“Top US Economist Stephen Moore: … Powell Should Resign”

Look no further for the source of Mr. Trump’s economic proclivities. The entire article title: “Top US Economist Stephen Moore: Time for New Pilot at the Fed – Jerome Powell’s Policies Are Disastrous – Powell Should Resign” (12/19):


The Fed has been way too tight. They made a major blunder three months ago with raising the rates. It’s caused a deflation in commodity prices. And I will say this, David, if the Fed raises interest rates tomorrow they should all be fired for economic malpractice.

That quote of Stephen Moore was from December 19th. Then, on Sunday (12/23), Moore spoke on a radio show, as recounted by NewsMax:


After meeting with President Trump and economist Art Laffer last week, Moore told host John Catsimatidis that Trump is considering firing Powell as chairman of the Fed.


“He was infuriated that the Fed, through very tight monetary policy, reversed the economic expansion,” Moore told Catsimatidis. …

…”Donald Trump wanted to drain the swamp,” Moore told Catsimatidis. “Well, John, the Fed is the swamp. The big question now that’s been debated about is whether Donald Trump has the authority as president to replace the Federal Reserve Chairman.
“The law says he can replace the Federal Reserve Chairman for cause. I would say, well, the cause is that he’s wrecking our economy.”

It’s always useful to consider where the Taylor Rule says the Fed should be positioning the Fed funds rate. From the Atlanta Fed’s Taylor Rule utility:

Figure 1: Effective Fed funds rate (blue), implied Fed funds rate assuming real natural rate at 2% (red), assuming real natural rate estimated by Laubach-Williams method-1 sided (teal), both assuming 2% PCE y/y inflation target, equal weights on gaps, and no smoothing. Dashed line at Trump quote, and orange shading denoting Trump administration. Source: Atlanta Fed utility, author’s calculations.

In other words, the “no smoothing” versions of the Taylor rule imply tighter — not looser — policies.

A final quote from Stephen Moore writing a mere three years ago helps us understand the malleable nature of Mr. Moore’s economic conclusions. From Forbes:


The Fed is expected to bid farewell to seven years of its zero interest rate policy. Wall Street is petrified because investors have become hyper-dependent on this zero rate scheme and the floods of dollars injected into the economy just as an addict craves crack cocaine. But the high from easy money, just as with any hallucinogenic drug, has been temporary at best and likely damaging in the longer run.


Liberals tend to believe that money creation is a stimulant to the economy and stock market. That’s only true, if at all, in the very short run. Over time, prices and output economy-wide adjust to the larger volume of money. The printing press, alas, is not a job creator. If it were, Mexico and Argentina would be the richest countries in the world, and people would be lining up at the U.S. southwest border to get out rather than to get in. …


Why hasn’t easy money pumped up the economy? The answer is that Fed money creation can’t reverse the effects of bad tax and regulatory policy. We now operate under a policy regime in Washington that punishes investment, risk taking and profits through high tax rates, strangulating regulations–especially aimed at our energy producers, our investor class, our banks, our drug companies and our health care providers. …

My advice: never trust a person who uses the word “strangulating” in a non-medical context.

47 thoughts on ““Top US Economist Stephen Moore: … Powell Should Resign””

  1. pgl

    Gotta love this hyperbole:

    “The Fed is expected to bid farewell to seven years of its zero interest rate policy. Wall Street is petrified because investors have become hyper-dependent on this zero rate scheme and the floods of dollars injected into the economy just as an addict craves crack cocaine. But the high from easy money, just as with any hallucinogenic drug, has been temporary at best and likely damaging in the longer run.”

    I suspect Moore is on crack. “hallucinogenic drug”? What a babbling idiot!

  2. pgl

    Migrant caravan: Detained Guatemalan boy dies at Mexico-US border

    https://www.bbc.com/news/world-us-canada-46682354

    “An eight-year-old boy from Guatemala has died in US government custody, immigration authorities say. A Texas congressman named the child as Felipe Alonzo-Gomez. It is the second time this month an immigrant child has died while being detained after crossing the US-Mexico border. In the previous instance, seven-year-old Jakelin Caal, also from Guatemala, died just hours after having been taken into custody. Texan congressman Joaquin Castro called for a congressional investigation into the boy’s death.”

    And once again CBP refuses to tell us much about why this boy died. Wonder why.

    1. Hans

      From the WDC Compost:
      “The boy and his father were taken to a holding facility at the Highway 70 checkpoint, and the child was given the medications about 5 p.m. About 7 p.m., the boy vomited. His father declined further medical assistance, CBP said.”

      2. pgl

        Hans cherry picks totally out of context some short snippet about something CBP claimed in the middle of a long ordeal. I found this snippet by Googlint the alleged quote as Hans was so incredibly dishonest he could not be bothered to provide any source or link. Read for yourselves folks:

        http://sandhillsexpress.com/abc_national/what-we-know-about-8yearold-boys-time-in-border-patrol-custody-before-his-death-abcid36142933/

        Hey Hans – we have had a long history of some rightwing troll named PeakTrader pulling the same stunt. You may think you are clever. But I bet most people have figured out: (a) you are a rightwing troll; (b) you are dishonest. (c) you are really incredibly lazy; and (d) you are really stupid.

