With the news that began circulating yesterday that President Donald Trump intends to put Herman Cain on the board of the Federal Reserve (as covered by my colleague Mike Ford here), I couldn’t help but question the logic behind it.
That’s not to say Cain isn’t qualified – in fact, he very much is. He headed up the Federal Reserve Bank of Kansas City in the 90s, after all. But, while Cain has been a Trump loyalist (particularly through his nationally-syndicated radio show), Trump and Cain are at odds over one particular issue that deals directly with the Fed: Interest Rates.
Trump has repeatedly blasted the Fed for raising rates during his time in office. He is not a fan of the practice. Cain, however, is a proponent of the widely-accepted idea that raising rates is a sign of a strong economy. I have argued the same thing here at RedState.
During Barack Obama’s administration, despite Obama’s claims that the nation was in a recovery, the Fed kept rates artificially low. The economy wasn’t strong enough at that point. But, as the unemployment rate went down and as pay started going up, it was clear that the average American was closer to getting back on their feet.
You didn’t need the artificially low rates anymore. Americans could afford raised rates. It is a good sign, especially if you are the President of the United States who had vowed to fix the American economy. But, Trump’s fears seem to stem from the worry that people would be unhappy if their rates went up. There has been no revolt over the issue, though, and for good reason: Americans could afford the rates and they weren’t breaking the bank.
Still, Trump has blasted the Fed on multiple occasions over the issue, and while Cain is a rhetorical loyalist, his economic beliefs may bring him into conflict with Trump. The thing is, Trump has to know this.
It’s unclear what that means, though. Is Trump assuming the position will sway a voice like Cain’s to his side on the issue? Or does it mean Trump is willing to give way to expertise? I don’t expect him to cease in his attacks on the Fed should another rate increase come (though I imagine it could be a while yet before we do, as signs are pointing to more correction in the markets that will be reported as signs of a weakening economy rather than just a correction). The appointment of Cain just seems… curious.
It’s not a knock on Trump, by any means. I think Cain is a good choice. He has the experience and, I believe, the right ideas for the job. It will be interesting to see how it plays out, though, if he and Trump are going to butt heads over interest rates.
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