As the country grapples with the attempted assassination of Donald Trump and speculation surrounding Joe Biden’s potential presidential exit, a crucial issue has escaped attention: the impending appointments to the Federal Reserve Board of Governors. The upcoming presidency will have the opportunity to shape the institution’s future, and the consequences could be dire if identity politics and unqualified candidates are prioritized over merit.
The Federal Reserve plays a vital role in maintaining the country’s monetary policy, with three primary goals: maximizing employment, stabilizing prices, and moderating long-term interest rates. The Board of Governors, comprising seven members, oversees the organization and has a significant impact on the economy. The next president will appoint at least two new governors and potentially a new chair, providing a unique opportunity to shape the institution.
Sadly, the Biden administration has set a precedence for appointing candidates based on their identities rather than qualifications. The recent appointment of Lisa Cook, whose term extends to 2038, is a prime example of this trend. Cook’s academic publication drew dubious conclusions about the impact of racism on black inventors and her resume lacks impressive accomplishments. Her appointment raises concerns about the priority given to identity over merit in the selection process.
If this trend continues, the Federal Reserve could be dominated by unqualified individuals, potentially leading to the adoption of unsound economic theories like Modern Monetary Theory (MMT). MMT proponents argue that the government can and should print as much money as necessary to fund its projects, ignoring the fundamental principle that every dollar of government spending requires a corresponding source of revenue. This doctrine has led to catastrophic economic consequences in countries that have adopted similar policies, such as Argentina, Venezuela, and Zimbabwe.
The recent inflationary pressures in the US, brought on by the lockdowns and an increase in government spending, have tempered interest in MMT. However, if the Democrats win again in 2024 and appoint unqualified candidates to the Federal Reserve, the potential for disastrous policies cannot be overstated. The upcoming presidential election could have far-reaching consequences for the American economy.
