Stephen Moore, President Trump’s choice for Federal Reserve governor, called for raising rates and tightening monetary policy even as the economy entered the worst recession since the Great Depression in 2008.
“I happen to believe we should be raising rates, not cutting them,” Moore said at a July 2008 appearance at the libertarian FreedomFest in Las Vegas.
At the time, the economy had already been in a recession for half a year, the National Bureau of Economic Research would later say. The labor market was hemorrhaging hundreds of thousands of jobs a month. Inflation, then near the Fed’s 2 percent target, was about to drop precipitously.
But Moore, then a member of the Wall Street Journal’s editorial board, told the audience that he was worried about the opposite prospect: a return to the soaring inflation of the 1970s.
“When you have a tripling in the price of gold over seven years, ladies and gentlemen, that’s a sign of two things: a declining currency and high inflation to come,” Moore said in his presentation. “So this is a big worry, it looks just like the 1970s.”
At the time, the Fed had set its short-term interest target to 2 percent, after lowering it through the early part of the year. It wouldn’t lower rates again, however, until October, after the collapse of Lehman Brothers. Ben Bernanke, then the Fed’s chairman, would later write in his memoir that it was “certainly a mistake” that the central bank failed to lower rates before Lehman’s collapse and allowed economy-wide spending to dive.
In the late spring and early summer of 2008, a few members of the Fed’s monetary policy committee resisted lower interest rates on the grounds that inflation was still near the Fed’s target. None, though, called for higher rates.
Through the fall and into 2009, however, Moore continued to advocate tighter money as gross domestic product and employment fell rapidly, a stance that put him at odds even with the members of the Fed most skeptical of low rates. As a member of the Fed’s board of governors, Moore would have a vote on all the Fed’s interest rate decisions.
In an appearance on CNN with the conservative host Glenn Beck in October of 2008, Moore warned that “we’re really much in a 1970s styles economy where the unemployment rate goes up, so they print more money to put more people to work, that causes more inflation.”
Later, in a piece published in the American Spectator in January of 2009, Moore called for the Fed to push up the value of the dollar, which would have entailed tightening monetary policy. “[W]eak dollar policies make Americans poorer — just as tax hikes do,” he wrote, but undercut purchasing power.
The dollar would rise about 20 percent between the summer of 2008 and the spring of 2009, as the economy shed millions of jobs.
Moore advocated for years for a stronger dollar and the monetary policy to go along with it. In recent weeks, however, he has called on the Fed to lower rates, aligning himself with President Trump, who’s criticized the Fed’s efforts to normalize rates under Chairman Jerome Powell.
In a Wall Street Journal op-ed published earlier in March, Moore criticized the Powell Fed for pursuing a “deflationary monetary policy” and slowing growth. He called for tying monetary policy to commodity prices. In interviews since Trump’s announcement of his selection for the Fed, Moore has called for the Fed to lower its rate target.
None of the members of the Fed who vote on monetary policy favor lowering rates, according to projections they released after their meeting in Washington earlier this month.
