A year and a half before the election, and a little less than a year before the first primary, the Wall Street Journal is already proclaiming that “Another Biden-Trump Presidential Race in 2024 Looks More Likely.”
Doesn’t that get you excited?
It’s pretty sad that out of more than 260 million adults the best the two parties could come up with is the current president, octogenarian Joe Biden, and his predecessor, Donald Trump, who is 76.
And advanced age isn’t their only drawback: both are, shall we say, not very popular.
Yet only a few people, so far, seem to have the guts to stand up and challenge them—no serious Democrats so far and only a handful of Republicans. But it’s early yet, so let’s not lose hope that others will step into the ring.
As Winston Churchill is credited with saying, “Democracy is the worst form of government, except for all the others.”
There are good reasons why the best and brightest people shun politics and have no desire to be president. Politics played at that level is an ugly sport. Few smart and ambitious people want to put themselves or their families through that. It’s a lot more lucrative and less painful to be CEO of a large corporation than to sully your name in politics. It’s also a lot easier to look yourself in the mirror every morning.
If you are willing to mix it up and eventually succeed into the Oval Office, you often have to do things you may not be proud of. In the spirit of “compromise,” you often have to lie and make empty promises—or worse—in order to get a fraction of what you really wanted. So it’s understandable why the government often botches things—we never get the best people or the best policies, so problems just seem to fester and get worse.
Which brings me to my point and how it applies to the Federal Reserve.
While ostensibly independent from the rest of the government, the Fed has no similar obstacles to making good policy.
You certainly can’t get to be Fed chair or some other senior position at the Fed without a little behind-the-scenes politicking either on your own or from influential friends and allies, but it’s not anywhere close to what you have to do to be president. And once you get there, while the Fed chair does need to rule by consensus and isn’t a dictator, he or she can exert their power and authority a lot easier than can the president of the United States, for the simple reason that they don’t have a constituency of voters they have to face every few years.
Members of the Fed’s Board of Governors aren’t “independent” to the same degree as Supreme Court justices, who can sit for life if they so choose. But Fed governors are, by design, insulated from politics, as they are appointed to 14-year terms.
Jerome Powell’s term as Fed chair doesn’t end until 2026 and his term as a Fed governor doesn’t expire until 2028. That’s pretty decent job security in Washington.
So, given that level of freedom and independence, why does the Fed — which employs hundreds of the (supposedly) smartest economists and financial minds in the country — make so many bad decisions and policy errors?
As we know, we’re currently living through the consequences of the Fed’s latest blunder. It failed to raise interest rates until long after the inflationary horse had left the barn and now seems poised to raise rates still further even though it appears that inflation has started to recede, even if that means the economy falls into recession and millions of people lose their jobs.
So what if a couple of big banks failed along the way as a result? That was as much about bad management as it was a direct result of the Fed’s foolish policy of keeping interest rates too high for too long.
So given the advantages it possesses, at least compared to the rest of the government, how does the Fed manage to do such a bad job?
In the coming weeks, President “No Compromise” Biden and the GOP-controlled House will do battle over increasing the federal debt ceiling with the country’s finances and legal obligations hanging in the balance.
It’s too bad such an important thing has to be in the hands of politicians. Yet, sadly, it’s hard to see that the Fed would do any better in solving the problem.
George Yacik
INO.com Contributor
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
