During an interview on CNBC’s Squawk Box this morning, Donald Trump said that if elected president, he would likely replace Federal Reserve Chair Janet Yellen once her term expired. How come? Well, he likes her approach to monetary policy, but she isn’t a Republican. To wit:
I have nothing against Janet Yellen whatsoever. I think she’s been doing her job, and I have absolutely nothing against her. I don’t know her. She’s a very capable person. People that I know have a very high regard for her.
But she’s not a Republican. She’s not a person—when her time is up, I would most likely replace her because of the fact that I think it would be appropriate. She’s a low interest-rate person, she’s always been a low interest-rate person. And I must be honest, I’m a low interest rate person. If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.
Generally speaking, there’s nothing wrong with presidential candidates suggesting that they would like to install their own nominees in important government positions. And, so far as the economy is concerned, there’s no position more important than Federal Reserve chair. If Trump had simply said, “I like Janet Yellen, but I think we can do better,” it would be newsworthy, though not necessarily objectionable.
What’s interesting here, and a little irksome, is the purely partisan reasoning behind Trump’s comments. In recent decades, party affiliation has not been a particularly major consideration for presidents when it comes to selecting a Fed chair. Bill Clinton was happy to reappoint Alan Greenspan, a libertarian Ayn Rand devotee first selected under Ronald Reagan. Prior to picking Yellen, Barack Obama (wisely) kept on Ben Bernanke, who was at least nominally a Republican (after watching the GOP drift further and further to the fringe, he now considers himself a “moderate independent”). But for Trump, Yellen’s being a Democrat outweighs the fact that, as far as his comments let on, he thinks she’s doing a fine job. It’s a reminder that while Trump may not be an especially ideological person, he is instinctively tribal.
On the bright side, Trump’s comments about the virtues of low interest rates here are coherent and, for a Republican, refreshing. (High rates pushing up the dollar would be a problem! Market monetarists, rejoice!). So, you know, at least there’s that.
