            Yet, it is increasingly becoming a moot point. We’re running out of time. Kushner is introducing new immigration policy on the 9th — so let’s see what’s in that package. Otherwise, it would take, by my estimates, eight months to run a program like this through the electorate and the DC policy establishment. That puts us right into year-end, and I doubt it could be passed in an election year. Just too much risk. So we’re all but cooked at this point. I’m sorry to say it, because so many people’s lives would be affected, but that’t the reality.

            After that, well, today’s CNN poll shows Trump losing to every Democrat except Warren. And losing badly to a couple of them. I personally think the Democratic primary is over, and Biden won it. And I think on the current trajectory, Biden beats Trump, and badly at that.

            And then we’re back to Menzie’s silence. The Democrats, if faced with voting for or against a market solution, will vote for it. How can they vote against it? But would they introduce it? Never, just as Menzie will never write about it voluntarily. So give Biden two terms, and the next window for a market-based solution is 2029. Put that in your Menzie Counter.

            This is hardly praise for conservatives though. By the time Biden leaves office, there will be one or two major amnesties of undocumented immigrants in the US. Why? Because seven million of them have already been here ten years. In ten years, they will have been here twenty years.

            When does an undocumented immigrant become a common law citizen? A woman is usually considered a common law wife after seven to ten years. At some point — and not in the distant future — the balance of opinion will swing towards granting wide-scale amnesties. And they will be granted, and conservatives will get nothing for it, just as they got nothing in 1986. But it won’t be enough to end the black market and won’t be enough to close the border, and this tragic farce of illegal immigration will continue as it has since the US abandoned the Bracero program in 1965.

            That’s the sobering outlook.

          3. Menzie Chinn Post author

            Steven Kopits: Menzie won’t write about some policy proposals that are not going to be implemented; he will write about policy proposals that have a pathway to citizenship (as opposed to permanent gastarbeiter-status). Menzie also recalls the fact that the low value-marginal-product argument was deployed against a certain group of people. That was an economic-optimizing argument as well.

            Call me an idealist. I’d prefer to adhere to the words emblazoned on the Statue of Liberty, as opposed to the “give me your rich, your highly skilled, and models from Slovenia”.

          4. Steven Kopits

            We are not speaking of a fiscal council in the US. My uncle is or has been on several fiscal councils, including Hungary (which he founded and where he later became Orban’s bête noire, as was well documented in The Economist and FT). He has also participated on fiscal councils in Peru and Portugal, if I recall correctly.

            I expressed my doubts about a fiscal council to my uncle in 2005 (over a very nice lunch outside on Freedom Square in Budapest, just beyond the shadow of the national bank). The issue is the demand for good — by which I mean GDP maximizing and fiscally sustainable — policy. There is only grudging demand for it, and trying to impose it through accountability and disclosure will end in tears over time, because politicians are not paid to provide sustainable prosperity. And that’s exactly how it played out in Hungary.

            I sincerely doubt there would be the remotest appetite for a fiscal council in the US. Nor would it solve our problems.

            That’s not what we’re talking about.

            Instead, we are speaking of the FOMC, the equivalent of Hungary’s Monetary Council, on which my uncle served for five years before the founding of the Fiscal Council.

            At this point, Trump needs an easy win. Someone like my uncle would be such a win. I have no idea whether he would even be interested in the job, but if you put together a list of competent macro economists, well-known and respected in the community, with no political baggage, and extensive actual experience setting monetary policy, he would be on that list of perhaps a dozen US citizen economists, all of whom will have served on the monetary policy boards of foreign central banks, eg, Stan Fischer. If you drop the experience criterion, then he’s still a perfectly good candidate, but probably would not be in consideration.

          5. Menzie Chinn Post author

            Steven Kopits: My point is that if Janet Yellen could be dismissed by Mr. Trump because she’s too short, then the mere fact that your uncle advocated something in the past that might be remotely construed as critical of the conduct of fiscal policy under the Trump/McConnell/Ryan regime means he’s got little chance.

          6. Steven Kopits

            “My point is that if Janet Yellen could be dismissed by Mr. Trump because she’s too short, then the mere fact that your uncle advocated something in the past that might be remotely construed as critical of the conduct of fiscal policy under the Trump/McConnell/Ryan regime means he’s got little chance.”

            I am not aware that my uncle has commented on Trumpian policies. I am merely stating that, compared to Caine and Moore, who now have zero chance, he would be a legitimate choice for a president looking to have someone perceived as a legitimate choice and who could be confirmed easily.

            I believe the President’s electoral situation is far more dire than is commonly appreciated. That’s the takeaway from either Biden’s astonishing poll numbers or the CNN poll showing most of the Democrats beating Trump.

            I personally believe that the decisive issue is not ideology or style or even truthfulness. It’s competence. We have a White House that is unable, for years, to fill any number of key posts. The nomination of Caine and Moore, both of whom fell relatively quickly by the wayside, speaks to a lack of competence in choosing nominees. Allowing Barr and Mueller to split — when it was clear to the average layman that a difference between the two men would quickly become a public matter — speaks to matters of competence. The longer the clock ticks, the more competence becomes an issue.

