The fed needs economists who aren’t politicians

By Robert Burgess

Which Stephen Miran will show up to the Federal Reserve’s monetary policy meeting in mid-September as a freshly appointed governor of the world’s most important financial institution?

The version who toiled away in relative obscurity after graduating from Harvard University in 2010 with a PhD in economics, writing papers about things like how supply-side reforms and deregulation can spur American industry? Or the version who has advocated for giving the executive branch — the very politicians who have steered the country toward a debt and deficit crisis — more control over the central bank and the cost of money?

On Thursday, President Donald Trump chose Miran, who is currently chairman of the White House’s Council of Economic Advisors, to serve as a Fed governor.

Trump said Miran, who needs to be confirmed by the Senate, would only serve out the expiring term of Fed Governor Adriana Kugler, which ends in January. “In the meantime, we will continue to search for a permanent replacement,” Trump said. We can only hope.

If Trump cared about protecting Fed independence and all the benefits that brings to the US economy, he would have picked someone with a bit more distance from the Oval Office.

There are plenty of qualified economists who would champion Republican views on the economy and interest rates. Yet in picking Miran, Trump is putting in place someone who will go much further, explicitly advocating the unorthodox — and dangerous — views coming out of the Trump administration.

Miran has been highly critical of the Fed in recent years, blaming perceived policy errors on “groupthink” and claiming the central bank had expanded into areas beyond its remit due to political motivations. In a March 2024 paper, Miran and Daniel Katz, now chief of staff at the Treasury Department, presented a plan for reforming the central bank, writing that “the Federal Reserve’s record in recent years raises questions about whether it has been operating in line with the best practices of central bank independence.”

Currently, the president can only remove members of the Fed board of governors “for cause,” and has no power to remove Reserve Bank presidents. Miran and Katz would change that, giving the president the power to fire both board members and regional bank presidents for any reason. They would also like to see the terms of Fed governors shortened to eight from 14 years, with the start and end dates of terms adjusted so that “a newly elected president will likely nominate all seven new board members in the early portion of his term.” This, of course, would politicize the Fed, with central bankers beholden to the president setting monetary policy with an eye toward electoral considerations.

History shows that no good comes from a central bank that serves the presidency rather than the people. One of the darkest hours in the Fed’s history came in the 1970s. President Richard Nixon named Arthur Burns, a White House counselor and political ally, in 1970 to replace William McChesney Martin as Fed chairman.

Two years later, Nixon pressured Burns to keep interest rates artificially low to spur the economy strong as the president sought reelection. It worked for Nixon, as he was reelected, but the move allowed high inflation to become entrenched for the rest of the decade, wreaking havoc on the economy. It took many years after Paul Volcker replaced Burns as head of the Fed for the central bank to regain the confidence of markets.

Since being named to head the CEA, Miran has sounded more like a politician than an economist. Although as a member of the White House team, one would expect Miran to tout the administration’s policies, his comments on the economy lean more toward propaganda than objective analysis.

That’s especially true when it comes to interest rates. Both markets and economists project Trump’s tariffs will spur inflation — and the evidence suggests they already are — yet Miran has supported the president’s desire for big, immediate cuts in interest rates.

“It’s really inconvenient for some that President Trump — who’s busy negotiating trade deals, enacting tax law, and stopping wars — has such a great track record on interest rates, in both the dovish and hawkish directions. But the track record is there,” Miran wrote on social media this month.

And this week, Miran told CNBC that the economy’s “headwinds have turned into tailwinds,” soon after government data showed that consumer spending fell in the first half of the year, something that’s only happened once in the last 18 years not counting the pandemic; and the jobs market had essentially gone flat, with employers refraining from hiring.

Speaking on Bloomberg Television Thursday, he said there was “zero macroeconomically significant evidence of price pressures” from Trump’s tariffs. Perhaps, but nobody told the nation’s chief executive officers. The results of a Conference Board survey of 122 CEOs released this week showed that 64% plan to raise prices in response to the Trump administration’s tariffs and pass them on to customers, while only 19% expect to absorb the costs.

When it comes to track records, Miran’s is less than stellar. He is the author of a 41-page document published in November, when he was a senior strategist at Hudson Bay Capital Management, that many say is a blueprint for Trump’s chaotic trade and tariff policies.

Although at the heart of the paper was the desire for a weaker dollar that buoys US exporters and manufacturers, Miran acknowledged the greenback would initially strengthen when Trump implemented tariffs. The dollar was “more likely than not” to appreciate alongside an improving trade balance, as it did during Trump’s first trade war in 2018 and 2019, Miran wrote. As my Bloomberg Opinion colleague Jonathan Levin recently pointed out, this currency “offset” was key to his view that the new levies wouldn’t necessarily be passed through to consumers, or at least not entirely.

And yet, the dollar has weakened substantially, with the US Dollar Index tumbling some 11% in the first six months of 2025, the worst first-half performance in at least a quarter century. The median forecaster surveyed by Bloomberg expects the greenback to depreciate further over the rest of this year and through 2026. The flip side of a weaker dollar is that it makes imports more expensive, supporting inflation.

To be sure, Miran won’t have outsized influence on Fed decisions, as he will be just one of 12 votes. Still, there’s the potential for disruption that leads to greater volatility in financial markets.

Trump wants a “pro-growth set of monetary policies that has a bias toward inflation,” Joseph Brusuelas, chief economist at RSM US LLP, told Bloomberg News. “For the foreseeable future, unanimous decisions on the direction of monetary policy are likely to disappear,” he said.

Trump has a rare opportunity to reshape the Fed. Besides filling Kugler’s seat with Miran, the president will also be selecting a replacement for Chair Jerome Powell when his term expires in May.

In short, Trump could fill the Fed’s leadership with allies that would advocate for ultra-dovish policy even if not warranted — like Nixon with Burns — and push for reforms that would lessen the central bank’s independence. Neither is in the country’s best interests, but then again that hasn’t stopped this administration yet.