The Weekly Wrap: Trump Derangement Syndrome Visits The Supreme Court
Welcome back to Friday! This week the grand poobahs of the U.S. economy gathered together in a friend-of-the-court brief to let everyone know they still really do not like what Trump is up to. The prices of goods affected by tariffs fell in August, crushing the hopes of everyone at the Cato Institute. And Americans once again made it clear that they really, really don’t like Democrat economic schemes.
Here’s this week’s pain-free roundup of the economic news—no Tylenol necessary.
A Supremely Unpersuasive Amicus Brief
Every living former Federal Reserve chair, former Treasury secretaries Robert Rubin, Larry Summers, Hank Paulson, Jack Lew and Timothy Geithner, and a bunch of prestigious economists signed on to an amicus brief written by lawyers at Covington & Burling arguing—without evidence—that “allowing the removal of Governor Lisa D. Cook while the challenge to her removal is pending would threaten that independence and erode public confidence in the Fed.”
While that sounds scary, we do not expect it to carry much weight with the court. In the first place, it is not a legal argument at all. It’s an argument for a policy to protect Fed governors from removal by the president of the United States. That’s something Congress could do by writing it into a statute. Instead, Congress wrote that a president can remove Fed governors so long as there is cause for removal. Perhaps the grandees of American economics do not like this arrangement; but if it is to be changed, that’s likely to fall to Congress and not the Supreme Court.
Even the policy argument, however, is weak. The great danger cited by the brief is that the removal of Cook would raise doubts about the independence of the central bank and that this, in turn, would unanchor inflation expectations. Those unanchored expectations would, the brief claims, then cause inflation to go higher on the theory that actual inflation is largely a matter of expected inflation.