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Qatar Tribune
13 hours ago
- Business
- Qatar Tribune
Why Trump's Fed pick is raising alarm over central bank's independence
Agencies US President Donald Trump's nomination of his top economic adviser to the Federal Reserve Board could strengthen the White House's influence over the central bank and deepen concerns over its independence, analysts said. Stephen Miran, chairman of the Trump administration's Council of Economic Advisers and an architect of its tariff policy, will be nominated to temporarily fill a vacant seat on the Federal Reserve's board of governors, the US president announced Thursday on social media. Analysts warned the move could put further pressure on Fed chairman Jerome Powell and increase the chances of an interest rate cut in September – a shift pushed by Trump that could impact global nomination, now subject to Senate approval, came amid an ongoing tug-of-war between Trump and Powell over interest rates. Miran has previously proposed sweeping reforms to the central bank. 'He [Miran] could be a shadow over Powell,' said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis, referring to the Trump administration official's previous criticism of Powell over the Fed's decision to maintain interest rates. 'He's not only aiming to be nominated. He's aiming to change the charter of the Fed. So that's why this is a big issue,' she said. Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, agreed that Miran's nomination would likely 'raise the White House's influence on the Fed' and increase the chances of a September rate cut. Miran is widely expected to join Trump-appointed governors Christopher Waller and Michelle Bowman in supporting the president's push for lower borrowing costs, after they opposed the Fed's decision in July to hold rates steady. If confirmed, he would fill the seat recently vacated by Adriana Kugler, a former appointee of former US President Joe Biden, who announced her resignation last week. The term for the seat runs through January 31, whose term ends on May 15, 2026, has repeatedly resisted calls to step down amid pressure from Trump. When asked about his job security in April, he said: 'I fully intend to serve all of my term.' Earlier this week, Trump said he had a shortlist of four candidates to potentially replace Powell, including economic adviser Kevin Hassett and former Fed governor Kevin Warsh. Garcia-Herrero, at Natixis, highlighted a report co-authored by Miran last year in which he proposed overhauls to the Fed, including reducing governors' 14-year terms to eight years and granting the president the authority to remove them. Miran is best known for a paper published in November 2024 in which he called for a 'Mar-a-Lago Accord' – a strategy to gradually weaken the US dollar by pressuring major economies such as China, Japan and the European Union to sell US dollar assets and swap short-term US Treasuries for 100-year bonds. In the widely circulated paper, he blamed America's huge trade deficit on the overvaluation of the US dollar stemming from its status as the global reserve trade war against China and other major economies, launched in April, appears to align with Miran's hardline strategy. By early afternoon on Friday, the US dollar index had dipped below 98 before slightly rebounding to about 98.2, while the spot gold price stood at US$3,392 per ounce after a volatile morning session. The yuan weakened to about 7.185 per US dollar, while the yen, after slight fluctuations, stood at 147.36 per US dollar.
Hindustan Times
a day ago
- Business
- Hindustan Times
Who Is Stephen Miran, Donald Trump's Fed Nominee?