            The President needs to get some of these topics off his plate. Choosing a nominee for the Fed who is non-controversial and can be confirmed easily would be a highly desirable move just now, I think. That’s the point I am making.

          7. Barkley Rosser

            Why is doing it outside of the FOMC such a big deal. Janet Yellen came up through the research shop at the Board of Governors, served as a Governor during the 90s when she helped Greenspan avoid slowing the economy at a crucial point when many were calling for interest rate hikes, served as CEA Chair, and then as President of the second most important district Fed bank, San Francisco, from where she was the first to call the housing bubble, and then was Vice Chair of the Board before becoming Chair.

            Maybe Stan Fischer was more experienced, but hard to find any others. Hey, Steven, the number of people who have worked at central bank outside the US is enormous. Why should your uncle be put on. I mean, sorry, but the Hungarian economy is dinky and unimportant. Sorry, but just stop making a fool of yourself with this. Do you want to join JBH and start spouting conspiracy theories from Q?

          8. Steven Kopits

            “Menzie won’t write about some policy proposals that are not going to be implemented; he will write about policy proposals that have a pathway to citizenship (as opposed to permanent gastarbeiter-status).”

            Right now, we could get a market-based program passed this year. The votes are there. As for a pathway to citizenship, if you have Biden plus the current House and Senate configuration, you might get that. A partial one. But the predation and victimization will go on and on. That’s why I called you an apologist for the Menzie Counter, and you are. You’re willing to trade people dying in the desert and women raped by the ten of thousands for ‘a pathway to citizenship’ for a few. I’m not. And by the way, that pathway is going to apply to probably less than one million people and unlikely to be more than two million. What of the other five million undocumented Hispanics in the country? You’ll let them languish without status at all?

            You want something for nothing. I get that, but it means unnecessary misery for millions, and death for tens of thousands.

            “Menzie also recalls the fact that the low value-marginal-product argument was deployed against a certain group of people. That was an economic-optimizing argument as well.”

            You are profoundly ignorant of what I’m proposing. A key reason for limiting the program to Mexico, Honduras, El Salvador and Guatemala was specifically to avoid commingling H-1B and H-2 class migrants, which we would if we included, say, India or China. Now, might we have leakage from higher income levels in, say, Mexico. Sure. If that’s 50,000 people, then it’s not a major problem, and some Mexican IT guys might earn more in California than they really ought to. I can live with it. If it’s 350,000 people, then it’s a problem. But I don’t want to start sub-segmenting markets until we know what we have, because there’s a trade-off between simplicity and fairness. At this juncture, an MBV is an H2 class — not H-1B — class program, hence the name of H-2M for the associated visa. It’s for low income workers.

            “Call me an idealist. I’d prefer to adhere to the words emblazoned on the Statue of Liberty, as opposed to the “give me your rich, your highly skilled, and models from Slovenia”.”

            I prefer the Hippocratic Oath: “First do no harm.” Prohibitions cause enormous harm.

            I am calling for papering seven million undocumented Hispanics already in the US in the next two years. These are not rich or highly skilled. They are these people:

            You are hoping to paper, in a best case scenario, two million over Biden’s term. Your view is, either they should be given citizenship, or they should remain undocumented. I emphatically disagree.

            Finally, if you want a path for the undocumented here, the most important consideration by far is the ability to close the border. Remember, in 1986, conservatives were promised that amnesty for three million Mexicans would solve the problem. In fact, those three million were completely replaced within seven years, and then the undocumented population went right on to double after that. So if you want amnesty, you had better have a plan to close the border — and you don’t have one, and I do.

            So you’re living in lala land. Obama had both houses for two years, and couldn’t deliver an amnesty. Will Biden? Maybe, but I doubt it will cover more than a quarter to a third of those here. The rest will be out in the cold for a decade and the horrors at the border, and worker exploitation domestically, will go on and on. That’s what you’re proposing. I couldn’t disagree more with that view.

          9. Steven Kopits

            Barkley –

            I have no problem promoting from within the bank. But the President has not taken that route.

            “…the number of people who have worked at central bank outside the US is enormous.” Name three that have worked on the equivalent of the FOMC at a foreign central bank.

          10. Barkley Rosser

            Wow, Steven, you are really going off the deep end here. I am not sure which is more gonzo, your obsession with your visa plan or your obsession with how your uncle should be named a Fed governor.

            Look, I have said that I do not necessarily think your visa plan is bad. Some other countries have done such things, e.g. Canada. But I think you make too much of its virtues, and I simply do not think it should replace every other part of our immigration system. I also think you way overstate its virtues. I also think it is not worthy to ramble on too much about the past failures to fix our immigration system. It is highly politicized and these efforts are difficult. I note that W. Bush made such an effort in conjunction with Teddy Kennedy, but even their sincere and obviously bipartisan effort failed. Things have gotten much more polarized since then.

