Powell or Brainard?

By: Robert Aro

Any day now President Biden will nominate his choice candidate for the role of Chair of the Federal Reserve. If Jerome Powell doesn’t get reappointed then Biden will likely go with progressive Democrat Lael Brainard. Everyone has a take, some more opinionated than others.

The editorial board of the Wall Street Journal made no attempt to soften their thoughts on Powell in the onion piece entitled Tweedledum and Tweedledee at the Fed, calling Powell’s tenure “historic failure:”

Mr. Powell’s credibility has been damaged with his persistent refrain, until recently, that inflation is “transitory.” His new monetary policy framework of average-inflation targeting, unveiled in August 2020, has been a bust.

They conclude that given the choice between two, there isn’t much of a difference and that he’ll have to “own inflation even more than he already does.”

CNBC provided an array of opinions last week, including a chief strategist from State Street who also didn’t have much faith in a Powell re-nomination:

The odds and probabilities seem to be falling. The higher-than-expected inflation readings hurt, the trading scandals hurt, and the fact he’s a Trump appointee makes him an easy scapegoat for the administration.

A chief economist at Grant Thornton made an attempt to compare the two, CNBC quoting:

The biggest difference between her and Powell is she might be faster on climate change, though Powell was pretty quick on the uptake. The other issue is she’s much more open to cryptocurrency for the Fed, and that’s the biggest difference I know between them.

Still somewhat of a difference, if Brainard is “more open” to cryptocurrency, that certainly wouldn’t be a bad thing for the country. While being “faster on climate change” sounds more contentious as the effectiveness of inflating the money supply or suppressing interest rates could have little effect on making the world a greener place.

Perhaps it was an investment manager at Morgan Stanley who said it best:

It’s not like either one would be dramatically different from the other… It’s not like you’re going from a hawk to a dove. You’re changing leadership, not changing philosophy.

Isn’t that the truth?

For all that can be said, the difference between Brainard and Powell is more superficial than skin-deep. Certainly, every Fed Chair brings their own experience, outlook and maybe even leadership qualities. But their ethos, whether it’s the dual mandate or the desire to use the central bank’s powers to intervene in the free market, still stands.

Any notion of freedom, liberty or understanding the dangers of increasing the money supply will likely continue to go unnoticed. Whether Powell or Brainard, however the next four years goes, unless a dramatic change sweeps the country or the Federal Reserve, which demands an end to this pseudo-mainstream/make-it-up-as-you-go economics, there really isn’t much to look forward to regarding who will helm America’s central bank.

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