President Trump likes to stir things up, and he's done it again with his choice of Stephen Miran to fill an open seat on the Federal Reserve Board of Governors. We can't recall when a President nominated to the Fed someone whose abiding policy conviction is to weaken the U.S. dollar. Mr. Miran has been chairman of the White House Council of Economic Advisers in Mr. Trump's second term. He's an ardent promoter of the President's economic policies, especially tariffs. For Mr. Miran, this is a matter of conviction. Before his White House days he offered a detailed case for rewriting the rules of the global trade and financial system. He summed up his central argument in a widely cited November 2024 essay: 'From a trade perspective, the dollar is persistently overvalued, in large part because dollar assets function as the world's reserve currency.' Foreign central banks hold huge dollar reserves and most of the world's goods are traded in dollars. He says this global demand for dollars results in an overvalued greenback that leads to trade imbalances and harms Americans. His solution? Manage a decline in the dollar's value over time by reducing the global demand for the U.S. currency, or at least mitigate the effects of its overvaluation. Tariffs do the latter in his view by forcing foreigners to pay for the fact that their currencies are undervalued and boost their exports to the U.S. But his ambition goes beyond tariffs. In that 2024 essay he laid out other policy options for negotiating a weaker dollar and diminishing its reserve-currency status. One idea is to tax foreigners who hold U.S. Treasury debt as an incentive to hold less of it. This would amount to a de facto default on current debt. More ambitiously, Mr. Miran floats a 'Mar-a-Lago Accord' in which leading nations would negotiate a new global financial system to rebalance currency values. This echoes the Plaza and Louvre accords of the 1980s that coordinated monetary policies to arrest the surging dollar amid the rush of capital and goods into the U.S. during the Reagan economic boom. Mr. Miran says his essay wasn't 'policy advocacy,' but when you land something like this after an election it's intended to get the attention of policy makers. It did, and Mr. Miran got the White House job. One question is whether Mr. Miran has talked to Mr. Trump about all this. The President likes a weak dollar for protectionist purposes, but he also likes the dollar's reserve-currency status. That status lets the U.S. borrow more cheaply to fund its deficits and gives him leverage to impose sanctions to pursue U.S. security interests. China and Russia in particular want to break the dollar's hold on global trade so U.S. sanctions won't matter. Mr. Trump has gone out of his way to impose higher tariffs on countries that are trying to diminish the dollar's global status—see Brazil. Others have written on these pages about the burden of being a reserve-currency country, notably Lewis Lehrman and John Mueller. But their answer is a global monetary reform that links the dollar to gold. Their goal is a stable dollar, not a weak one. This is a debate worth having, as improbable as such a reform is. But Mr. Miran gives no indication he has given any thought to such a global monetary reform. His preoccupation is devaluing the dollar to reduce the flow of capital and imported goods to the U.S. None of this is at stake any time soon, since Mr. Miran would for now only fill the remaining term of Adriana Kugler, who resigned Friday and whose term ends in January. Mr. Miran would be only a single vote on the Federal Open Market Committee. But Mr. Trump is also looking to replace Fed Chair Jerome Powell, and as Chair Mr. Miran would have a global platform and influence. Senators can do the country a favor by exploring Mr. Miran's views and whether a dollar devaluationist at the Fed is in the U.S. national interest.
Mint
a day ago
- Business
- Mint
Nouriel Roubini: The US economy could thrive in spite of Trump's disastrous policies
Since United States President Donald Trump's 'Liberation Day' on 2 April, when he announced sweeping trade tariffs on friend and foe alike, the conventional wisdom about the US economy's short-term and medium- to long-term prospects has been pessimistic. Among other things, it has been said that higher tariffs will cause a US and global recession; that American exceptionalism is over; that America's fiscal and current-account deficits will become unsustainable; that the US dollar's status as the main global reserve currency will soon end; and that the dollar will sharply weaken over time. Certainly, some of the policies that Trump has announced warrant such pessimism. Tariffs, protectionism and trade wars are likely to prove stagflationary (causing higher inflation and lower growth, i.e). Also worrisome are draconian restrictions on migration, mass deportations of undocumented workers from US shores, large unfunded fiscal deficits and efforts to interfere with the US Federal Reserve's independence. Equally, the US economy would not be well served by a Mar-a-Lago Accord [along the lines of the 1985 Plaza Accord] to weaken the dollar, further damage to the rule of law at home and abroad, or tighter restrictions on foreign talent—such as scientists and students—coming to the US. Also Read: Barry Eichengreen: The end of American exceptionalism? Nonetheless, I have maintained (since last winter) that the US economy will be fine—not because of Trump's policies, but in spite of them. For starters, I expected a combination of market discipline, Trump's more sensible advisors and Federal Reserve independence to prevail, and that is what has largely happened. Trump has almost consistently 'chickened out' and pursued trade deals, rather than following through with his Liberation Day tariffs. Trump's default may be 'TALO' (Trump Always Lashes Out), but bond vigilantes and financial markets seem to have pushed him into 'TACO' (Trump Always Chickens Out) mode. As his most damaging economic policies take a milder form, the US economy will still endure some pain, but the likely end-of-year scenario is a growth recession (meaning below-potential growth), not an outright recession (typically defined as two consecutive quarters of negative growth). Second, because the positive effects of technology will always trump the negative effects of tariffs, the era of US economic exceptionalism is not over. The country is ahead of everyone—including China—in most of the revolutionary innovations [such as artificial intelligence] that will define the future. Accordingly, its potential annual growth is likely to increase from 2% to 4% by the end of the decade, before rising much higher in the 2030s. Suppose that new technologies increase its potential growth by 200 basis points while trade and other bad policies reduce it by 50 basis points; America would remain exceptional. It is America's uniquely dynamic private sector, not Trump's policies, that will determine the future growth outlook. Also Read: Is American exceptionalism finally on its last legs? Third, if potential growth does indeed accelerate toward 4% over time, US public and external debts as a share of gross domestic product (GDP) will prove sustainable, stabilizing and then falling over time (unless there is even greater fiscal recklessness). While the US Congressional Budget Office projects a rising public debt-to-GDP ratio, that is because it assumes that America's potential growth will peak at 1.8%. [Faster growth could change those forecasts.] Fourth, as long as American economic exceptionalism [survives], the 'exorbitant privilege' conferred by the dollar's global primacy is unlikely to erode. Despite higher import tariffs, US external deficits will probably remain high, since investment as a share of GDP will rise on the back of a secular tech-driven boom, while the US savings rate is likely to remain relatively stable. The resulting increase in the current-account deficit will be financed by equity inflows (both portfolio investment and foreign direct investment). In this context, the dollar's role as global reserve currency is unlikely to be significantly challenged, even if there is some modest diversification out of dollar-denominated assets. Likewise, these structural inflows will limit downside exchange-rate risks, and they could even strengthen the dollar over the medium term. Also Read: Nouriel Roubini: US economic tailwinds will help it overcome tariff headwinds In short, the US is likely to do well over the rest of this decade, not thanks to [Trump's policies], but in spite of them. There is no question that many of his policies are potentially stagflationary. But the US happens to be at the centre of some of the most important technological innovations in human history right now. These will deliver a large positive aggregate supply shock that will increase growth and reduce inflation over time. This effect should be an order of magnitude larger than the damage that stagflationary policies can induce. Of course, one shouldn't be complacent about bad policies; their negative impact could be serious. But as long as markets and bond vigilantes do their job, Trump's worst impulses may be constrained. ©2025/Project Syndicate The author is professor emeritus of economics at New York University's Stern School of Business and author of 'MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them'.
Mint
a day ago
- Business
- Mint
Who is Stephen Miran, Donald Trump's Fed nominee?