            In that regard I think you are misguided in thinking that your visa plan would be an obvious and easy proposal to pass through both houses of Congress and get signed by the president. Just exactly who is going to be pushing it? Again, I am not that against your plan as a possible part of our system, but I think you overstate both its virtues as well as the political ease of getting it adopted.

            As for your uncle, here is why he is simply not even going to be considered for the Fed. He is a foreigner with no experience or background in the US. Stan Fischer is from abroad, Zimbabwe to be precise, as well as being on the Central Bank of Israel. But he served for a long time as a professor of economics at MIT, one of the top econ depts in the world, as well as the US. Sorry, but your uncle does not have such experience.

            You want me to name three people who have served on foreign central banks’ FOMCs? How about Goodhart, Trichet, and Duisenberg? The first ran the Bank of England while the latter two ran the European Central Bank. All of that is a lot more impressive than working at the Hungarian central bank. Sorry, Steven, but do please try to get real here.

          11. Menzie Chinn Post author

            Steven Kopits: Indeed, Wim Duisenberg is not a US citizen. He has been dead for 14 years. Signed, Menzie Chinn, ECB Wim Duisenberg fellow, 2017.

          12. Steven Kopits

            My uncle is a US citizen. He has lived in DC since the 1960s. High school in Baltimore. Georgetown for undergrad and PhD, worked at Treasury, 26 years at IMF in DC. Again, if you read his bio, maybe you learn something.

          13. Steven Kopits

            So we’re still at Stan Fischer and dear uncle.

            Barkley, I should have added to being alive is a criterion for membership on the FOMC. Well, it’s custom, anyway.

          14. Barkley Rosser

            OK, Steven, I confess I had not read your uncle’s bio. He probably would be better than Cain or Moore. He has had a respectable career. He might even be able to get through the Senate if Trump were to nominate him.

            However, I can see that Menzie was more up on things here than I was. I did not read your linked bios (could not find them). I just googled him (no Wikipedia entry) and it does seem that what he is known for both from his time at the IMF and also in Hungary is fiscal policy rules. I think Menzie is right that this is not going to go over well with Trump. However, I grant that supporting such things is not a s crazy as being a gold bug.

            There is also the matter that he was born in 1943. Yes, we have people running for president that age, but offhand I think that is pushing it for putting somebody freshly onto the Fed board who has never been part of the Fed system at all. Has he been asking you to push his candidacy because he is bored being retired?

            Frankly, while better than Moore or Cain, I can think of lots of people more qualified than he is who are at least Republicans, if not necessarily ones Trump would like. But, again, I think you are making a fool of yourself pushing your uncle’s candidacy like this, over and over at great length. One, or maybe two, posts on this were quite enough, although I guess I am glad you think well of your uncle.

            As for Canada, they famously had a program whereby foreigners could buy themselves immigration entry by making an $800,000 “loan.” This was directed at Hong Kong Chinese, who moved to Canada, especially Vancouver, in droves. However, eventually this led to a backlash, and that program was ended in 2014. You can check it out.

          15. Steven Kopits

            Menzie –

            You’re correct. I can’t find anything on his citizenship either, but his Hungarian wikipedia site shows he graduated from Georgetown undergrad in 1969 and worked for Treasury for six years in the early ’70s. So it’s probably fair to assume he’s not on a 50 year H-1B visa.

            As for other US economists involved with foreign monetary policy boards, coincidentally here’s one from just yesterday.

            “Pakistan’s Finance Ministry has appointed an IMF economist to head its central bank amid ongoing talks with the international lending agency over a key $8 billion bailout package. The ministry named Reza Baqir as governor of the State Bank of Pakistan late Saturday.”

            His nationality is listed as Pakistani, but he’s been in the US a good twenty years. He could have picked up US permanent residency or citizenship somewhere along the way.

            I imagine there have to be a handful of economists in this bracket: US citizens / permanent residents; US based; experience with monetary policy at a foreign central bank; and in the interest of completeness, alive. Interestingly, most of the candidates would likely be associated with either emerging countries like Pakistan or Sri Lanka, for example; or minor non-EZ OECD countries, notably the Commonwealth countries like Canada or New Zealand; or Eastern European countries, like Hungary for example.

          16. Menzie Chinn Post author

            Steven Kopits: I merely pointed out the absence of a reference to US citizenship because you wrote that all we needed to do was read his bio. I inferred that he was likely a US citizen given his record. However, one could be a longstanding IMF official without obtaining permanent residence.

          17. Steven Kopits

            “As for Canada, they famously had a program whereby foreigners could buy themselves immigration entry by making an $800,000 “loan.” This was directed at Hong Kong Chinese, who moved to Canada, especially Vancouver, in droves. However, eventually this led to a backlash, and that program was ended in 2014. You can check it out.”

