White House looking at former Pimco exec to replace Stanley Fischer as second in command at the Fed
On Nov. 14 news broke out that President Donald Trump was taking a serious look at Mohamed El-Erian to replace Stanley Fischer as the Vice-Chairman of the Federal Reserve.¬† El-Erian has a long history working in an industry that deals significantly with interest rates as he formerly was the second in command behind Bill Gross at the world’s largest bond insurer.
In what will come as a big surprise to many Fed watchers, moments ago¬†the WSJ¬†reported that among other candidates,¬†Mohamed El-Erian, former deputy director of the IMF, former head of the Harvard Management Company, Bill Gross’ former partner at Pimco until the duo’s infamous falling out, and one of the few people who – together with John Taylor – actually deserve the nomination,¬†is being considered for the Fed Vice Chairman role.¬†DJ also added that Kansas banking regulator Michelle Bowman is also being considered. From the WSJ:
The White House is considering economist Mohamed El-Erian as one of several candidates to potentially serve as the Federal Reserve‚Äôs vice chairman, according to a person familiar with the matter.
The process of selecting the Fed‚Äôs No. 2 official began this month after President Donald Trump nominated Fed governor Jerome Powell to succeed Fed Chairwoman Janet Yellen when her term expires next February. –¬†Zerohedge
Interestingly, El-Erian is almost the exact opposite of Trump’s nominee to run the Federal Reserve as his hawkish stances on interest rates, the dollar, and on the central bank not participating in propping up markets are a complete 180 to what the Fed has followed in regards to monetary policy over the past eight years.
- El-Erian likes Bitcoin/Blockchain
- Fears a China Minsky Moment
- Is aware of equity market disconnect from reality
- Thinks The Fed Put is gone
- Is not surprised by low inflation
A pick like Mohamed El-Erian to backstop Jay Powell at the Fed could be a way for President Trump to be able to appease the Establishment while also putting in a strong voice to counter the Keynesian policies that have led to low inflation, low bond yields, and massively higher debt.¬† And also this could be only the beginning as Trump will have numerous decisions over the coming months to fill the Fed’s Board of Governors with his own stamp of approval.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.