Reuters has recently published an article about potential contenders for the nomination to replace Janet Yellen as Chairperson of the Federal Reserve Board.
It’s interesting that on Reuters’ short list of candidates is one guy who is probably the least qualified of any possible candidate, and who tops the Dajeeps list of deplorables – Mr. Kevin Warsh –
the corrupt, righty-tighty opportunist a visiting fellow from the Hoover Institution who just won’t go away.
For former Wall Street banker Kevin Warsh, who served as a Fed governor at the time of the financial crisis, the economic recovery is characterized by bloated central bank balance sheets, financial risks, and a hidebound institution that needs new approaches.
While he did not refer to a potential candidacy for the Fed Chair job, Warsh’s speech struck some in the audience as an audition. Warsh and Stanford University economics professor John Taylor have emerged as potential frontrunners to succeed Yellen whose term ends in February 2018.
Warsh, a Wall Street lawyer by training rather than one of the Phd economists who have come to dominate monetary policy in recent years, called for “fresh air from the real side of the economy, fresh air from the markets,” in revamping the Fed.
He says the central bank has left the public confused, lacks a long-term strategy, and is too beholden to short-term stock market and other events.
Warsh, who was consulted frequently by former chair Ben Bernanke when at the Fed, was speaking at the Hoover Institution, a center of conservative thinking on monetary policy that has in recent years tried to amp up its profile in the Washington policy debate.
Along with being close to Bernanke, Warsh has family connections to President Donald Trump, and is on one of the president’s White House advisory panels – advantages some feel put him on any short list for consideration.
It’s also interesting to note that Reuters highlights Mr. Warsh’s relationship with Ben Bernanke, leaving the impression that Warsh is close to Bernanke and was his adviser during the financial crisis, when in all reality Warsh betrayed that relationship, if it existed at all, for his own needs. Even if true, that there was some sort of close relationship there, if part of the reason the Chairman Bernanke was not the same Bernanke from the past, and Warsh was his adviser, then it probably isn’t such a plus for the job.
In the past, I have searched for papers either written or co-written by Mr. Warsh and, if any such papers exist, they are not publicly available. So there really isn’t much to look at in terms of discovering what Mr. Warsh believes about economic policy, monetary policy, etc…, except for an op-ed he wrote for the Wall Street Journal a few years ago in which he apologized to America for QE and suggested that the Fed should pull a soft coup on Congress. So I suppose that if the op-ed doesn’t speak enough to the lack of qualification for the job, making assumptions about monetary policy by looking only at the M in MV=PY, perhaps subversion will count as an extra strike.
I have not been pleased with the performance of Chair Yellen. But I am not foolish when it comes to measuring the performance of Yellen vs. a potential Chairman Warsh. Mediocre economic performance is better than severe recession and bankruptcy laced with unabashed bureaucratic corruption any day of the week and twice on Sunday, and if put to a choice, I’d stick with Yellen.
Nobody really knows what Trump will do about the Fed Chair nomination. All I can do is hope that if he chooses to replace Yellen, ultimately nominates a qualified individual at the very least, and takes a pass on Warsh whose only public statements made about the subject matter couldn’t have been more profoundly wrong.