            Yes, the US also has a similar visa, the E-2.

            They are, in fact, a kind of precedent for market-based visas, but they are really a niche product. If I am reading the report linked below correctly, about 8,000 such visas are issued annually. Not a big number.

            For H-2M visas, would we be speaking about 25 million visas covering 12 million people per year for about 8 million visa-years in total and representing an increase of about 350,000 over current migrant levels. Very different in animal from an E-2.

        2. Steven Kopits

          “But I think you make too much of [your systems] virtues, and I simply do not think it should replace every other part of our immigration system.”

          Let me quote myself from the white paper, which I have linked for you now four times (try reading it!):

          “The Plan system can exist side by side with incumbent work visa systems, and need not disturb them at all. If the Plan is successful, other work visas can be migrated to the proposed system over time. If it is unsuccessful, the incumbent systems continue to operate without disruption.” p. 5

          “A guest worker program like the proposed H2-M is, of course, not ideal for undocumented migrants who are for practical purposes permanent residents. Nevertheless, since negotiations regarding the status of DACA and Dreamer participants seem at an impasse, market-based visas (MBVs) can serve as a substitute, even if an imperfect one.

          “Providing market-based visas just for incoming migrants is less than ideal. Even assuming the border can be sealed with this approach, the incoming migrants will end up working alongside undocumented immigrants at a ratio of perhaps one legal migrant for every 10-20 undocumented workers. In such an event, either the value of the visa will be low or a migrant who entered on H2-M visa may allow it to lapse to improve his personal economics. Moreover, the American public will remain unsatisfied if 90%+ of the migrant market remains illegal.

          “As a consequence, extending the H2-M program to undocumented migrants already resident in the country makes sense. This would materially wipe out the black market in labor over time and ensure the unsecured southwest border remains closed to economic migrants.” p. 9

          “I also think you way overstate its virtues.”

          It will perform as promised. We have extensive experience with repeals and the economics are absolutely clear. The principal risks pertain to the passage of the bill itself. What might arise from that could be materially different than what’s in the white paper. That’s true.

          “I also think it is not worthy to ramble on too much about the past failures to fix our immigration system.”

          I am the only one, to the best of my knowledge, who has systematically cataloged the predation and victimization related to illegal immigration. (And even I have not looked at domestic exploitation systematically.) That’s in fifty years. So, yes, I think we can have an extended discussion about the evils of a prohibition. We need more of that, not less, and not just with respect to illegal immigration.

          “It is highly politicized and these efforts are difficult. I note that W. Bush made such an effort in conjunction with Teddy Kennedy, but even their sincere and obviously bipartisan effort failed. Things have gotten much more polarized since then.”

          No one ever has proposed a market-based system. Ever. Everything I am doing now, I could have done in 1993. The only reason I am doing it now is because Trump is president. He would get it, and boy, does he ever need it. But I have no in at the White House. If not Trump, then yes, we should have every expectation that the Menzie Counter will go on and on for decades, just as it has for the last fifty years.

          Moreover, this legislation will pass. Because negotiations inevitably devolve into something-for-nothing, per Menzie above, or brute force enforcement, per Republican nativists, there is never a meeting in the middle. But there is actually a huge amount of negotiating space. Current policy has literally no constituents. No one likes the current system. How hard is it to displace a system which all stakeholders hate? Menzie bitches and moans about ‘path to citizenship’, but reality, if seven million Hispanics were offered status and Central American migrants were offered on-demand access to the US labor market, would he come out against it? I sincerely doubt it. Consequently, it really comes down to the Republicans, and I have never lost when given the chance to present. But if you want the conservatives, you’re going to have to go into the field and sell it venue by venue. I relish the opportunity, should it arise.

          So all you have to do is create a system which is, in effect, Pareto optimal for everyone, and a market-based system meets such criteria with flying colors. Illegal immigration really isn’t a hard problem politically speaking. The hard part is getting economists and politicians to think like ordinary citizens.

  5. joseph

    Frankel ties himself in knots trying to call Moore “pro-cyclical” as if he espouses some semblance of economic policy.

    It is quite simple. Moore is pro-Republican, and that is a political position not an economic one. His motivation is to maintain power for Republicans for his favored right-wing policies including racism, sexism, and wealth inequality. His job is to get Trump re-elected to advance these policies. It has nothing to do with “pro-cyclical” theory.

    1. PeakTrader

      Joseph doesn’t realize the large extent of racism, sexism, and wealth inequality within Democrats.

      He gets his info and lack of info from political hounds pretending to be journalists and liberals pretending to be conservatives in Hollywood.

      Anyway, under Trump, it’s amazing watching the media self-destruct, along with some actors. And, what’s with Uncle Joe Biden sniffing women’s hair?

