Fed and Circuses

by on October 30, 2017 at 12:31 pm in Current Affairs, Political Science | Permalink

That is my latest Bloomberg column, here is one paragraph:

Enter Trump, master impresario and provocateur. By thinking out loud about the post and the candidates so much, polling both a group of assembled senators and TV anchor Lou Dobbs, and by teasing the audience with the final pick, Trump is removing that elevated air from the Fed. I am reminded not only of today’s reality TV, but also the older show “The Dating Game” and the 1987 Arnold Schwarzenegger movie “The Running Man.” Whether we are consciously aware of the shift in our perspective or not, we are likely to think of the future Fed with less of that mysterious aura surrounding it. It will instead seem like the result of an undignified competition for victory and status.

…he’ll let social media and the public debate do his dirty work of politicization for him, with perhaps a jab of his own thrown in from Twitter. Because the Fed will no longer be above the fray.

Do read the whole thing, and by the way here is Arnie’s 1973 appearance on The Dating Game.

1 Tin Man October 30, 2017 at 12:39 pm

“The Fed has been a kind of Mount Olympus or high priestly caste. Perhaps the Fed has not always used that influence for the better (recall Greenspan’s easy money decision in 2001, or the lead-up to the financial crisis), but this arrangement is better than the president and Congress calling more of the shots.”

Straussian reading: Democracy has failed, technocratic dictatorship is the future, and you’re gonna love it.

2 Anonymous October 30, 2017 at 12:54 pm

An oligarchy is most often not a technocracy.

3 Dzhaughn October 30, 2017 at 12:40 pm

Perhaps Tr*mp is all about removing the air of credibility from government. Including himself as President. A quasi-libertarian position?

4 Sam the Sham October 30, 2017 at 1:49 pm

Only Caligula could elevate a horse to a Senator… or did he lower the senate to that of a horse?

5 chuck martel October 30, 2017 at 12:45 pm

“…we are likely to think of the future Fed with less of that mysterious aura surrounding it.”

Similar to the extravagant ceremonial rites of the Catholic church being reformed to the plain exercises of the Protestant/Puritan sects.

6 QE2 October 31, 2017 at 5:03 am

My dear chuck, have you ever seen a British coronation? A royal funeral?

7 Dick the Butcher October 30, 2017 at 12:49 pm

“Trump is removing that elevated air from the Fed.” Are you referring to his not re-nominating Yellen? I think the Fed accomplished that feat many years ago.

Regarding “politicization” that ship went down the ways many years ago.

To be fair, today everything is politicized.

No! Wait! It’s not politicization if you like the nominee and when Democrats politicize the Fed.

It appears that guess Trump trashing is a form of media “tenure” – job security.

8 Dick the Butcher October 30, 2017 at 1:13 pm

“Trump is removing that elevated air from the Fed.”

You wrote that as if it were a bad thing.

Thinking about the movie, “The Wizard of Oz.” I see a clique of unelected, unsupervised Ivy League PhD’s secretly pushing and pulling levers just like the Oz wizard in the green suit behind the green curtain.

For you academics, Trump and his voters believe da Fed wields too much coercion over American economic life.


9 A Truth Seeker October 30, 2017 at 12:53 pm

America has gone to the dogs (at least, it is the translation Google offers to “degringolar”). The most influential ideologies niw are Trumpian fascism and Bernie’s communism (Clintonian cronism per si doesn’t count as an ideology qua ideology). America became Weimar Germany, where a group of bizarre conservatives try to hold the power against the attack of radical leftists. Is Trump the Hindemburg of our days (the Marshall/president, not the doomed airship)? What will come after Trump? What rough beast, its hour come round at last, slouches towards Bethlehem to be born. Only time will tell.

10 Brian Donohue October 30, 2017 at 1:06 pm

That’s a weird column. Maybe we should wait and see who he nominates before writing our awesome takedown.

I mean, Gorscuh seems like a pretty good choice, and that happened in The Age of It’s All About Trump.

11 Anonymous October 31, 2017 at 10:20 am

Elect a reality tv show, get a reality tv show.

