White House economic adviser Larry Kudlow praised President Donald Trump's picks of Stephen Moore and Herman Cain for the Federal Reserve Board.
The veteran financial guru and former Ronald Reagan adviser told Bloomberg News that both potential nominees share the view that strong growth doesn’t necessarily cause inflation, which central bankers try to prevent by raising rates.
On Thursday, Trump said he plans to nominate his political ally Cain, the former head of Godfather’s Pizza, to one of two vacancies on the Fed’s seven-member Board of Governors. Cain runs a political fundraising group that has spent more than half its money supporting Trump’s re-election, Reuters reported.
Two weeks ago, Trump said he would nominate conservative economic commentator Moore to the other vacant seat on the Fed’s board. Moore is also a longtime Trump ally who has joined him in criticizing last year’s rate hikes.
“These are very capable people,” Kudlow told Bloomberg Television. ‘These are people that would like a steady dollar and they don't believe that growth causes inflation,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
“I think what you have here is a philosophy that strong growth is not inflationary, especially when it comes from the supply side of the economy which is where it coming, as you look at the jobs and the hours worked and the business investment,” said Kudlow, who served as the Trump campaign's senior economic adviser.
“The Fed is independent but for heaven's sakes strong growth is not inflationary more people working can't be inflationary and that's a point of view that I've held for three or four decades. I think that's what those two candidates believe that and I think that's a good balance to the Fed,” said Kudlow, the head of the National Economic Council that advises Trump.
Meanwhile, Bloomberg Businessweek also pointed out another similarity between Moore and Cain: Both are outside the economics mainstream in wanting to peg the dollar to gold.
"Moore and Herman Cain, are interested in fixing the price of the dollar in quantities of gold — bringing back a system that President Richard Nixon abandoned in 1971," Bloomberg explained.
"Their stance on gold encapsulates how far the two are outside the mainstream. It doesn’t mean they’re wrong — just that most economists of the left, right, and center who have looked into restoring the gold standard have concluded that it would be a bad idea," Bloomberg said.
While campaigning for president in 2016, Trump told GQ, “Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.”
Meanwhile, Reuters explained that half a dozen Fed officials in recent days have touted the underlying strength of the American economy and argued a recent spate of weak data on business activity is more likely to prove fleeting than lasting. None said they currently back a rate cut and some have said rate hikes may eventually be necessary.
But a Fed chaired by a Trump appointee, Jerome Powell, has stopped raising rates after four hikes last year, saying that there are enough economic risks, including a slowdown in Europe and China, to warrant patience. The Fed’s policy rate is currently between 2.25 and 2.5 percent.
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