  6. PeakTrader

    That’s not right:

    New York Times – 1993

    “Mr. Clinton and the governors of the Fed are on a collision course, because the central bank wants economic growth to continue its slow takeoff, hoping to keep inflation heading downward even though inflationary pressures are at their lowest level in more than two decades. But Mr. Clinton’s advisers have a quite different goal: far faster economic growth to fulfill his campaign pledge of slashing the nation’s 7.3 percent unemployment rate.

    Federal Reserve governors, in interviews last week, cautioned that if Mr. Clinton hit the growth accelerator too hard he just might repeat the mistakes of the one President he seems least eager to emulate: Jimmy Carter, who the governors say overstimulated the economy and ignited double-digit inflation.

    The Fed’s seven governors are keeping their fingers crossed that Mr. Clinton will steer clear of Mr. Carter’s mistakes.”

    1. PeakTrader

      Of course, no complaints from Obama.

      He got more monetary stimulus than he could ever hope for.

      1. Comrade Willie

        Actually, the US economy needed stimulus in a big way. Supply does not care where demand comes from. We had no demand. A right winger ought to understand this unless he is a complete fraud. Like Paul Ryan, the ultimate fraudster.

        I like this new name. Thanks 2slugbaits!

      2. pgl

        What a dumbass comment even for you. First you complain there was not enough stimulus and now you whine there was too much? Oh wait – you are only following the Trump play book. Never mind!

      3. Barkley Rosser

        Actually, PT, the super stimulative monetary policy ended well before Obama left office. Quantitave easing stopped well before he left.

        What is irresponsible now is Trump wanting to have lower interest rates now just to goose the ecoomy temporarily up for him to get reelected, sort of like Nixon in 1972. if they get lowered now, there will be no policy tool left at all for fighting the next recession when it arrives, given that Trump has alredy blown the fiscal policy tool with his massively irresponsible deficit spenfing.

        But then a racist pond scum like you does not give a damn. What is important is that the “fine person” who has now passed 10,000 lies remain int ehWhite House for another term.

        1. Comrade Willie

          Hey, I know what Trump can also do – bomb Cambodia! That should help with his reelection if messing with the economy doesn’t work.

        2. PeakTrader

          Barkley, shifting your racism to non-racist people still makes you racist. I’m sure, you’ll keep repeating the lies, because that’s what low-life’s like you do.

          Trump’s lies are far less than 1% compared your wacko hypocrites in your media.

          Trump is trying to prevent a recession, in part, to prevent one of your lunatic candidates to run people’s lives, in the ground.

          And, you complain Obama didn’t get enough monetary stimulus!

          1. pgl

            You’re not a racist? Yea right? And Trump did not try to obstruct the Mueller investigation!

          2. Barkley Rosser

            Actuallly, PT, you calling anybody racist is really a joke. No, buster, Menziwe is right. Your hum or is not “racial,” it is stinking racist.

            Just exactly what have I done that has you spouting this drivel, you worthless “fine person”?

            This post seems to have just becoming completely unhinged. Are you about to join JBH in spouting lunatic QAnon conspiracy theories?

          3. PeakTrader

            It seems, the stock market is down, because the Fed didn’t cut rates or slow the run-off of bonds on its balance sheet.

            After 10 years, we haven’t closed the output gap and inflation remains well below 2%.

            Trump may be correct, the Fed is holding us back from stronger economic growth.

          4. PeakTrader

            Barkley, as usual, you don’t know what you’re talking about.

            You’re always calling people racist with no proof of racism.

            Yet, believing minorities need extra help and supporting policies based on skin color are racists beliefs.

            If anyone is racist here, it’s you. You constantly yelling racist doesn’t change that.

          5. Barkley Rosser


            Now you are lying. I never said that Obama “did not get enough monetary stimulus.” I said that the Fed began reducing the stimulus he got before his term was ended. It was and is my opinion that it was reasonable to do so. It is Trump and I guess you that think that there should be super duper monetary stimulus all the time, or at least when Trump is in office.

            My position stated on several occasions is that it was wise of the Fed to get interest rates back up some while the economy is growing and in a strong employment state, as it has been in recent years since before Trump got into office, so as to give the Fed the tools for combating the next recession whenever it arrives. Of course, Trump was madly declaring that the economy was in terrible shape before he got in, a view you spout periodically, but then suddenly became great when he was in.

          6. Barkley Rosser


            I do not “constantly call people racists” here. In fact I have not done so at all to anybody until just now when you started telling racist jokes only to claim that they were “racial.” BS.

            I have also not supported policies specifically directed at minorities. When did I do that? You are just making stuff up because you got caught with your pants down making racist comments. Clean up your act, pond scum.

          7. PeakTrader

            Barkley, when Obama left, the output gap still wasn’t closed.

            Some destruction of potential output took place from the slow “recovery.”

            The Fed raising rates was not political. It was in response to moving closer to lower potential output.

            Trump’s business tax cuts and deregulation, along with optimism, provided a boost in the weak “recovery.”

            And, I never made a racist joke.

            Your statements imply minorities are less capable. You don’t even realize your statements are racist, and you have the nerve to call others racist!

