Biden Withdraws Shelton Nom, Fed Wants CBDC Manager
Biden Withdraws Shelton Nom, Fed Wants CBDC Manager
The long saga of Judy Shelton’s twisting and turning quest for a Federal Reserve Board seat has finally come to a predictable end. Her unorthodox views made it one of the more charged and dare we say entertaining nominations in modern history.
On Thursday, President Biden formally removed Judy Shelton and twelve other Trump nominees’ names from the appointment docket. Shelton was nearly confirmed at the end of Trump’s tenure but as you may recall her nomination was able to be blocked in dramatic parliamentary fashion due to several Republican Senators coming down with COVID-19.
Though Biden has not yet indicated who he will nominate, the eventual pick should be a good signal as to what direction the President will want the Fed to go. The general consensus is that politicians of both parties, particularly if at they sit in the Oval Office, should generally be big fans of the ultra-dovish approach that has been tailored to respond to COVID-19 by Jay Powell and his deputies. The Fed’s role and activities going forward in the economic recovery will likely be highly politicized.
As vaccination campaigns continue to inch their way forward more and more focus is coming into how the Fed will handle the coming period of economic normalization. Many folks are now openly speculating that the unprecedented amounts of fiscal and monetary stimulus could heat up and force the Fed’s hand to tighten. Though Fed leadership repeatedly and often states that inflation is very welcome, initial spikes likely won’t be enough to justify tightening, and that they will let inflation run higher than normal to promote the inclusive economic gains.
One thing is clear; the battle lines are being drawn for a 2021 between different camps of Fed hawks and doves. The ‘Reddit Rebellion’ seemed to also kick into gear the narrative that the Fed has created massive bubbles. We think these items are unrelated in a direct sense and agree with what Chicago Fed President Charles Evans said, “At the moment, I don’t see that as a link to macroeconomic borrowing costs for businesses or households.” That’s also how an economist gives a dismissive response if you were wondering.
In an exciting development for the future of cryptocurrency, the Federal Reserve has posted a job post for a Research Director to help develop a ‘regulatory framework for emerging payments platforms.’
Though Powell has indicated in recent comments that the American central bank will likely let other Central Banks forge the initial path ahead for Centrally Banked Digital Currencies (CBDCs), the development is undoubtedly positive particularly when paired with the appointment of the crypto-friendly Gary Gensler as Chairman of the SEC.
The Fed and other regulatory also met to discuss the events in markets last week. Officials largely were pleased that financial stability wasn’t substantially undermined by the events.
Asset purchases continued at a pace of $40 billion a month for MBS and $80 billion a month for Treasuries. The benchmark yield on the 10 year is at 1.16% up from 1.07% last week.
