Radford Neal comments on Economics Roundup #2

[Radford Neal]

I’m confused by your comments on Federal Reserve independence.

First, you have:

The Orange Man is Bad, and his plan to attack Federal Reserve independence is bad, even for him. This is not something we want to be messing with.

So, it’s important that the Fed have the independence to make policy decisions in the best interest of the economy, without being influenced by political considerations? And you presumably think they have the competence and integrity to do that?

Then you say:

Also, if I was a presidential candidate running against the incumbent in a time when the Fed has to make highly unclear decisions on interest rates, I would not want to be very clearly and publicly threatening their independence.

So you think that the Fed will modify their policy decisions to help juice the economy in the short term, and thereby help defeat Trump, if they think that Trump might threaten their power? As long as things are unclear enough that it’s not obvious that they’re acting for political rather than economic reasons?

So maybe not so high on the integrity scale after all?

[AnthonyC]

I took the second point to mean, “You do not want to put your political reputation and stabding on the line to take control of a difficult decision where there is not an obvious right choice and you are not the expert and even the right choice will make a lot of people unhappy.”