Friday, January 12, 2018

Senate Panel to Vote January 17 on Powell Nomination for Fed Chief (For the Second Time)

The U.S. Senate Banking Committee will hold a second vote on Jan 17 over the Trump administration’s nomination of Fed Governor Jerome Powell to lead the Federal Reserve, according to the committee’s calendar, reports Reuters.

The committee already backed Powell to head the U.S. central bank in a Dec 5 vote, but a second vote is required because the full Senate failed to approve Powell before the end of 2017.

If the panel backs Powell again as expected, his nomination will be sent back to the Senate floor for final approval.

Powell will be the first Fed chair since Paul Volcker to not have a PhD in economics. But he is no Paul Volcker. Think more the non-PhD G. William Miller.

I'll let Wikipedia take the story from here:
Miller succeeded Arthur Burns as Fed Chairman in March 1978. He inherited a high inflation economy, still suffering from the increase in oil prices from OPEC. The change in the Consumer Price Index was 4.9% in 1976 and 6.7% in 1977. Nevertheless, Miller believed that inflation was not too high, and would be self-correcting. He thus pursued a strongly dovish policy and opposed raising interest rates. The effect of this was to send the dollar's value spiraling downward.In November 1978, only 11 months into his term, the dollar had fallen nearly 34% against the German mark and almost 42% against the Japanese yen...

Miller's lackadaisical measures against inflation caused distress among members of the Carter Administration itself. Treasury Secretary Blumenthal, Inflation Adviser Alfred Kahn, and Chief Presidential Economist Charles Schultze all advocated for increasing the interest rate prior to the April 1979 meeting, where Miller opposed such measures. Carter had to admonish his own staff over the press leaks used to carry on the dispute...

 A 2003 article in The Economist said that "America's central bankers have all made their weight felt across the political sphere, with the possible exception of William Miller, whose brief tenure in 1978-79 was notable for his attempts to ban smoking at the board."...

By early 1980, inflation was running at 14 percent per year.
I know a top Fed assistant who worked at the Fed during the Miller, Volcker and Alan Greenspan years at the Fed. She told me that before each Fed FOMC monetary policy meeting the Fed chairman gets a briefing of the current monetary and economic situation.

She said that she and other assistants could tell by the creases at the staple holding the pages together that Greenspan read the entire briefings.  Volcker read the 3 page lead summary to the briefing and there were no creases at all in the briefings given to Miller.



  1. We should recall that Greenspan's PhD was mostly an honorary one, awarded by NYU while Greenspan was working for President Ford. He had abandoned his efforts to get one from Columbia back in the 50s. His so-called dissertation, which has been suppressed, was mostly pieced together from staff writings of the Council of Economic Advisers.

  2. Are we better off being ruled by the Ph.D-standard? Given what's taught and studied in the vast majority of academic economics programs, I'm not sure it really matters.