Tuesday, December 27, 2011

Here we go again...Obama appoints two new "fiscal conservatives" to Fed board

Here we go again as if we haven't had our fill of this lunacy. More fiscal conservatives in the Obama Administration. And you guessed it!...they've got either Harvard or Goldman Sachs' ties. (Or both!)

Jerome Powell and Jeremy Stein. Powell is a lawyer with no economics background (bad) and Stein is a Harvard professor (worse!).

Powell quote:

“I am by any fair reckoning a fiscal conservative,” Powell, who goes by Jay, said in a May 16 interview with Bloomberg Television. At the same time, allowing a default is “just not a risk that you run.”

“That doesn’t mean that you don’t negotiate very hard to get additional spending cuts and get the deficit under control,” he said. “You do. But that crosses the line into hostage taking, I’m afraid, and is just tactically unacceptable.”

Did you get that part about "getting the deficit under control?"

And here's a Stein quote:

“The Fed in the early part of this decade would have been better had they been a little bit more aggressive in dealing with the housing bubble in its early stages, both through interest-rate policy and potentially through worrying a little bit more about the buildup of all this leverage on bank balance sheets,” Stein said...

Nothing in there about rampant fraud and lax oversight. Only implies low interest rates created the "bubble" and there was too much leverage. Peter Schiff stuff.


Anonymous said...

I agree.

But let's be real. If Obama or his people didn't pay lip service to "getting the deficit under control", he would lose the election.

Nobody from either party could say anything honest about our debt without being a laughingstock.

mike norman said...

I'm not so sure. Polls show most people are concerned about jobs. If he stopped talking about the deficit, even dismissing it, and concentrated on talking jobs aggressively, I think that would be an effective strategy.

Tom Hickey said...

O is trying to walk a tightrope strung between populist desire for jobs, which serves their economic and social interests, and elite desire for fiscal austerity, which they erroneously think serves their financial interest. We need some truth-telling here.

Anonymous said...


But I still think a lot of middle class people think "If I have to balance my budget, then the government should, too."

Not sure they see any connection between deficits and aggregate demand and employment.

mike norman said...


That's true, but that's just a belief and it can be dispelled. The president has a huge bully pulpit, which if used effectively, could change people's minds.

On the other hand, it's not simply a "belief" that says having a job is beneficial.

Tom Hickey said...

@ Anon

That's the false government as household analogy rearing its head again. It's wrong and our job is to show it so.

beowulf said...
This comment has been removed by the author.
beowulf said...

Good Lord, seriously? They're both illegal appointments. The Federal Reserve Act, Subsection 10(1), "In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district...

Jeremy Stein is a Harvard professor and lives in Massachusetts which is (naturally) in the Boston Fed bank district. Jay Powell lives and works in the District of Columbia, which is in the Richmond Fed bank district (along with Virginia and Maryland).
The trouble is there's already a Fed governor from the Boston district and there's already two (!!!) governors from the Richmond district. If Obama's plan is to come up with recess appointments that would hand Mitch McConnell a legitimate reason to go to court to block, then mission accomplished. Its not like the American public doesn't already think the Fed governors act like they're above the law or anything, geez.

"Tarullo, Daniel K., of Massachusetts, to be a Member of the Board of Governors"
"Elizabeth A. Duke, of Virginia, to be a Member of the Board of Governors"
"Sarah Bloom Raskin, of Maryland, to be a Member of the Board of Governors"

mike norman said...

Thanks, Beo.

Dan Lynch said...

Thanks for the excellent info, Beowolf.

Anonymous said...

I had no idea such a law existed. Good catch beowulf.

Matt Franko said...


Maybe you could craft some legislation that limits each I-bank to only one person at a time per administration!


Great catch!


beowulf said...

Maybe you could craft some legislation that limits each I-bank to only one person at a time per administration!

Well I guess that's one way to break up Too Big to Fail banks.
Another way is for Congress to adopt for federal officials and employees the NJ Gaming Commissions rule that no commissioner can work for a casino (or applicant), directly or indirectly for 3 years before appointment or for 4 years after leaving commission.
For "casino", plug in "govt contractor, registered lobbyist or primary dealer."