Meanwhile, at the Fed...

It's been obvious that Our President values "loyalty" over competence, so nobody could have been especially surprised when he proposed two incompetent sycophants for seats on the Fed.  Both Cain and Moore, though,  turned out to be too horrendous even for some otherwise dependably sycophantic Republican senators.  Let us all breathe great sighs of relief.

The Fed is struggling with an unprecedented problem: ten years of economic growth with little to no inflation.  That may seem like a great thing, but that low inflation – combined with a prolonged but slow growth rate – has made it nearly impossible to push interest rates higher.  Yes, that still sounds like a good thing, but it's robbing the Fed of its most important tool for coping with an economic downturn: with interest rates so low, there's no room to meaningfully cut them when the next downturn arrives.

Assuming capitalism hasn't outgrown the business cycle, recession is inevitable — and given the length of the current expansion, it can't be too far away.  The Fed fights recession by significantly cutting interest rates; but with rates already so low, there's not enough to cut to create adequate stimulus.  It will be forced to try quantitative easing again; and economists still aren't sure how well that worked last time around.

The two empty seats on the Federal Reserve Board have to be filled by individuals who not only are expert in monetary policy, but are creative enough to come up with new strategies to prevent a downturn from spiraling into a crash.  Frankly, I'm not sure anybody can come up with the needed answers right now — but I am sure we can do better than a pair of political hacks.