Tyler Cowen: belief

Transcript context

…I think the lesson of what was happening in the 1920s and reading all those diaries suggests that they never were, that they were always concerned about the politics in some regard. Back then, it wasn’t that Hoover was manhandling them per se, but they were conscious of what the political implications would be. Obviously, we’ve had a whole number of situations over the past 100 years now — or nearly 100 years — where actually, we have had presidents physically manhandle the head of the Fed, and now we have President Trump doing the same. My preference would be that we don’t have those things. My preference would be we don’t have those things for a different reason, though, which is that oftentimes you have to make super politically unpopular decisions. If the politics in the moment are going to influence you, you can’t do it. This is why I actually give great credit to Ben Bernanke because Ben Bernanke did things in that moment — and frankly, Hank Paulson, too — that were very politically unpopular. They were against everything that any conservative Republican would be doing at that time, and yet they did them anyway. By the way, give credit to President Bush for not pushing them otherwise. Think about what would happen if we had a crisis and either a president or somebody else who had a very different view of how to handle it. I agree with much of what was done, but keep in mind, they’re always sitting down with the Treasury secretary, and these decisions are made jointly, which I would say is inevitable, not a complaint I have. But once you see that . . . You see the same during COVID. Treasury, Fed — they work together. So, all the hand-wringing over central bank independence, I don’t want Trump being the one who pushes it around, but I find a lot of the hand-wringing a little out of place or not contextualized properly. Well, look, the thing that I think is more concerning now, which is slightly different, is that President Trump has talked about having a “majority” on the Federal Reserve as if it’s the Supreme Court. By the way, even a couple of years ago, we never talked about that in such a political context. Maybe he’s just speaking the quiet part out loud. Maybe that’s what’s really happening here. But if you have a political majority on something like the Fed, and then you use that political majority to effectively . . . By the way, you could potentially even replace all of the presidents of the regional feds as well, leveraging that “majority.” It could create a lasting, decades-long generational shift based on politics in terms of what our economic policies are, to some degree.…

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