![\"fed\"](\"http:\/\/www.veteransnewsnow.com\/wp-content\/uploads\/2016\/11\/fed.jpg\")
<\/p>\nby Mike Whitney<\/a><\/strong><\/p>\n UNZ Review<\/a><\/p>\n In Donald Trump\u2019s first four years as president, he will not only choose three judges for the Supreme Court, he\u2019ll also pick five of the seven members on the Fed Board of Governors. It would be impossible to overstate the effect this is going to have on the nation\u2019s economic future. With both houses of Congress firmly in the GOP\u2019s grip, we could see the most powerful central bank in the world transformed into a purely political institution that follows the diktats of one man.<\/strong><\/p>\n Critics may think that is a vast improvement over the present situation in which the Fed conceals its allegiance to the giant Wall Street investment banks behind a public relations cloud of \u201cindependence\u201d, but the idea of one man controlling the price of the world\u2019s reserve currency and, thus, the price of financial assets and commodities across the globe, is equally disturbing.<\/p>\n Already we have seen how the Fed\u2019s determination to enrich its constituents has resulted in one titanic asset-price bubble after the other. Imagine if that power was entrusted to just one individual who could be tempted to use that authority to shape economic events in a way that enhanced and perpetuated his own political power. Even so, after seven years of a policy-induced Depression that has increased inequality to levels not seen since the Gilded Age, we think it is high-time that the president use his power to choose the members who will bring the bank back under government control.<\/p>\n Here\u2019s more background from the LA Times:<\/p>\n \u201cDonald Trump leveled unprecedented criticism at the Federal Reserve during the campaign<\/strong>. As president, he could get to quickly reshape it \u2026 Trump will have the opportunity to appoint as many as five new members to the seven-person Fed Board of Governors during his first year and a half in office. That includes a new chairperson to replace Janet L. Yellen, whose term expires in early 2018\u2026<\/em><\/p>\n Trump hammered Yellen in the final months of the (presidential) campaign, accusing her of keeping the benchmark rate \u201cartificially low\u201d to help fellow Democrats President Obama and Hillary Clinton.<\/em><\/p>\n \u201cI think she is very political and to a certain extent, I think she should be ashamed of herself.\u201d Trump told CNBC in mid-September. At the first presidential debate two weeks later, he declared that \u201cthe Fed is being more political than Hillary Clinton.\u201d<\/em><\/p>\n And Trump\u2019s final campaign video included images of the Fed and Yellen, casting her has part of the \u201cpolitical establishment\u201d that has \u201cbled our country dry.\u201d\u2026<\/em><\/p>\n \u201cNever before have we had an incoming president not just criticize how Fed policy has been executed \u2026 but accuse the Fed chair of undermining the institution by being in political cahoots with his opponent and the White House,\u201d (James) Pethokoukis said. \u201cWe\u2019re off the grid into uncharted territory.\u201d\u2026 (Trump hammered the Federal Reserve as a candidate. As president, he could quickly reshape it<\/a>, LA Times)<\/em><\/p>\n We can safely assume that the Supreme Court is going to reflect Trump\u2019s corporate-friendly laissez-faire attitude towards big business, the question is: What can we expect from the Central Bank once it becomes the White House\u2019s flunky?<\/p>\n That\u2019s hard to say, mainly because Trump frequently espouses two seemingly contradictory views at the same time.<\/p>\n What do I mean by that?<\/strong><\/p>\n I mean, that on the one hand, Trump is a big cheerleader for non-interventionist, free market capitalism, but on the other, he is a committed rightwing populist who seems to thrive on the support of the masses, which is clear when he thinks like this:<\/p>\n \u201cYou know who gets hurt the most (by Yellen\u2019s easy money policies)? The people that went through 40 years of their life and saved a hundred dollars every week (in the bank)\u2026..They worked all their lives to save and now what happens is they\u2019re being forced into an inflated stock market and at some point they\u2019ll get wiped out.\u201d<\/em><\/p>\n So, how will Trump\u2019s populism shape his views on who should or should not be a member of the Fed?