I certainly hope a supply-sider will run the Fed. As Art Laffer has said again and again, tax something less and you get more of it. Tax something more and you get less of it.
This applies to work and investment. And growth. And production. Wait a minute, if you produce more goods, that lowers prices.
Supply-siders understand that tax incentives generate faster growth at lower inflation. And the Fed has never understood this. Never. The demand-siders at the Fed believe more growth increases inflation. They don’t understand incentives to work. They don’t understand the Laffer curve. And that’s why down through the years, they’ve done more harm than good.
Let’s add one more point. The dollar should be reliably stable and sound. Scarce dollars produce a strong greenback. Overabundant dollars wreck the currency’s value. The Laffer-Mundell model was always tax cuts and tight money.
According to Treasury man Scott Bessent, there are five finalists for the top job at the central bank. Bond-maven Rick Rieder, current Fed Governors Miki Bowman and Chris Waller, White House NEC Director Kevin Hassett, and former Fed Governor Kevin Warsh.
President Trump has said he’ll probably make up his mind sometime after Thanksgiving. Jay Powell’s term ends next May, finally. The whole institution is badly in need of change.
Now, I’m not ready to make a personal choice yet; they’re all strong players. But at this point, I’m looking for a real supply-sider to run the Fed. We’ve never had a true-blue one.
But I’ll tell you this: tax cuts and tight money can deliver four to five percent growth with virtually zero inflation. Think of it.
Read the full article here