          8. Barkley Rosser

            More lies, pond scum PT. Where did I say minorities are less capable. Other than defending Elizabeth Warren from some of Moses Herzog’s more off the wall remarks about her miniscule Native American ancestry, I have said basically nothing about minorities here. You lie.

            Go ahead and show where I did that. Do so, or STFU, racist pond scum.

            And, sorry, but yes, your joke was racist. Own up to it and deal with it, without making completely baseless accusations of racism against others. My civil rights activity in the 60s got me a file at the FBI. Oh, is that evidence of racism? No, I did not get it for being under investigation for possibly being in the KKK, quite the opposite. Were you involved in the civil rights movement, or did you whine about minorities being treated too favorably?

      1. PeakTrader

        Stephen A MacDonald, the Misery Index fell under Ford, but rose sharply to a high level from 1978 to 1980.

      1. pgl

        OMG! Those comments from Trump were ALMOST as stupid as the gibberish we are getting from JBH and PeakLiar!

        1. Comrade Willie

          For people who like to spout rhetoric about taking responsibility and who like to accuse others of claiming victim-hood, the current crop of Republicans sure to whine about how unfair the world is to them all the time. The poor dears. I find it entertainingly ironic, in a gourmet coffee and craft beer kind of way.

          I’m debating whether to go back to just being Willie again. That way I can have craft beer again and can change out of this orange suit.

      2. Moses Herzog

        Damn, I was over 6 hours late to the party again?!?!?!?! PLease send this link to Menzie. During these difficult speed-bumps of life when we can be overcome by a feeling of melancholia and doom, when the bright lights get shot down from on high, we’re all in this together—Menzie, hold on brother, hold on!!!!

  7. pgl

    PeakTrader just now:

    “After 10 years, we haven’t closed the output gap and inflation remains well below 2%”.

    Which would mean that Trump’s economic policies SUCK! Lord this Russian bot cannot keep his lies straight! Too bad as Trump will have to fire this idiot from the White House spin machine. Which means he will go homeless and have to sleep the streets of Oakland with all those DARK people!

    1. PeakTrader

      Pgl, no, it means you’re ignorant.

      And, what’s wrong with “DARK” people?

      If anyone here is a Russian Bot, it’s you.

      Putin loves your anti Make America Great Again sabotage.

      1. pgl

        God – your replies are getting more and more off point, angry, and stupid. Seek professional help.

    1. Moses Herzog

      This had more to do with many government agencies being lax and absentee in their enforcement of regulations, derivatives securities and/or swaps, and private banks low equity ratios. But then you’d have to readto know shit about that, so……

      Yes, things are “more stable” now. Because President Obama cleaned up the mess that “W” Bush and Hank Paulson left smeared all over the White House toilet seat. With a half-assist from Barney Frank and a few Democrats, who as usual were relegated to “clean up duty” after a 2007–2008 Republican clusterf*ck.

    2. pgl

      Did you give a 3 year old some crayons and this chart came out? No wonder you failed to tell us where this stupid exercise came from!

  8. Bruce Hall

    March 28, 2007
    The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
    The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

    “Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses,” he said.
    “Uncertainties about the economic outlook are unusually high right now,” he said. “These uncertainties require flexible and pragmatic policymaking — nimble is the adjective I used a few weeks ago.”

    December 13, 2007 [from The Christian Science Monitor]
    “The odds of a recession are now above 50 percent,” says Mark Zandi, chief economist at Moody’s “We are right on the edge of a recession in part because of the Fed’s reluctance to reduce interest rates more aggressively.”

    January 13, 2008 [N.Y. Times]
    “The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”

    January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph – UK]:
    The high priestess of US monetarism – a revered figure at the Fed – says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. “The new group at the Fed is not equal to the problem that faces it,” she says, daring to utter a thought that fellow critics mostly utter sotto voce.

    Okay then.

    1. pgl

      You know – Ethan Harris wrote “Ben Bernanke’s FED” which covered what he was thinking and writing during this period. It is excellent which I cannot say about4 your cherry picked quotes here. Highly recommended if you actually really want to understand our economic history and the role the FED played.

      Of course you could continue to just write your uninformed and really stupid criticism if you prefer!

    2. pgl

      “December 13, 2007 [from The Christian Science Monitor]
      “The odds of a recession are now above 50 percent,” says Mark Zandi, chief economist at Moody’s”

      I guess Bruce Hall does not get the irony of quoting who John McCain choose to be his economic adviser. As the crisis was becoming apparent to everyone including Bernanke and even George W. Bush, Bush invited Obama and McCain to join his economic team, Bernanke, and the leadership of both the Senate and the House. Everyone got it except for the Speaker of the House and McCain. McCain was opposing doing ANYTHING to offset the ongoing recession.

      And somehow Bruce Hall blames the FED? What a stupid thread he is putting forth here. But that is standard faire for Bruce Hall!

