Stephen Moore’s Path to the Federal Reserve Board: A Steep Learning Curve
Virtually everyone in this administration, from the very top down to those with barely a 1B net worth, has a steep learning curve. The country will fare somewhat better once they begin to understand the complexities of their roles.
No Economics Knowledge Required?
Many are under the impression that Federal Reserve Board members are expert economists or experienced bankers. While a few notable governors possess these qualifications, the majority of governors are long-time partisan government staffers rewarded for their service without extensive qualifications.
The current composition of the Federal Reserve Board of Governors includes three lawyers and two undistinguished PhD economists, most of whose resumes are rooted in political and staff roles. With such a background, a public commentator with a master’s degree in economics does not seem out of place. However, Stephen Moore’s appointment, while adhering to the usual standard, raises questions about his suitability for a position that is supposed to be insulated from politics.
The Road Ahead for Stephen Moore
Moore has no knowledge of economics and will sit among PhDs, much like a spectator in a football game criticizing the players instead of taking the field himself. His ideology may serve him well in preaching, but implementing it is a different matter. Moore may enter the Fed's inner sanctum with a sense of vinegar and piss, believing he can change the infrastructure, only to be sobered by the complexities and implications of his ideas.
While some may hope for a dramatic shift in the Fed's policies, it is more likely that Moore's influence will be minimal. His ideological views, while influential in his public persona, may be tempered by the realities of governance. He will learn much, provided he can actually learn, but significant changes in the Fed’s operations are unlikely.
The Role of Federal Reserve Board
According to legislation, the Federal Reserve Board of Governors should have 'fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country.' However, in practice, the board often represents the political and bureaucratic interests of Washington D.C., rather than a wider spectrum of stakeholders.
While some governors like Paul Volcker and Ben Bernanke bring significant expertise to the table, the average governor is more likely to have a political background. This reflects a broader issue of qualifications in the current governance of the Federal Reserve.
Conclusion
The appointment of Stephen Moore to the Federal Reserve Board highlights the existing challenges in the governance of the Fed. While his credentials may meet the usual standards, his lack of economic knowledge and the political leanings of the current board suggest that change may be minimal. However, based on historical patterns, Moore is likely to undergo a learning curve that could moderate his public persona and ideological views.
As the country waits for the unfolding of events, the focus should be on understanding the complexities of the Fed's role and the potential impacts on various stakeholders.