        I just hope for your sake some gal thinks you are good looking.

  5. joseph

    Trump should get some credit for doing more to reduce wealth inequality in that last few weeks than any other president in a decade.

  6. 2slugbaits

    I never heard anyone refer to Stephen Moore as a “Top US Economist”, so I was curious about this thegatewaypundit.com website. Oh my. It brags about being cited by intellectual heavyweights such as Rush Limbaugh, Sean Hannity, Mark Levin and Drudge.

      1. 2slugbaits

        Instead of reading those inane comments from knuckle draggers who never opened an econ textbook, try checking out some of those ads on Breitbart. What do those ads tell us about the demographics of people who read Breitbart? I am reminded of the analysis of Google searches for certain kinds of products identified with insecure males (Viagra, penis enlargement, erectile dysfunction, etc.) and the propensity of that media market to vote for Trump.
        https://www.motherjones.com/kevin-drum/2018/11/insecure-men-were-a-big-trump-demographic-in-2016/

        1. pgl

          I read that the other day. The close was interesting:

          “Although the authors found that insecure men might like Trump, they held no grudge against women running for office: “Notably, fragile masculinity was unrelated to support for female candidates in the 2018 elections.” That means we can feel free to nominate anyone we want. It just needs to be someone who knows how to talk to insecure men.”

          OK – no more women nominees from the State of New York. Look – New York City has its share of insecure losers. Not sure if they voted for Trump or not but when they try to make a move on a New York City chic, the rejections are BRUTAL! Now this may be an appropriate way to diss an insecure loser but it ain’t exactly going to get out the vote!

      1. noneconomist

        It has made life easier and more predictable. Yesterday, buoyed by Trump’s visit to the troops in Iraq, (the first ever to Iraq by any President), the Dow had its best day ever.
        Today, the Democrats are working hard to erase those gains. They just can’t stomach prosperity. Schumer’s wall comments have done it again.

        1. pgl

          I heard that the stock market boomed yesterday when folks at the CEA assured them that the dump Powell movement was going no where. Of course I was listening to those left leaning socialists on the regular media. I’m sure Breitbart and Fox and Friends has an entirely different explanation.

        2. Grunschev

          “We have always been at war with Eastasia.” – This is from Orwell’s 1984, with seems to be a very popular book with Trump supporters.
          “Trump is the first president to visit Iraq.” – Unless you count all the other times presidents have visited Iraq. You know, like Bush and Obama.
          “The Dow had its best day ever.” – This is true. It very nearly covered the loss of the previous … two days. Yup, up is down and down is up. Democrats can’t handle prosperity. Somebody should take a look at some long-term stock market charts. Under Bush, the market lost half its value. Not once, but twice. Under Obama, it tripled. Under Trump, we’ve now had the worst year in the market since… the last Republican president.

          1. noneconomist

            Today, Democrats drove down the market until Trump rescued it. Or, maybe, according to Nobel economist Moore, the real problem is the Fed, which doesn’t understand markets or booming economies like he and Trump do.
            No doubt too that God carefully watches the market and, because he so wants Trump to succeed, will never allow a Depression to occur like he did under Obama.

          2. noneconomist

            Looks like Democrats didn’t do too much damage to the Dow today. Likely because Americans are so appreciative of the 10% raise Trump personally gave to our troops.

  8. joseph

    Donald Trump just stood up in front of soldiers in Iraq and flat out lied in their faces. Trump said he’s giving the troops a 10% raise. Actually they’re receiving a 2.6% raise. Trump said the troops haven’t gotten a raise in more than 10 years. But the truth is they’ve received a raise every year since 2008, including the largest raise of 3.4% in 2010 under Obama.

    Respect the troops, my a**. Republicans stand by silent as their chosen leader disrespects and lies to the troops.

    Republicans have a lot to answer to for foisting this psychopathic abomination on the country.

    1. pgl

      I was also offended by his comments re ISIS. Talking about how they were DOMINANT when Trump first took the office but are not so dominant now. Yea right – Trump all by himself took down the dominant ISIS. Oh my bone spurs are acting up.

