Stephen Moore Must Not be Confirmed

Wiser voices than mine have said as much.

Nevertheless, I don’t think economists have done a great job of explaining why Stephen Moore is such a bad pick to serve on the Federal Reserve Board.

The Fed is perhaps the closest part of government that I can think of right now that has some measure of independence. Unlike, say, former Attorney General Jeff Sessions, Federal Reserve members do not serve at the pleasure of the president. The Federal Reserve Act strictly limits the ability of the president to remove board members thusly:

Upon the expiration of the term of any appointive member of the Federal Reserve Board in office on the date of enactment of the Banking Act of 1935, the President shall fix the term of the successor to such member at not to exceed fourteen years, as designated by the President at the time of nomination, but in such manner as to provide for the expiration of the term of not more than one member in any two-year period, and thereafter each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.

Note that these are very long terms to be served and removal otherwise must be “for cause.” This restriction apparently came as a bitter revelation to Trump.

It’s not quite tenure, but it’s close.


There is good reason for this. Generally, government should be accountable, but monetary policy should be well-insulated from accountability. If interest rates were set directly by Congress or the president, they would do so in a manner that optimized the case that they were doing a good job to their constituents rather than in a way that would enhance the long-term health of our economic system. Good monetary policy necessitates doing difficult, unpopular things. Even without accountability, doing unpopular things is hard. When you can be fired for it, it is neigh impossible.

In return, the Board must promise to do a good job. It must make its decisions in a fair manner to maximize our long-term economic prospects even if that might hurt a favored political interest.

It is this requirement that makes Stephen Moore comically unqualified.

Through Trump’s term, Moore has repeatedly claimed we are experiencing deflation.

Trump reportedly wants to put Stephen Moore on the Fed, which Moore says should loosen monetary policy because the Fed policy is causing "deflation." We do NOT actually have deflation right now.

— Catherine Rampell (@crampell) March 22, 2019

He is factually wrong. But more disturbing is that he argued the exact opposite during the Obama administration:

Funnily enough, when we DID have deflation — during the depths of the financial crisis — he argued for tighter monetary policy, suggesting that the Fed was about to stoke hyperinflation.
Of course, a Democrat was in the White House then. https://t.co/osuYfChdAQ pic.twitter.com/fP5Vpz7UXF

— Catherine Rampell (@crampell) March 22, 2019

Moore is a political operative who happened to get some sort of economics degree from somewhere. If the Senate unwisely decides to confirm him, he will work to boost short-term, nominal growth prior to an election even if it risks making an impending recession worse. If Trump fails to win reelection, he will then punitively work to trigger a recession.

At least, he has given every indication that he would operate in such a way.