It’s Time To End The ‘Deep State’ Fed

Authored by Larry Kudlow via RealClearPolitics.com,

Both Kevins Will End the Fed’s Deep State

There’s a great story on the front page of the Wall Street Journal today, called “Two Kevins Battle to Be Next Fed Chair in Trump’s Apprentice-Style Contest.”

The two Kevins are a former Federal Reserve governor, Kevin Warsh, and the director of the National Economic Council in the Trump White House, Kevin Hassett.

They are both very dear friends of mine, going back a long while. And they are both brilliant people.

I doubt seriously that they’re battling each other, but I do think they’re at the top of President Trump’s list for Fed chairman, at least for now.

Here’s a key point, though: the Fed is in need of perestroika.

In other words, the Fed has to be cleansed of its Deep State dislike of all things Donald Trump, and frankly its Deep State bureaucratic groupthink of deadwood economists with models that haven’t worked in 50 years — who are now advising Chairman Jay Powell to fight Mr. Trump and his economic growth agenda.

The next Fed chairman has to go toe-to-toe with the hundreds of Fed economists who are spurring Mr. Powell on in his fight against Mr. Trump’s tariff and reciprocity fair trade policies. Also, against Mr. Trump’s tax-cut policies.

Economic growth does not cause inflation. Tariffs do not cause inflation.

As per the recent paper by the Council of Economic Advisers chairman, Stephen Miran, and even the interview by the Chicago Fed president, Austan Goolsbee, where he acknowledged the real-world fact that exporters and American companies will eat the tariffs, not consumers.

Of course, the Board of Governors has to be changed, and that will come over time.

Importantly, however, presidents of the regional reserve banks have got to be rotated out. The vast majority of them are Obama-Biden lefties who are heavily biased against Mr. Trump.

All this has to be changed: the chairman, the board, the regional reserve bank presidents, and the bulk of the Fed staff economists.

I myself started my career at the New York Fed — and am proud of it. I even had a chance to work with the great Paul Volcker.

But the Fed, over the past 50 years or so, has atrophied into a self-serving, central-planning Deep State that is essentially ignoring and opposing the wishes of the 80 million people who voted for Mr. Trump for president.

It’s time to end the Fed’s deep state.