    3. pgl

      What is Bruce Hall’s little agenda here as he tried to blame the Great Recession on Bernanke’s FED? Yes there were warning signs in late 2007 and early 2008. Bernanke recognized that and the FED was acting well before Bruce Hall and his little cartoon graphs drawn by his 3-year old would suggest. OK Bruce Hall is a master at cherry picking quote as he is incompetent at basic economics. But if the agenda is to suggest the gold bug clown known as Stephen Moore is more qualified to be on the FED. Let me remind you of one of my posts:
      “Is Stephen Moore a Gold Bug?”

      Moore tries to deny that but he is in favor of a commodity price rule. If Bruce Hall had an ounce of integrity (I doubt he does), I would invite him to check my link on FRED’s global commodity price index. It was soaring in 2007 and early 2008 so Moore’s rule would have been to reduce the money supply whereas the FED was smartly doing just the opposite!

      1. Bruce Hall

        pgl, is that whining or crying coming from you? Hard to distinguish. Somehow you think I made up the quotes. But feel free to try to defend the institution that was so hidebound it couldn’t get out of its way… or the economy’s … when necessary. The Fed was operating in hindsight back then.

        1. pgl

          Let me be clear Bruce. I’m not whining. I’m calling you out as an ill informed right wing troll who knows nothing about economics and cares little about what really happened back then. “Hindsight”? I see people using the term a lot when they have no way to address the analysis from their critics. Leave it to you to pull this oft used but stupid canard. No – what I was referring to was things said in real time and it was you that used “hindsight” in a very partisan and dishonest way.

          1. Bruce Hall

            pgl, those are a lot of words you used, but little substance. If you want to sound like anything more than a snarky, vacuous apologist, you might address the actual quotes and issues that criticize the Fed’s actions prior to the “great recession”. Your poor personal attacks against me are the sign of a weak intellect. But I’ll give you another chance:

            Hopefully, the Fed has learned its lesson.

            As to Stephen Moore, I think that issue is now moot. Besides, you might have noticed that I never defended him as a choice for the Fed.

          2. Menzie Chinn Post author

            Bruce Hall: Re: assertions of snark, etc. Just tryin’ to remember who wrote: “pgl, is that whining or crying coming from you?” Do you remember?

  9. Willie

    For now. Looking at the funds rate over a much longer term would be instructive. I don’t know for sure what it would show, but my expectation is that it would show periods of stability, punctuated by periods of volatility, just like everything else under the sun. Rates since the late 1970s have been up and down until recently, when they hit the zero lower bound for a while. Having nowhere to go is one way of getting stability. Rates haven’t gone up very much, but they don’t have to when you start from zero. That seems fairly self-evident.

  10. Not Trampis

    Trump’s two people who he hopes wil be on the Fed would create havoc in financial markets.

    Have they got sway over Powell. Can Powell be bullied like Burns was with Nixon.

    Are there now slpits in the Fed between the Trumpers and the people who understand economics.

    I could go on

    It would be a nightmare

  11. JBH

    Donald Trump’s excellent adventure:

    Two Supreme Court Justices. Another coming. 100 honest new federal district court judges. 55 more awaiting confirmation. Increased Republican control of the Senate to 53-47. Domestic policy success of tax cut. GDP growth rate to date a percentage point above Obama’s. Halfway to 4:3 majority control of Federal Reserve Board. No new wars. Winding down Afghanistan. Getting troops out of Syria. Major foreign policy success of bringing Koreas together. Called out the fake news media, thus slowly awakening America to the full-fledged propaganda and dishonesty of the evening news. Defensively rode out the Russia collusion investigation, and now is on the offense. George S. Patton, Jr. would approve. Trump may well be Patton reincarnated as he was born ½ earth revolution after Patton nearly to the day. Enemies of America off balance and greatly confused by Trump’s classic Art of War style. Massive infrastructure rebuilding project coming. Trump will build that … along with the Wall. Doubled the size of physical structures in Guantanamo to meet coming military tribunal demand for holding space. Sealed cases (indictments) in federal district courts normally 1,000 to 2,000 per year. As of April 30th, 94,399 cases and counting per President’s net approval rating now in positive territory. Rising at trend rate of 1 ppt per month since August 2017 low.

    Every morally-upstanding hard-working patriot in America regardless of race, color, or creed supports you, Mr. President. Continuing to Make America Great Again. An excellent adventure, indeed! </p

    1. Barkley Rosser


      You are seriously deluded. I just checked. According to Mornign Report that does weekly polling, Trump has hit a new low as of a week ago, 39% approve, 57% disapprove. That is an 18% negative net rating, about as bad as he has had ever. Get real.

      Oh, and are you ever going to tell us where you went to grad school? Or was telling us you went to grad school at all just another lie? You tell so many it seems like maybe you and Peak Trader are trying to compete with the arch liar himself President Trump, who has now passed 10,000 in his verified lies since taking office.

