Many people on the Street are unjustifiably attacking Governor Waller. He is debasing himself to succeed Powell in service of Trump, or so the thinking goes. Ah yes, he is bending over backward by pointing out that the US economy is not in fact as good as the White House claims.
Importantly, what Waller says will be taken seriously by the decisionmakers around him. Many of his colleagues are not far behind his views and almost none of them are in contention to lead the Fed next year. Is Mary Daly debasing herself too?
There is intellectual consistency to the argument Waller is making, which is more than we can say for others. Someone ask them: if the economy was in the gutter last year but booming now why hold rates steady last year but cut them now? Waller doesn't need to answer that one.
If President Trump's goal is to leave his mark on the Fed, then he should proceed in a way that likely ensures that he is able to quickly fill the most seats. Elevating Waller to the top job is the most obvious path to afford him that opportunity.
The first concept taught in economics is opportunity cost. By concern trolling about Waller, folks on the Street are helping Hassett and Warsh, the two candidates seen as being closest to Trump. Is that your goal?
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