Before we talk about the candidates for the Fed Chair position, let’s discuss for a moment the problem with Chair Powell’s current thinking. Right now, he’s setting interest rate policy based on Trump’s tariff negotiating positions. In other words, rather than waiting until he sees what the final actual tariffs may be, Powell is making his decisions based on tariffs that change every week, sometimes every day. (Don’t ever underestimate Trump’s skills at throwing off his opponents in a negotiation!)
Historically, tariffs have not created inflation. Recall that tariffs were used by this country (and other nations) for hundreds of years – without excess inflation. (In fact, throughout history except during the oil crisis, the problem was deflation – a reduction in asset values – caused by too tight money, caused by the Fed and the government.) Trump’s current tariffs are temporary – until other countries come to their senses and sign a permanent agreement on tariffs (or no tariffs). These temporary tariffs will cause companies and consumers to slow or even pause their purchases, causing a slowdown in the economy and lower GDP, not inflation!
Once permanent tariffs are in place, then you would also NOT see inflation caused by tariffs, instead you will see substitution, i.e., corporations that buy products overseas will substitute countries – they’ll buy from low-tariff countries, shifting away from high-tariff countries. This just shows what an idiot Powell is. It’s common sense, and if he ever got out of his political D.C. bubble and met with and talked to real people and companies, he’d find that they are not going to just keep buying from the same suppliers if their tariffs are high. They’ve already begun the process of looking at alternatives and preparing to buy from other suppliers in other countries. This will result in little inflationary impact from the tariffs that do go in place.
(That’s also a good negotiating position for Trump to take with other nations – play one off another – and the last man standing, i.e. the last one to sign an agreement, gets the high tariffs!)
Besides, what if many of these countries lower their tariffs and there ends up being no or low tariffs? Then Powell would have set his interest rate policy based upon a ‘what-if’ instead of based upon reality. Again, the Fed should focus on supporting a strong dollar, low interest rates, and a strong economy. That’s it!
Candidates for the Job
The Wall Street Journal had an interesting comparison of candidates for the position of Federal Reserve Bank chair. Personally, I don’t think either would be appropriate. Based on the Journal’s statements, both candidates seem to have changed their positions over the last few months to lobby for trying to get the chairmanship position. One has softened, even reversed, his position on lowering interest rates. He was against it, but now he’s for it. The other previously was all about being having an independent Fed, as in the chair should not have to report to the president, but now has softened that position. (No doubt they would change the mind back to their prior positions once appointed.)
I think Trump learned his lesson from his first term when the corporate leaders he selected for jobs didn’t do what he wanted, but instead thought that they were there to do what they wanted. When candidates alter their positions in a few months leading up to an election or an appointment, then you know that they lack the fundamental, foundational principles that should be concreted in their core being. When they make a 180º change, then they’re really just lobbying and they’ll say whatever they have to to get the job, which also tells you that they want the job too much.
Here’re the criteria I would use in selecting a new chair. First, I’d stay away from Wall Street and instead focus on Main Street candidates. Someone from middle America who isn’t living in a bubble. Second, the individual needs to publicly state or sign a pledge that they support and believe in democracy, that they will uphold the constitution, which also includes specifically recognizing that the chair position is an appointment and serves at the pleasure of the president, which also means that the chair answers to the president. And they should acknowledge that if the president wants to remove them from office, he can do so. Every appointment by the president is an appointment that can be revoked at any time the president chooses. Anything else is mutiny.
Remember the Fed was created by Congress around 1913 and signed into law by the president. It is a creation of Congress. The idea that it’s independent is horse-hockey. What if someday Congress wanted to alter the structure of the Fed, or even eliminate it? Then the Fed chairman starts bantering about that they’re “independent of Congress”. Of course, the Fed is not independent. It answers to the president and it answers to Congress because the appointment has to be confirmed by the Senate, and Senate confirmation can be revoked.
In fact, further, I’d say that anybody the president appoints as Fed chair should agree in advance that he will meet with and report to the president once a month – to talk about the economy, interest rate policy, national debt, and all matters. The Fed should be coordinating its policy with the administration – otherwise, you have what we just had – a federal government that was widely spending trillions (flooding the markets with capital), while the Fed was tightening the money supply by raising interest rates. These two policy approaches directly conflicted, and look at the mess we got.