12 msgkings October 31, 2017 at 12:26 pm

This. Whether you are for or against Trump, there should be no surprise what a clowny media-frenzied narcissistic spectacle his presidency is.

13 Joel E November 1, 2017 at 8:31 am


This is just Trump once again saying “Look at the birdie!” while he does what he wants. I’m beginning to think, perhaps counter-intuitively, that Trump is in fact not a proud man, at least not in the way we have typically thought of it. He is quite happy to bloviate and rage and tweet inanities if it occupies the attention of those who pay attention to such things.

14 rayward October 30, 2017 at 1:10 pm

We believe in institutions because they support order and stability, the alternative being chaos. It’s true that I have been critical of an economic policy that relies on rising asset prices for economic growth, not as a criticism of the Fed but an acknowledgment that the Fed is the only institution that is sufficiently independent of politics that it has been willing to implement the only measures it has authority to implement in order to achieve its dual mandate of full employment and stable prices. Without the Fed and its independence and credibility, we would most likely be deep in another economic depression. I read this morning that Powell is the front-runner (ahead of Taylor). But whomever Trump chooses, the circus is diminishing the Fed and its credibility.

15 mike October 30, 2017 at 2:37 pm

Institutions are a chimera. They represent the constructions and operations of individuals who create them to advance their own interests and alter them as those interests change. At some point there were enough powerful individuals with an interest in a central bank to make its establishment possible. When a sufficient amount of influence is available to modify or replace it that will occur. Institutions exist at the convenience of men.

16 Hadur October 30, 2017 at 1:14 pm

What if the Fed’s independence is more a function of hierarchies and organization within the federal government, rather than mystery surrounding the nomination process? Whatever the end result of Trump’s fed chair selection process, the new Fed chair will enjoy the same budget independence, lack of oversight, and unilateral powers as all of their predecessors.

17 David Pinto October 30, 2017 at 1:35 pm

I happened on The Running Man the other day when I was looking for something to watch. It’s free on Vudu right now. I did not remember that it was set in 2017.

One thing I like about that old style hero movie compared to today is the lack of self doubt. Ben Richards never goes through any self imposed angst. He’s the good guy, he acts like the good guy, he takes out the bad guys, and never looks back.

18 clamence October 30, 2017 at 2:26 pm

Also “Climbing For Dollars” is a legitimately good idea for a TV show


19 dwb October 30, 2017 at 1:41 pm

Only elitist economists think that the Fed is above the fray and immune to politics.

Monetary policy is the domain of Congress. Says so in the constitution. Congress has delegated the authority to the Fed. But the Fed is only a few (more?) mistakes away from having it taking away. In some sense, appointing Taylor (who no doubt would impose strict rules) would be a recognition that the Fed has made a lot of mistakes, and that its discretion needs to be removed.

Ironic in my mind that conservative economists who believe in the wisdom of markets think that the Fed chair should be a technocrat. The Fed chair has enough power, it probably should be its own elected position.

So, no, the Fed chair is not “above the fray.”

20 BC October 30, 2017 at 5:51 pm

Congress gives the Fed its mandate — full employment and price stability. How the Fed achieves that mandate is indeed a technocratic function. An analogy would be that only Congress can declare war (theoretically) and the President is Commander-in-Chief. Appointing generals, though, should really be an apolitical process. Civilian government can apply political constraints — don’t target civilians, constraints on spending, constraints on risk to soldiers, etc. It would be a mistake, though, to elect generals, micromanage military strategy, or to turn generals into political figures.

21 Nigel October 30, 2017 at 1:52 pm

Whether we are consciously aware of the shift in our perspective or not, we are likely to think of the future Fed with less of that mysterious aura surrounding it. It will instead seem like the result of an undignified competition for victory and status…

Or perhaps it will seem like a bizarre aberration, like the Trump presidency itself ?
One can hope.

22 derek October 30, 2017 at 5:09 pm

Nope. 2008 showed the Fed to be essentially a sugar daddy to bail out the kids who crashed their Ferrari. Their third one.

