Left-leaning critics of the Federal Reserve, in particular Big Labor, have a colorful metaphor for the central bank’s oversized power over our economy.
You’re at a great party. The partygoers are having the time of their lives, but some are throwing back a few too many and it’s getting out of hand. So the host has to take away the punchbowl!
Removing the booze when the economy gets too happy is a thankless job, but somebody has to do it, and that somebody is the Fed. Otherwise people might get hurt, the victims of “irrational exuberance,” to use Alan Greenspan’s infamous phrase, which instantly sent global markets on a downward course amidst the 1990s tech boom.
What’s so disgraceful about more-reliable-than-not Republican senators like Lindsey Graham and Joni Ernst knocking growth champion Steve Moore out of contention for a seat on the Federal Reserve is that Moore knows the punchbowl is a phony analogy.
Like others in the supply-side movement that came to prominence designing Ronald Reagan’s tax cuts, Moore knows that an economy growing at optimum speed does not cause inflation. And he would have been the first Fed governor ever who unapologetically refused to raise short-term interest rates for the express purpose of slowing down an “overheating” economy. He wouldn’t take part in killing Americans’ jobs for fear of an inflation ghost that the evidence says doesn’t really exist.
He also understands that money supply and interest rates are not the federal government’s playthings, which is why Moore has emphasized the importance of looking to the real world indicator of gold and other commodities for guidance, and has even wondered – like free-market Nobel laureate Milton Friedman – if the Fed should even exist in its present form.
Elite Bureaucratic Power
The Federal Reserve is adept at using the complexity of money and banking to defend itself from attack and reform. It’s a quintessential example of elite Washington bureaucracy maintaining power by convincing the people that taking it away from the experts would mean the end of the world. The iconoclastic Moore wasn’t welcome in that inner sanctum.
Republican senators like Rob Portman of Ohio, Shelley Moore Capito of West Virginia, and frequent thorn-in-conservatives’-side Susan Collins of Maine, who signaled misgivings about Moore’s nomination, should go back home and undergo town hall hell for opposing Moore. There are constituents in their states, Graham’s South Carolina and Ernst’s Iowa, who will lose out on good jobs because they kept a man whose priority was job creation off the board of the central bank.
As everyone who’s dealt with him over his long career going back to the 1980s knows, Moore is one of the most cheerful, optimistic, high-energy souls in Washington. The unearthed humorous comments he made about women, or the Midwest (from which he comes), are mud dug up and slung at him to keep an enemy of anti-free market big government off a powerful agency where he would have effectively opposed those destructive forces.
An Absurd Smear
And a distasteful irony is that at a time when Democrats breathlessly accuse Republicans of xenophobia and racism, they shun a man who 30 years ago, with economist and Ultimate Resource author Julian Simon, established the American Immigration Institute. That organization’s core purpose was to raise awareness about how immigrants – of all races, places of origin and economic condition – help the economy.
In those days, Moore was known for privately suspecting anti-immigration conservative Republicans of racist motives. Yet he is now absurdly smeared as a bigot.
President Trump will find another Fed nominee who champions economic growth – no doubt with help from Moore. And Moore will likely continue to help craft this administration’s stunningly successful economic policy, whose tax cuts and reduction in regulations have given America a private sector and a jobs market that are now the envy of the world.
But it won’t be the same as having the unafraid Steve Moore inside the Federal Reserve, shaking up perhaps the most insulated and unaccountable government agency in Washington, with the noble purpose of giving Americans as many jobs and as much opportunity as possible.
Issues & Insights is a new site formed by the seasoned journalists behind the legendary IBD Editorials page. We’re just getting started, and we’ll be adding new features as time permits. We’re doing this on a voluntary basis, because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide.
Be sure to tell all your friends! And if you’d like to make a contribution to support our effort, feel free to click the Tip Jar over on the right.