<\/p>\n We don\u2019t know, but we do know that monetary policy is going to change dramatically from the last eight years of unproductive experimentation because Trump has surrounded himself with industry leaders who ascribe to an entirely different philosophy than the one currently in practice.<\/p>\n Check this out from monetary analyst Tommy Behnke:<\/p>\n \u201cSome of today\u2019s most reasonable mainstream economic voices are included in (Trump\u2019s) inner circle.<\/strong> These names include David Malpass of Encima Global, who co-signed a letter with Jim Grant opposing the Fed\u2019s \u201cinflationary\u201d and \u201cdistortive\u201d quantitative easing program; John Paulson of Paulson & Co., who made billions from shorting the housing market before the Great Recession; Andy Beal, a self-described \u201clibertarian kind of guy\u201d who blames the Fed for the credit crisis; and the Heritage Foundation\u2019s Stephen Moore, who told CSIN in 2012 that he is a \u201cvery severe critic\u201d of the Fed\u2019s \u201cincredibly easy-money policies of the past decade.\u201d<\/em><\/p>\n While none of Trump\u2019s economic advisers are by any means Austrians, they are far more hawkish than most of Presidents Bush and Obama\u2019s past economic advisers.\u201d (Why President Trump Will Fumigate the Fed<\/a>, Mises Institute)<\/em><\/p>\n There\u2019s no doubt that the distributional effects of the Fed\u2019s policies helped catapult Trump into the White House. Millions of working class Americans who are sick of the monetary \u201ctrickle down\u201d policies and the job-eviscerating trade agreements found a way to express their frustration in the candidacy of Donald Trump. Their collective rage suddenly exploded at the ballotbox on November 8 pushing the real estate tycoon to a victory over opponent Clinton in what many are calling the political upset of the century.<\/p>\n Trump tapped into that wellspring of anger and frustration by denouncing the \u201cfailed and corrupt political establishment\u201d in which both Hillary Clinton and the Fed feature prominently.<\/p>\n Now he\u2019s going to take it to the next level by launching a surprise attack on the Fed which will leave Wall Street stripped of its power-agency and left to fend for itself. This is a blurb from the New York Times:<\/p>\n \u201cA core view of many Trump advisers is that the extended period of emergency policy settings has promoted a bubble in the stock market, depressed the incomes of savers, scared the public and encouraged capital misallocation,\u201d said Ian Shepherdson, chief economist at Pantheon Macroeconomics. \u201cRight now, these are minority views on the F.O.M.C., but Trump appointees are likely to shift the needle.\u201d (With Trump in Power, the Fed Gets Ready for a Reckoning<\/a>, New York Times)<\/em><\/p>\n They\u2019re going to \u201cshift the needle\u201d alright, then they\u2019re going to drive it through the serpent\u2019s heart. The Fed has had every opportunity to show where its loyalties lie and it has sided with Wall Street every single time. There\u2019s a reason why 95 percent of all income gains in the last eight years have gone to the one percent, while working people have struggled just to put food on the table. Just like there\u2019s a reason why stocks have tripled in value in the last eight years while wages and incomes have stagnated and the economy has slowed to a crawl. It\u2019s the policy, stupid.<\/p>\n The Fed has created the conditions for a permanent Depression so it can provide infinite cheap money to its crooked reprobate friends on Wall Street. Now their little party is coming to an end.<\/p>\n Boo fucking hoo.<\/p>\n![\"fedds_dees\"](\"http:\/\/www.veteransnewsnow.com\/wp-content\/uploads\/2016\/11\/fedds_dees.jpg\")
<\/p>\n![\"obama-hopeless\"](\"http:\/\/www.veteransnewsnow.com\/wp-content\/uploads\/2016\/11\/Obama-Hopeless.jpg\")
Trump, who is no fan of the Fed\u2019s bond buying program called QE, has admitted he thinks stocks are in a bubble suggesting that he will probably take a more conservative approach to monetary policy. Even so, that doesn\u2019t change the fact he\u2019s going to have to opportunity to personally select the FOMC\u2019s ruling majority, which means that he\u2019ll be in a position to demand their loyalty as a condition of their hiring. Does anyone seriously doubt that Trump would rather control the Fed himself than keep it in the clutches of the cutthroat Wall Street banks?<\/p>\n![\"hillary-clinton-wall-street-600x280\"](\"http:\/\/www.veteransnewsnow.com\/wp-content\/uploads\/2016\/11\/hillary-clinton-wall-street-600x280.jpg\")
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