Lastly, I think Trump deserves to know explicitly that the new Fed chair will lower interest rates. Think about it. Keeping interest rates this high is jeopardizing the solvency of our government (due to the almost $1 trillion annually in interest costs), jeopardizes the entire business industry due to the higher refinancing rates, and jeopardizes the entire banking and insurance industries (along with Fannie Mae and Freddie Mac) due to the risk of loan defaults. The Fed and the Treasury Department have already caused the bankruptcy of three banks.
New York Mayor’s Race
Mamdani in NY wants to try out communism in New York City. Good luck with that. The only problem is, when it fails, it’ll be New York state or the American taxpayers that have to bail him (the city) out. He wants city owned grocery stores where he sells products at wholesale cost, which, ahh, duh, means that the city taxpayers have to pay for the building, warehousing and distribution, labor (which of course will be unionized and would work only banker’s hours), and all the other costs – all to be paid for by those same city taxpayers he’s trying to help. So taxes on the middle class and upper income earners will skyrocket.
Then, unless he builds a Berlin Wall around the city, those middle and upper taxpayers will flee to adjacent states or even to Florida, where they won’t be taxed. This will leave a much larger tax burden on the remaining citizens, putting more pressure on them. This process continues until, like Detroit, the city goes broke.
As in the Soviet Union, the bread will be low cost, but there won’t be any available, because it’ll get bought out, and then all the other grocery stores in the city will go broke as consumers flock to the city-owned grocery stores. And then the next phase will be that as the city grocery stores run out of everything (since the prices will be lower), you won’t be able to buy groceries anywhere else because those stores will have closed. Then there will be a shortage of food and produce. Naturally, the final phase will be another government program to resolve the crisis that Mamdani himself will have created.
Likewise with housing. The local and state governments getting into affordable housing here in Wisconsin has created a disaster. Developers of ‘work force’ housing get rich on their upfront cash fees, while they solicit low income residents of Chicago to move here to occupy the housing – housing that was intended to help waiters and retail clerks here in Wisconsin. Not to mention the crime at those properties. (That’s a fact.) So, Mamdani’s desire to provide free housing to NY residents will again attract more low-income families to NYC. You see how this works? If it’s free, more low income non-residents will move to NYC and the crisis will become worse. Then the mayor will need to spend even more money, come up with another government program, and make an even bigger mess of the situation.
If it’s free or below cost, people will want it, and more people will want it, and the appetite for the product never dies, but the supply does (die) because its the government running the show and they’re not real good at engaging in economic based decision making or timely customer service.
What if the Wisconsin government were to decide open up convenience stores. What do you think would happen to Kwik Trip? They would all be forced out of business. Then the government, having the monopoly, would proceed to f things up because of their incompetence at trying to run convenience stores and – the lack of a profit motive – for both the store, the manager, and the employees.
The last thing I want is the same people who run the Dept of Motor Vehicles and dish out driver’s licenses, running my local grocery store, or my housing, or anything else.
Wisconsin Right Now is a news organization focused on covering the news from a conservative point of view, in particular on politics and policy issues through analysis and opinions, and is protected by the first amendment of the United States constitution. WRN does not make endorsements of candidates or direct readers to vote for or against any candidate or issue. On October 18 and November 23, 2023 Donald Trump tweeted out on Trump’s Truth Social account T. Wall’s October 6th column on Trump’s property valuations. T. Wall has appeared on Fox News, Jesse Waters Show on Fox, Newsmax, CBS, NBC, Spectrum News 1, USA Today, X.com, YouTube, and numerous Madison and Milwaukee news programs and local newspapers (Wisconsin State Journal, Capital Times, Middleton Review, Middleton Times Tribune, and Milwaukee Journal Sentinel and a dozen other Wisconsin papers) and previously wrote a column for InBusiness magazine and the Middleton Times Tribune for five years each. T. Wall holds a degree from the UW in economics and an M.S. in real estate analysis and valuation and his full time career is as a real estate developer. Disclaimer: The opinions of the writer are not necessarily those of this publication or the left!
