Editorials

Yellen and Fischer to exit Federal Reserve?

In 2018, President trump could replace as many as five of the seven members of the Federal Reserve Board of Governors, and change the direction of the Fed.

President Trump's chief economic advisor, Gary Cohn, gives praise for the work of Federal Reserve Chairman Janet Yellen, but refuses to confirm her renomination when her term ends in February, 2018. She will be a lame duck this summer if John Taylor and Kevin Warsh are announced as replacements for Yellen and Vice Chairman Stanley Fischer.

It appears the Trump administration plan to go in a new direction with a more rules driven Federal Reserve, operating more under the control of Congress. Yellen and Fischer believe the Fed should be independent of Congress. However, Vice President Mike Pence, and Speaker Paul Ryan believe the Constitution gives Congress the power to coin money and regulate its value. It is rumored Randal Quarles will be nominated to replace Daniel Tarullo as the Fed's point man on financial regulation. If confirmed by Senate, Quarles would become vice chair of financial supervision and regulation. Treasury Secretary Steve Mnuchin believes the Dodd-Frank financial law places too much bureaucratic burden on small regional banks.

There are two seats on the Fed's seven-member Board of Governors vacant and Daniel Tarullo announced he will leave on or about April, 2018. This will give President Trump the opportunity to nominate three new members. The Trump administration has interviewed David Nason, Marvin Goodfriend and Quarles to fill board vacancies. In addition President Trump could replace board members Yellen and Fischer if they are not renominated and resign. This would give President Trump five vacancies to fill on the seven member board, and a chance to change the direction of the Fed. Unfortunately the Taylor rule, named after John Taylor, is based upon neo-Keynesianism, and President Trump's candidates look a lot like the crew who bailed out Wall Street during President Bush's administration.

One name that appears at the top of many suggested short lists to replace Yellen or Fischer is Kevin Warsh. While he does not have Yellen's PhD. in economics, he does have a J.D. from Harvard Law School. During the financial crisis of 2008, Warsh was a governor of the Federal Reserve System, and acted as the central bank's primary liaison to Wall Street.

At 35, in 2006, Warsh was the youngest appointment in the history of the Federal Reserve. Kevin Warsh is a lecturer at the Stanford Graduate School. He is a conference leader with the Council on Foreign Affairs. He has served as a steering committee member of the Bilderberg Group.

Bernanke, Kohn, Warsh, and Geithner became known to some inside the Fed as "the Four Musketeers". This group of four were involved with the Fed's bailout of Wall Street in the form of trillions of dollars of loans, purchase of toxic assets, suppression of interest, and the quantitative printing of money.

In 2002, Warsh married Jane Lauder, heiress of the Estee Lauder family. Kevin and Jane Warsh have a net worth of over $100 million, with strong political connections with the Republican Party. Warsh is an open critique of quantitative easing and zero interest rates, but was a key player in the bailout of Wall Street.

In 2018, President trump could replace as many as five of the seven members of the Federal Reserve Board of Governors, and change the direction of the Fed. However, many of the candidates are affiliated with the Council on Foreign Affairs and the Bilderberg Club, which promotes a one world government. The demise of the dollar could be an appointment with destiny and result in a coming world ruler.

For what happens next, see my book, "When is judgment day?"

 

Dr. Steve Johnston

 

 

 

 

 

 

 

 

 

 

 

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