Donald Trump failed spectacularly this year when he tried to appoint a circus clown and a pizza baron to the Fed board, but it wasn’t for lack of trying.
The president vigorously made the case for famous idiot Stephen Moore, both on Twitter and in remarks the media. He even roped in Larry Kudlow to help push the envelope, which is only fair considering it was Larry who made the mistake of showing Trump one of Moore’s Op-Eds over lunch one day in March, prompting the president to consider Stephen for one of the open seats.
Ultimately, Moore was forced to withdraw from consideration after six weeks of non-stop ridicule and media scrutiny. Moore’s long history of supply-side sock-puppetry, carelessness with facts and reputation as a famously idiotic charlatan made him a perfect fit for the Trump administration, but for lawmakers, Stephen’s nomination to the Fed was a bridge too far.
Reports about a long-standing debt to the IRS, a dispute with his ex-wife over unpaid alimony and the unearthing of a series of controversial comments about child labor and women eventually convinced Trump that Moore’s nomination wasn’t tenable.
Moore dropped out of the hunt less than two weeks after Herman Cain, whose nomination was doomed from the beginning primarily because he’s Herman Cain.
Hilariously, the combined credibility deficit of Kudlow, Moore and Trump was so large that it made Cain look marginally “qualified” by comparison, a ridiculous situation befitting of the ridiculous times we’re forced to live in, but, ultimately, Herman simply had too much political baggage.
Fast forward exactly two months from Moore’s unceremonious throwing in of the towel and Trump took to Twitter to announce his latest picks, this time betraying exactly zero enthusiasm. To wit:
I am pleased to announce that it is my intention to nominate Christopher Waller, Ph. D., Executive VP and Director of Research, Federal Reserve Bank of St. Louis, Missouri, to be on the board of the Federal Reserve. Prior to his current position, Christopher served as a professor and Chair of Economics at Notre Dame.
I am pleased to announce that it is my intention to nominate Judy Shelton, Ph. D., U.S. Executive Dir, European Bank of Reconstruction & Development to be on the board of the Federal Reserve. Judy is a Founding Member of the board of directors of Empower America and has served on the board of directors of Hilton Hotels.
Clearly, Trump is not as excited about Waller and Shelton as he was Moore and Cain, which is understandable because, again, Moore is a circus clown, Cain is a pizza salesman and Trump is a six-year-old.
The Waller choice looks like a clear acknowledgement of Jim Bullard’s dovish leanings and, more specifically, his dissent in favor of a rate cut at the June meeting. Waller is Jim’s director of research. “Waller has obviously been working closely with Bullard for years, I suspect they see eye to eye”, FTN Financial’s Christopher Low told Bloomberg TV.
As for Shelton, Judy is something of a nut, but not nearly the same caliber of nut as Stephen Moore, so we’ve got that going for us. Shelton is currently executive director for the European Bank for Reconstruction and Development, which means her confirmation process should go smoothly. But since being tipped as a possible Trump Fed nominee, she’s made no secret of her unorthodox views on everything from the Fed’s dual mandate to the desirability of a new gold standard wherein nations would peg their currencies to a reference point, which she imagines might be a convertible gold-backed bond.
Asked by Bloomberg about this in May, Shelton remarked that while “people talk about sand or oil or water… gold is more suitable”. It wasn’t immediately clear which “people” Shelton was referring to, given that the list of those advocating for pegging currencies to fixed quantities of “sand” is presumably even shorter than Trump’s list of potential Fed nominees.
Shelton is close with Kudlow and supports the Trump administration on trade and domestic economic policy. “Thank goodness he is sticking it out, I’ve always thought we had to fight fire with fire with China”, she told the Financial Times, in a recent interview.
Somewhat alarmingly, Shelton isn’t even sure there should be a Fed. “How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate?”, she wondered, in the same FT chat. “The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?”, she went on to ask.
I don’t know the answer to that, but by virtue of not being nominated for a seat on the Fed board, I don’t have to. Judy, on the other hand, might want to start thinking very seriously about the issue.
Shelton harbors a grandiose vision for the future of money. “Her big dream is a new Bretton Woods-style conference to reset the international monetary system, replacing the current regime”, FT explained in May.
“If it takes place at Mar-a-Lago that would be great”, Judy mused.
The interview was conducted at the Trump International Hotel in Washington.