On Thursday, supply-side economist Stephen Moore withdrew his nomination for the Federal Reserve Board of Governors after weeks of scathing criticism from Democrats, the media, and even several GOP senators.
The last straw for the Moore nomination seems to be a column he wrote in the early 2000’s that many deemed disparaging to women. But long before that writing was unearthed, the effort was well underway to sink the nomination.
“Steve’s got a long history of needling the left. Steve’s got a long history of talking up tax cuts and things like that that members of the media didn’t like. Part of it was that and part of it was, ‘Hey, wait a second. This is a guy who sat next to us forever. What’s he doing on the Fed now?” said John Tamny, director of the Center for Economic Freedom at FreedomWorks.
Tamny says Moore was looked down upon for not have the educational pedigree we usually see in such nominations.
“There was a little bit of snobbery going on, that you have to have a certain degree to be at the Fed, when in fact a lot of people there aren’t economists. Not to mention, if you are an economist (at the Fed) your track record for predictions is one of being spectacularly wrong for decades. What were they so afraid of of having Steve on the Fed board? I don’t get it,” said Tamny.
Tamny also dismisses suggestions that Moore was too political for the post, noting that every figure who passes through the Federal Reserve has a political agenda of one kind or another.
But another reason for Moore’s rough reception is his very different approach to the Fed compared to how the board usually operates.
“People at the Fed, almost to a man and woman, believe that economic growth causes inflation. There’s no evidence supporting that. History is very clear that economic growth is driven by investment and investment is all about falling prices.
“But that’s the consensus view inside the Fed and suddenly you’d have this combative person coming in there and questioning what is accepted wisdom. I don’t think they like that very much,” said Tamny.
While Tamny strongly supported Moore’s nomination, he does not share Moore’s view that Fed tried to – or even could – stunt economic growth through interest rate hikes.
“I think this notion that the Fed fiddling around with interest rates could have some sort of major economic impact thoroughly insults the U.S. economy. The idea that we’re reliant on what a bunch of drones do in a globalized world of credit just isn’t a serious one,” said Tamny.
While Tamny believes the Fed has a minimal impact on the economy, he still wants the bureaucrats to just leave the economy alone.
“What the Fed can do best is to do its studies that no one reads and intervene as little as possible because it cannot help the economy. At best it can hurt,” said Tamny.
Listen to the full podcast for more discussion on Moore withdrawing his nomination, including why Senate Republicans were not willing stand up for him.