We’re now three months into the new administration and more than a year on from the start of a powerful late-cycle monetary stimulus (otherwise described as ‘the Yellen Put’ in which all planned rate rises for 2016 were halted) by the Federal Reserve. But, we haven’t heard a whimper from the Republicans over the Fed’s extremely timid efforts at ending it’s ultra-easy-money policy. They have been focused instead on Ryancare and the border adjustment tax. Meanwhile in the marketplace the Fed-watchers are back to business as usual – deciphering every word and dot plot change from the leading monetary bureaucrats still at their posts.
Counter-factual historians can wonder how different and better the situation might now be if conservatives and nationalists had begun the Trump era with efforts to rein in the Fed. Instead, what we got was an aborted repeal-and-replace of Obamacare and now a planned ‘tax reform’ that still appears far off on the horizon. Yes, any monetary reform bill would have faced most probably a filibuster in the Senate, but the president has the power to at least point us in the direction of sound money by filling the empty chairs in the Fed and nominating successors-in-waiting to Professors Fischer and Yellen.
This post was published at Ludwig von Mises Institute on April 5, 2017.
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