What’s at Risk if the Fed Becomes as Partisan as the Rest of Washington – The New York Times

“It’s more overtly political than anything we’ve seen since at least the ’80s, and historically when we’ve had political appointments and interventions in the Fed, there have been unintended consequences that last,” said Julia Coronado, president of MacroPolicy Perspectives and a former Fed staffer. “It may be expedient in the near term, but what’s good for the next year or two may not be good for the next decade.”

All presidential appointees to the Fed’s board of governors come with their own political point of view, which generally dovetails with the president who appointed them. But typically they have also brought deep technical expertise and an inclination to keep political dimensions out of Fed debates.

“People around the table did have political views, and I did, too,” said Alan Blinder, who was appointed vice chairman of the Fed by President Bill Clinton and is more recently the author of “Advice and Dissent,” about the role of politicians versus technocrats in shaping policy. “But you weren’t supposed to bring them into the room when it was time to make a decision, and people didn’t.”

That is the tradition that Mr. Trump’s approach endangers.

You can read thousands of pages of transcripts of closed-door Fed policy meetings without seeing a reference to the political jockeying that occupies the rest of Washington.

Three times in recent decades, a president has reappointed a Fed chairman first named by a president of the opposite party (Ronald Reagan with Paul Volcker, Mr. Clinton with Alan Greenspan and Barack Obama with Ben Bernanke).

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