The new Fed chairman?

[stpioc]

Could there be a worse choice?

No qualifications and being flagrantly wrong

Back in the younger and more innocent days of January, 2006, then-President George W. Bush decided to appoint a nice-looking and well-off young man named Kevin Warsh to a seat on the Federal Reserve Board of Governors that he had no apparent qualification for. At just 35 years old, Warsh had no background in monetary policy or economics at all. He was, instead, a Wall Street lawyer working primarily on mergers and acquisitions who in 2002 had come to Washington to work in the White House on financial regulation. Or, rather, given that this was the Bush administration in the mid-aughts he came to work on financial de-regulation. And he headed to the Fed with, presumably, the same mandate — to cut through the red tape that was overburdening America’s financial system and unleash the forces of financial innovation.

A couple of years after that, of course, it turned out that these deregulatory impulses had completely destroyed the economy of the United States of America and, indeed, of much of the rest of the world. Congress and the Federal Reserve staunched the bleeding with bailouts, and then Ben Bernanke, later followed by Janet Yellen, nursed the American policy back to health with a program of low interest rates. But Warsh spent the crisis years being flagrantly wrong about the macroeconomic outlook in both public and private remarks. He excoriated the Bernanke Fed for being too aggressive in its efforts to stabilize the economy and too blind to the risks of inflation. He lauded the disastrous tenure of Jean-Claude Trichet at the European Central Bank, and eventually left the Fed to join a chorus of outside conservative critics who lambasted Bernanke and Janet Yellen for pursuing loose money policies that would allegedly debase the dollar and send prices spiraling upward (didn’t happen)..

Meet Kevin Warsh, the man Trump may tap to wreck the American economy - Vox

A generous interpretation of Warsh’s record would be that he is a shrewd, cynical partisan operator who believed that weak economic performance under Obama would boost the fortunes of the Republican Party and therefore he would advocate for anti-stimulative policies. Putting a well-networked party hack in charge as Fed chair would mark a throwback to what are now broadly considered to be the “bad old days” of how Richard Nixon ran monetary policy, but it wouldn’t be the first time Trump appeared to be using Nixon as a model.

A more troubling interpretation, however, would be that Warsh means exactly what he says. That would help explain why he was so paranoid about inflation even back during the waning days of the Bush administration, when the poor performance of the economy doubtless ended up helping Democrats secure their landslide down ballot wins in November 2008. And it would explain why in January of this year he published a Wall Street Journal op-ed on monetary issues that Tim Duy characterized as “so riddled with errors and misperceptions that it is hard to believe he was actually a governor.”

Meet Kevin Warsh, the man Trump may tap to wreck the American economy - Vox

And here there is a variety of experts weighing in, pretty embarrassingly so..

Uniquely qualified for the Republican era though:

• Having no prior qualifications
  
• Having strong convictions nevertheless
  
• Which are unmovable irrespective of the evidence.
  

[stpioc]

From Krugman, needless to say he isn't a fan of Warsh either, and with good reasons:

When the financial crisis struck in 2008, it was essential that the Fed engage in aggressive monetary expansion... But congressional leaders fought these necessary measures every step of the way. Most notably, Paul Ryan, who gets his ideas about monetary policy from Ayn Rand novels, berated Bernanke, claiming that his policies would debase the dollar and lead to runaway inflation. ... And it goes more or less without saying that none of the people who kept warning that the Fed would cause terrible inflation have admitted having been wrong, or learned anything from the experience. 

What all this means is that if congressional Republicans play a large role in selecting the next Fed chair, they’ll insist that it be someone who has been wrong about everything for the past decade. Kevin Warsh, a former Fed governor widely considered a favorite for the job, certainly fits the bill. He warned about inflation in the midst of global economic collapse; he argued vigorously against doing anything, monetary or other, to fight 10 percent unemployment; he warned that the United States was about to turn into Greece, Greece I tell you. And he has shown no hint of being chastened by the failure of events to play out the way he expected.