    3. pgl

      Here are the facts about this:
      https://militarypay.defense.gov/Pay/Basic-Pay/AnnualPayRaise/
      Annual military pay raises are linked to the increase in private sector wages, as measured by the Employment Cost Index (ECI). In the 1990’s, the annual military pay raise was capped at one-half percent below private-sector growth unless specifically granted a larger increase by Congress. The FY2000 National Defense Authorization Act directed that pay raises for 2000 through 2006 would automatically be one-half percent above the private-sector wage increases. Pay raises beginning in 2007 are equal to the increase in the ECI. Pay raises may exceed these automatic levels if authorized and funded by Congress.
      The basic pay raises since 2007:
      1 January 2007: 2.2%
      1 April 2007: 0.5%
      1 January 2008: 3.5%
      1 January 2009: 3.9%
      1 January 2010: 3.4%
      1 January 2011: 1.4%
      1 January 2012: 1.6%
      1 January 2013: 1.7%
      1 January 2014: 1.0%
      1 January 2015: 1.0%
      1 January 2016: 1.3%
      1 January 2017: 2.1%
      1 January 2018: 2.4%

    4. pgl

      The news has finally got onto what Joseph let us know about Trump’s lying to the troops about pay. I take a different take noting that nominal pay increases that barely keep pace with inflation over time does not mean higher real compensation:

      https://econospeak.blogspot.com/2018/12/real-military-pay.html

      And yes I appeal to Robert Lucas’s 1972 island economy forerunner of New Classical economics. A fancy way of saying our troops are not as stupid as Trump hopes they are. A Commander in Chief who insults our troops this way needs to be removed from office.

  9. Julian Silk

    Dear Menzie,

    I don’t think you or anyone else should trust someone who uses “strangulating” in any context.

    Julian

  10. Not Trampis

    I did not know Stephen Moore was an economist. this confirms it.

    how come in the land of believers sport is played on Christmas but in secular Australia it is not. A complete disgrace

    1. pgl

      Legend has it that Moore took economics at George Mason where the faculty was foolish enough to grant him an M.A. He did have the title of “chief economist” when he worked for the Heritage Foundation. But we should not get hung up on titles and such. If someone is competent at economic analysis – great. Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.

      1. Hans

        “Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.”

        And what was Lord Keyne(s) babble in his “famous” General Theory;
        followed worldwide by stunned and thinking leftest economists?

        Then of course, PGL, is the village intellectual, because of his aforementioned post simply
        degrades and humiliates the human character. The apex of leftest values.

        1. pgl

          leftest? Try learning to spell.

          BTW – I have read the right wing claims from Human Events as to how evil the General Theory is. Some of the stupidest rants on the internet.

      2. bill

        “Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.”

        And what was Lord Keyne(s) babble in his “famous” General Theory;
        followed worldwide by stunned and thinking leftest economists?

        Then of course, PGL, is the village intellectual, because of his aforementioned post simply
        degrades and humiliates the human character. The apex of leftest values.

        CHINN, I see your Stalinist purge has taken place! What took you so long for your
        echo camber.

        1. pgl

          Bill is not only Hans’s Minnie Me. He just cuts and paste Han’s nonsense complete with spelling errors. Leftest? Learn to spell guys!

      3. Tom

        “Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.”

        And what was Lord Keyne(s) babble in his “famous” General Theory;
        followed worldwide by stunned and thinking leftest economists?

        Then of course, PGL, is the village intellectual, because of his aforementioned post simply
        degrades and humiliates the human character. The apex of leftest values.

      4. tom

        “Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.”

        And what was Lord Keyne(s) babble in his “famous” General Theory;
        followed worldwide by stunned and thinking leftest economists?

        Then of course, PGL, is the village intellectual, because of his aforementioned post simply
        degrades and humiliates the human character. The apex of leftest values.

        Double CHINN, is a censoring Stalinist. I see the latest progam has taken place. Maoist CHINN
        must prefer an echo camber.

        1. Menzie Chinn Post author

          bill aka hans: It’s not you but me… you’ll excuse me for taking 7 hours off to sleep before approving your (inane) comments. None of your comments were censored. Just because you’re paranoid doesn’t mean we’re all out to get you.

          1. pgl

            I bet this trio regularly reads Human Events.

            http://humanevents.com/2005/05/31/ten-most-harmful-books-of-the-19th-and-20th-centuries/

            You can tell no one at Human Events even read Keynes based on their little review of The General Theory:

            “The book is a recipe for ever-expanding government. When the business cycle threatens a contraction of industry, and thus of jobs, he argued, the government should run up deficits, borrowing and spending money to spur economic activity. FDR adopted the idea as U.S. policy, and the U.S. government now has a $2.6-trillion annual budget and an $8-trillion dollar debt.”

            Not only intellectual garbage but beyond stupid. But this is what you get when you read this right wing rag.

        2. noneconomist

          Looks like we’re in for a special edition of Hansbill and Ted’s Excellent Economics Adventure.
          Hansbill: So– krates said “The only true wisdom consists is knowing that you know nothing.”
          Ted; That’s us, dude.

  13. Tom

    “Then again Moore’s writings are so bad than even conservative economists realize Moore is a village idiot.”

    And what was Lord Keyne(s) babble in his “famous” General Theory;
    followed worldwide by stunned and thinking leftest economists?

    Then of course, PGL, is the village intellectual, because of his aforementioned post simply
    degrades and humiliates the human character. The apex of leftest values.

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