Biden's Decision for Fed Chairman Critical to Future Inflation

by Wall Street Rebel | Michael London | 11/15/2021 9:58 AM
Biden's Decision for Fed Chairman Critical to Future Inflation

Biden associates say they haven't heard anything definite about Powell's re-nomination, and it's not a hot issue among White House personnel.

 

President Biden must make a critical choice on whether or not to renominate Federal Reserve Chairman Jerome Powell for a second term in office.

Because of Powell's broad support from both political parties, the bank's successful response to the pandemic-driven stock market meltdown, and Powell's own views on the job market that are similar to those of President Joe Biden, many Fed-watchers believe he will be re-elected for a second term after his current term ends in February.

Powell, a Republican who was chosen to Federal Reserve posts by previous Presidents Obama and Trump, is a rare example of reconciliation in a severely divided Congress. Powell was named to the Federal Reserve by both former Presidents Obama and Trump. Fed-watchers believe Powell will be re-elected to a second term after his current term expires in February, owing to his broad support from both political parties, the bank's successful response to the pandemic-driven market meltdown, and his own views on the job market that are similar to those of President Joe Biden.

However, the left is pressuring Biden to replace Powell with a Democrat who is more closely aligned with his support for stricter financial regulation and a more violent reaction to climate change, two areas in which Powell falls well short of liberal expectations.

One of three reasons may be attributed to the fact that everything is still so calm.

They have been very adept at keeping things quiet, that they haven't made a choice and are unlikely to decide for some time, or that they are attempting to analyze the political implications of the decision are all possibilities.

All of those things can stall any progress on anything," a Biden ally told The Hill.  Neither Powell nor Federal Reserve Governor Lael Brainard, the lone Democrat on the Fed board and a favorite candidate of progressives, were seen in Washington last week. Still, the White House would not reveal why they were there.

When asked whether the president will decide a matter of days, weeks, or months, Karine Jean-Pierre, the White House's deputy press secretary, said, "I understand that this is an important topic."

"You know, I'm not going to go into what the president — how he's concluding — is thinking right now.

To answer the question of whether the number of board openings plays a role in the decision to retain Powell, Jean-Pierre replied, "All I can say is that this is tremendously important to the president, and he is taking this very seriously."

When asked for an update on the timeline, the White House did not comment on Friday.

Biden supporters have said that they have not received any firm information on whether Powell would be renominated. It is not a prominent subject of conversation among White House officials with those outside the government.

While the president's absence has fuelled even more conjecture, most Fed experts believe Powell's chances of becoming chairman improve as time passes.

Floortime and political capital will be devoured in the Senate's finely split chamber by Biden's attempt to solidify his economic plan, fights over government funding and military legislation, and the fiscal cliff, which is set to take effect at the beginning of December.

The Federal Reserve as an institution, as well as President Biden's probable nominee, are under increasing pressure after annual inflation reached a 30-year high of 6.2 percent in October.

"With inflation becoming more prominent, it is becoming an even more difficult confirmation, most likely for both of them."

Powell, on the other hand, has a lot more wiggle space in the Senate than Brainard," says Sam Bell, the founder of Employ America. This research group advocates for measures that increase job opportunities.

The Federal Reserve's Powell and Brainard, according to Bell, "are quite indicative of the trends in the Fed" toward waiting for unemployment to reach the lowest level feasible before raising interest rates.

Interest rates were routinely raised by the Federal Reserve when inflation seemed to be heading near its annual objective of 2 percent, as it did most recently in 2018. However, this was likely at the expense of a healthier job market.

By simply renominating Powell, who received 82 votes for confirmation in 2017, Biden would avoid a more messy confirmation struggle over a successor candidate while ensuring that the Federal Reserve remains in full employment.

The support of more than a dozen Republicans and moderate Democrats has already been revealed for Powell's re-election, providing a critical boost in the 50-50 Senate, with just Sen. Elizabeth Warren (D-MA) announcing her opposition to Powell.

Brainard, like Powell, may be able to count on decades of expertise in Washington and widespread support among liberal legislators to achieve success.

Her supporters also point to her wide portfolio of international banking expertise and her constant support for tighter bank regulations and climate oversight, as opposed to Powell's erratic backing.

Those assets might be precious to Biden, who has also surrounded himself with some progressive financial regulators who have made significant contributions to the field.

Brainard would be just the second woman to serve as chairman of the Federal Reserve, after Treasury Secretary Janet Yellen, who President Biden nominated to be the first woman to fill the position.

Although I recognize Powell's capabilities, I believe the greatest danger to his re-appointment is a clever, experienced woman well-known in the financial markets and a specialist in monetary policy AND regulation, climate risk, and financial technology.

 

                    Biden Administration 'Don't Have A Lot Of Options To Address Inflation

 

 

 

[Strategic Investment: The Post WWII World Order is About to Collapse]

 

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