By Howard Schneider
President Donald Trump’s nomination of Council of Economic Advisers Chair Stephen Miran to the Board of Governors of the U.S. Federal Reserve has raised eyebrows, given Miran’s past criticisms of the institution he may now be a part of. In a report last year co-authored by Miran for the Manhattan Institute, he proposed significant changes to the central bank, including addressing issues such as “groupthink” on monetary policy, regulatory overreach, poor accountability, and a loss of focus on fighting inflation.
One of Miran’s controversial ideas was the so-called Mar-a-Lago accord, which aimed to devalue the dollar and restructure U.S. debt. This proposal was met with criticism and skepticism, particularly regarding its potential impact on the dollar’s global reserve status.
Miran has been vocal about his views on the Fed’s independence, arguing that the institution is unaccountable and ineffective. He has proposed a new system where presidents could fire the seven members of the Board of Governors at will, shifting authority over monetary policy to the 12 regional Federal Reserve banks.
These proposed changes have sparked debate among U.S. Senators, who must confirm Miran’s nomination, and global bond markets, which are concerned about the implications of a politically influenced central bank on inflation control. Despite the initial market reaction to Miran’s nomination, expectations of rate cuts at upcoming Fed meetings remained unchanged.
Miran has criticized the current setup at the Fed for excusing poor performance and lack of accountability. He has cited past policy decisions, such as the asset purchases made under former Fed Chair Ben Bernanke, as examples of ineffective measures that have distorted the allocation of credit.
If confirmed by the Senate, Miran’s appointment to the Board of Governors could have significant implications for the Fed’s future direction. With the potential for a full 14-year term and the possibility of being elevated to chair, Miran could become a key player in shaping the central bank’s policies.
While some of Miran’s proposed changes would require congressional approval and are considered unlikely, his nomination signals a shift in the Fed’s leadership. With other board members potentially resigning and giving Trump more opportunities to fill seats, Miran’s views on presidential authority over the Fed could gain importance.
Overall, Miran’s appointment to the Board of Governors represents a departure from the traditional norms of central bank independence. His ideas for reforming the Fed, while controversial, could reshape the institution’s governance and decision-making processes in the years to come.