US President Donald Trump likes to stir things up, and he's done it again with his choice of Stephen Miran to fill an open seat on the Federal Reserve Board of Governors. We can't recall when a President nominated to the Fed someone whose abiding policy conviction is to weaken the U.S. dollar. Mr. Miran has been chairman of the White House Council of Economic Advisers in Mr. Trump's second term. He's an ardent promoter of the President's economic policies, especially tariffs. For Mr. Miran, this is a matter of conviction. Before his White House days he offered a detailed case for rewriting the rules of the global trade and financial system. He summed up his central argument in a widely cited November 2024 essay: 'From a trade perspective, the dollar is persistently overvalued, in large part because dollar assets function as the world's reserve currency." Foreign central banks hold huge dollar reserves and most of the world's goods are traded in dollars. He says this global demand for dollars results in an overvalued greenback that leads to trade imbalances and harms Americans. His solution? Manage a decline in the dollar's value over time by reducing the global demand for the U.S. currency, or at least mitigate the effects of its overvaluation. Tariffs do the latter in his view by forcing foreigners to pay for the fact that their currencies are undervalued and boost their exports to the U.S. But his ambition goes beyond tariffs. In that 2024 essay he laid out other policy options for negotiating a weaker dollar and diminishing its reserve-currency status. One idea is to tax foreigners who hold U.S. Treasury debt as an incentive to hold less of it. This would amount to a de facto default on current debt. More ambitiously, Mr. Miran floats a 'Mar-a-Lago Accord" in which leading nations would negotiate a new global financial system to rebalance currency values. This echoes the Plaza and Louvre accords of the 1980s that coordinated monetary policies to arrest the surging dollar amid the rush of capital and goods into the U.S. during the Reagan economic boom. Mr. Miran says his essay wasn't 'policy advocacy," but when you land something like this after an election it's intended to get the attention of policy makers. It did, and Mr. Miran got the White House job. One question is whether Mr. Miran has talked to Mr. Trump about all this. The President likes a weak dollar for protectionist purposes, but he also likes the dollar's reserve-currency status. That status lets the U.S. borrow more cheaply to fund its deficits and gives him leverage to impose sanctions to pursue U.S. security interests. China and Russia in particular want to break the dollar's hold on global trade so U.S. sanctions won't matter. Mr. Trump has gone out of his way to impose higher tariffs on countries that are trying to diminish the dollar's global status—see Brazil. Others have written on these pages about the burden of being a reserve-currency country, notably Lewis Lehrman and John Mueller. But their answer is a global monetary reform that links the dollar to gold. Their goal is a stable dollar, not a weak one. This is a debate worth having, as improbable as such a reform is. But Mr. Miran gives no indication he has given any thought to such a global monetary reform. His preoccupation is devaluing the dollar to reduce the flow of capital and imported goods to the U.S. None of this is at stake any time soon, since Mr. Miran would for now only fill the remaining term of Adriana Kugler, who resigned Friday and whose term ends in January. Mr. Miran would be only a single vote on the Federal Open Market Committee. But Mr. Trump is also looking to replace Fed Chair Jerome Powell, and as Chair Mr. Miran would have a global platform and influence. Senators can do the country a favor by exploring Mr. Miran's views and whether a dollar devaluationist at the Fed is in the U.S. national interest.
Business Times
16-07-2025
- Business
- Business Times
Is the US dollar's era of exorbitant privilege ending?
THE US dollar's global standing is a mixed blessing. Its status as a safe haven and dominant reserve currency lowers the US cost of borrowing – the so-called 'exorbitant privilege' – which means more investment, more growth and higher incomes in the aggregate. But the dollar's strength also leans against the economy's competitiveness in international trade, which puts some of its producers at a disadvantage. What a shame that, on the face of it, you can't collect the benefits of a strong currency alongside the benefits of a weak one. On one interpretation, though, the Trump administration is aiming to do just that. According to a strategy mapped out by Stephen Miran, chairman of the president's Council of Economic Advisers, it's possible to nudge the dollar's value lower without causing long-term interest rates to rise – thus achieving greater competitiveness in trade without surrendering the exorbitant privilege. The key is to change the terms of international trade and finance by using all the instruments of US power. By itself, declaring a weak-dollar policy might spur a flight from dollar assets and, as a result, sharply higher interest rates. So it's better, as Miran explained, to start with tariffs. They wouldn't do much to reduce the trade deficit, because lower imports would mean a stronger dollar, reversing the gain in competitiveness and squeezing exports as well. But this is only the first stage. The threat of punitive tariffs would give the US leverage to use alongside other pressure (such