The Next Fed Chair

We note ongoing discussions concerning the replacement of the current Chair of the Federal Reserve, Jerome Powell. While Mr. Powell was perhaps the most competent policymaker chosen by an Administration noted for it's lack of competence,  there are reasons to consider replacing him. In the face of novel crises like COVID, Global Warming and the George Floyd protests, we believe a new perspective is required. 

We encourage Mr. Biden to consider replacing Mr. Powell with Roger Ferguson, retiring CEO of TIAA-CREF.

As we noted, in 2006, Mr. Ferguson was directly responsible for saving the US economy in the days following 9/11. See: https://drive.google.com/file/d/1Dwun8vPy1-9_U0Bfh7ELkeWkRZSFTZ43/view?usp=sharing

Mr. Ferguson will be better able to deal with the growing economic and social costs of racism.

The Fed has consistently been wrong about, well, Black people. In response to a question from Congresswoman Joyce Beatty (OH) about Black unemployment, former Fed Chair Janet Yellen indicated that "the Fed's concerns about inflation limit its ability to address high African-American unemployment." Ms. Yellen went on to state that.. “there really isn’t anything directly the Federal Reserve can do to affect the structure of unemployment across groups, And unfortunately, it’s long been the case that African-American unemployment rates tend to be higher than those on average in the nation as a whole.” The problem with her analysis is that it is wrong. While it is true to say that the Fed has limited tools, that is not the same thing as having no tools. 

The Fed has also been wrong about digital currency. In testimony to the HFSC, current Chair Powell stated that he feels digital currency poses special challenges to the Fed’s dual mandate of low inflation and maximum employment. We think the Fed is attempting to diminish crypto markets  by tying their objections to the Fed's social mission (maximum employment) and placing crypto in the category of having negative social return. We know this is likely false.

Now is the time to prevent the next crisis, not quibble about providing help. Mr. Ferguson will be better able to do so.

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