Institutions are valuable when they are forced to justify their existence. Institutions hate to have to justify their existence.

23 rayward October 30, 2017 at 1:56 pm

Okay, what’s the connection between Cowen’s Bloomberg column and Arnold Schwarzenegger’s appearance on the dating game? I assume it’s the similarity of choosing the new Fed chair and choosing a date. I appreciated the diversity of the picks. Not for Fed chair, but for Arnold’s date: a lifeguard, an accounting major, and a playboy bunny. If only Trump had those choices for Fed chair.

24 Nimrod October 30, 2017 at 2:00 pm

OT: since unz is down, I thought I’d link this most current year article ever:

“A Muslim feminist activist in France who has accused prominent Islamic scholar Tariq Ramadan of violent rape detailed her claims in a hard-hitting interview Monday.

The leading Oxford professor, whose grandfather founded Egypt’s Muslim Brotherhood Islamist movement, is facing investigations in France for the alleged rape of two women.

Ramadan has denied the accusations as a “campaign of lies launched by my adversaries”.

Henda Ayari, a former Muslim fundamentalist who says Ramadan raped her in a Paris hotel room in 2012, said she was encouraged to speak out against him publicly by the “Me Too” campaign sweeping the world.”


25 Chip October 30, 2017 at 5:36 pm

Whether we are consciously aware of the shift in our perspective or not, we are likely to think of future prominent Islamic scholars with less of that mysterious aura surrounding them.

26 FE October 30, 2017 at 2:10 pm

“[P]olling both an assembled group of senators and TV anchor Lou Dobbs…” Whoa, back up. He’s seeking the advice and consent of the Senate? Clearly a man with no regard for our constitutional traditions. The way Obama let Summers and Yellen duke it out was so much classier. https://www.washingtonpost.com/business/economy/summers-yellen-allies-wage-behind-the-scenes-effort-to-win-federal-reserve-nod/2013/08/20/5d7a3dfa-09a2-11e3-8974-f97ab3b3c677_story.html

27 Bob October 30, 2017 at 2:34 pm

“The Fed has been a kind of Mount Olympus or high priestly caste. Perhaps the Fed has not always used that influence for the better (recall Greenspan’s easy money decision in 2001, or the lead-up to the financial crisis), but this arrangement is better than the president and Congress calling more of the shots.”

The Fed, the presidency, and Congress have consistently been in favor of asset price inflation. There’s no indication that this will change any time soon.

28 Anon October 30, 2017 at 3:39 pm

Nice pun , to rhyme with ” Bread and Circuses.”

29 Gil October 30, 2017 at 4:00 pm

Maybe in order for folks to understand what it looks like when the fed (and the FBI) are “above the fray” and why that is a really good thing, they need to see what it looks like when these institutions become political.

I think these institutions are probably strong enough to stay far enough above the fray for us to get by. But things have really changed when we even have to ask the question.

I thought it was a great column.

30 Lanigram October 30, 2017 at 8:21 pm

Will there be no end to this mood-affiliated wailing and gnashing of teeth.

If only HRC had won, we could have a trans of color leading the Fed. The bathrooms would be put into good order.

It couldn’t be any worse than the great recession.

31 msgkings October 31, 2017 at 12:28 pm

Your side did it for 8 years under Obama, so get used to it. God I’m so sick of the partisanship of the last 20+ years

32 Barkley Rosser October 30, 2017 at 8:23 pm

The record of relative non-politicization of the past is given by Reagan reappointing Carter’s Dem appointment of Volcker, then Clinton reappointing GOP appointee Greenspan (originally appointed by Reagan and reappointed by G.W.H. Bush), then Obama reappointing GOP appointee Bernanke and even appointing a Republican during his admin, one Jerome Powell.

Everybody from The Economist to even Lou Dobbs supports continuing the tradition and reappointing Yellen, who seems to have done an excellent job, one of the best Fed chairs ever, but Trump wants to “make his mark,” so reports have her out and it down to two Republicans, Powell and Taylor. Whatever.

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