as threats to withdraw security cooperation) to extract concessions on trading partners' tariffs and non-tariff barriers – and to impose new currency arrangements (including the management of dollar reserves) that would enable an orderly dollar depreciation. This new 'Mar-a-Lago Accord' would affirm the dollar's global standing, prevent dollar flight and restrain long-term interest rates. Get the sequencing right and the end result could be moderate tariffs (as opposed to the sky-high rates threatened at the outset) and less government borrowing (thanks to tariff revenues), causing a smaller inflow of capital, a smaller trade deficit, a judiciously depreciated currency and no spike in borrowing costs. Ambitious. I noted some of the difficulties with all this (many, to be sure, emphasised by Miran) in a previous article. But how is is it working out? So far, not quite as envisaged. The initial onslaught of actual and threatened tariffs caused the dollar to depreciate, not appreciate, and pushed long-term US bond yields higher. That's not good. The combination of a cheaper dollar and higher long-term interest rates is unusual. At the very least, it suggests an uptick in nervousness about holding dollar assets – intimations, you might say, of a 'Truss moment'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Granted, it's early days. Trade flows and currency fluctuations will be hard to read until the smoke clears, if it ever does. (For instance, many importers have accelerated their purchases to build up stocks before most of the tariffs kick in, clouding the eventual effect on prices, trade volumes and exchange rates.) The administration is rewriting the rules of global trade even as it champions a huge expansion in government borrowing (tariff revenues notwithstanding) and threatens the independence of the Federal Reserve. Given all of the above, recent fluctuations in interest rates and the dollar, though notable, have been modest. Nonetheless, investors clearly have their doubts. One obvious reason for anxiety is confusion over how the strategy is meant to unfold. The endless back-and-forth on country-by-country tariffs, threats and retractions, ever-shifting deadlines and contradictory rationales make the thinking opaque to trading partners and investors alike. Yet defenders of this approach would say that's the whole idea. 'Strategic uncertainty', as Treasury Secretary Scott Bessent calls it, gives the US leverage in negotiations. On this view, you don't want the other side to know what you're thinking. Once you've struck the best possible deal, clarity will ensue. Maybe. Despite the risks, one can imagine investors coming to terms with disruption as long as it's yielding wins for US interests. Much more dangerous is the administration's failing to see where US interests really lie and, in particular, failing to see that trust in US leadership – and with that, the dollar's preeminence – is a vital US asset. Initial confusion over tariff policy is consistent with the Mar-a-Lago project; reconfiguring the international monetary and financial system is indispensable to it. Here is the core contradiction. The programme envisages new arrangements that spread the costs of global governance more equitably. It doesn't just want to smash the existing multilateral norms and institutions, a process now well under way; it wants new ones, not least to underwrite the dollar's exorbitant privilege. If confidence in the dollar subsides, other governments might question their reliance on dollar reserves for liquidity purposes and wonder whether their financial systems should be so closely integrated with America's – potentially, a vicious circle. The administration understands this threat. It has told the expanded Brics group of developing and emerging-market economies to expect higher tariffs on goods they sell to the US if they move forward with plans to rely less on the dollar in their trade with each other. Another way to defend the exorbitant privilege, discussed by Miran, would be to demand that other governments change the composition of their dollar reserves by adjusting the duration of their holdings to avoid upward pressure on long-term yields. But all such deals depend on mutual advantage and trust – and the administration's goals and methods unsettle both. In the era now ending, the US was mostly perceived as a beneficent hegemon providing global public goods and enjoying the exorbitant privilege (and other benefits besides) in return. In the new era, it promises to exert power more selfishly – to be less exploited by other countries, as the administration would say. Yet it still wants a kind of multilateralism (a durable system of arrangements and understandings) and it still wants to be in charge. The dilemma for other countries is acute. It isn't just that they're to be denied some of the benefits of pre-Trump US hegemony – in Europe's case, for instance, the protection of US military power at relatively little cost. It's also that the new order, once such concessions have been banked, will be far less stable. Favouring US imports and terming out dollar reserves might do for now, but what comes next? Even if financial markets, against the odds, take the trifecta of tariffs, fiscal incontinence and Fed intimidation in stride, one question will surely erode global confidence in the dollar system: How far can you trust a more selfish, impatient and erratic hegemon? If Trump cares about the dollar, he needs a clearer endgame and a better answer. BLOOMBERG