      1. noneconomist

        FiveThirtyEight has his AR (considering ALL polls) at 42+%. And we don’t need a discussion of polls to know just how seriously deluded JBH is.

  12. CoRev

    Anyone talking about polls this early is not serious. After 2016 any Democrat believing in presidential polls is delusional.

    1. Barkley Rosser


      Dems should not pay attention to polls, but apparently it is OK for JBH to spout nonexistent ones showing Trump with a positive net rating? Are you just a little bit inconsistent here?

    2. 2slugbaits

      CoRev The national polls in 2016 had it just about right. The popular vote was very close to what the polls predicted. The problem was in the state polls in the upper Midwest…or rather, the lack of state polling data in the upper Midwest.
      The current polls might not be too relevant in terms of which Democrat is likely to emerge as the nominee, but we have quite a bit of solid polling data telling us what Trump’s share of the popular vote is likely to be. In over two years Trump has struggled to rise above the low 40s at a time when the economy is doing well. Trump has a very narrow trading range.

    3. noneconomist

      JBH has Trump’s approval rating “in positive territory.” FiveThirtyEight—with numbers from all polls on the subject— has it at 42.3%. That’s considerably below below JBH’s assertion of “positive territory.” Are you saying JBH is not serious? Or that Five ThirtyEight has miscalculated?

      1. 2slugbaits

        noneconomist Trump’s approval is in positive territory; i.e., it’s greater than zero. He would only be in negative territory if his approval rating fell below zero, and he’s not quite there yet. But give it time.

    4. JBH

      CoRev: I agree with you about political poll data in general. 538 missed last time around by a country mile But this is hard data from the Rasmussen daily presidential poll. Data downloadable. Many claim Rasmussen is right biased. Those many are of course on the left. Yet if bias is constant across time, that bias matters little to my point, that the president’s ratings have been improving steadily for going on two years now. What I provided readers with in my post was a thinly veiled template overlay of the 13 Keys. The 13 Keys methodology correctly predicted every presidential election since its inception, and I so used it in doing so over all this time. It predicted that the challenging party candidate would win the last go-’round. At this point per the 13 Keys, Trump is a shoo-in for a second term. The wild card is what the outing of thousands of deep state players will do to the stock market and consumer spending. Reading between the lines, I believe this is what Trump’s jawboning of the Fed is all about. He’s farsighted enough to want to take out insurance against an exogenous shock to the economy. Of course he wants to win reelection. But he could do that given what the 13 Keys are saying right now. Whereas a serious dent in the 4-year growth rate and a recession in election year would make it a much closer call. The proof will be in how and when these sealed indictments get opened. One way or another, opening them before the election or not will be the all-telling mark of the Trump presidency. Everything up until then will have been dressing for the main event.

      1. 2slugbaits

        JBH Rasmussen did come the closest in predicting Clinton’s winning the 2016 popular vote; however, Rasmussen was by far and away the worst among 32 polls in predicting the 2018 House races. Right before the 2018 election Rasmussen was predicting a “red wave” that would sweep the GOP to victory. Rasmussen had the GOP winning the national popular House vote by 1 percentage point. The Democrats ended up winning by 8.6 percentage points. That’s almost a 10 point error, which was easily the worst among 32 different polls taken shortly before the 2018 election.

        And thanks for the chuckle with those sealed indictment claims. You can go back to reading all about the coming Rapture.

    1. Barkley Rosser

      Yes, I thought it might be Rasmussen, if there were any. It does indeed “tilt right” and as 2Slug notes, so far so as to be pretty far off a lot of the time. Yeah, it has him net positive, but it is funny that even Rasmussen has never had him have an actual majority of the population approve of him, although he has hit 50% a few times with them as he is doing in the latest one.

      Of course now we have a new entry, the 13 keys, whatever they are. Their problem is that they almost certainly do not take account of the fact that Trump’s massive lying and racism have an enormous chunk of the population hating his guts. Did this Rasmussen poll take account of intensity? Sorry, but the super Trump supporters, the ones drooling and shouting at his rallies about the press being the enemy of the people and lock up Hillary, are way outnumbered by those who think it is Trump who should be locked up.

      1. noneconomist

        Of course we went from “President’s approval rating now in positive territory” to a song and dance that includes 13 Keys to mining the hard data of Rasmussen to the usual deep state nonsense. I’m getting the feeling that the B in JBH is for “Blowhard.”

  13. Barkley Rosser

    I just checked. Since May 1, there have been 10 polls rating approval of Trump. One, Rasmussen, has him in net positive territory. The other 9 have him in net negative territory, ranging from -4% to -18%.

    Sorry, folks, but thinking that Trump is in net positive territory is suffering from Trump Derangement Syndrome, as is believing lots of his lies. Yes, those who are deranged are those who believe and repeat lies, not those who point out facts. Deal with it, all you sufferers from TDS spouting off here, with JBH and his sealed indictments and magic 13 keys (and nonexistent grad school) the most deranged.

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