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President Donald Trump said Friday he would announce his choice for the next leader of the U.S. central bank “sometime next week,” and said he has “somebody very specific in mind,” as reported by the Wall Street Journal.

We know the pick will be fantastic because everything Trump does is fantastic.

“It will be a person who hopefully will do a fantastic job,” Mr. Trump said in a video posted to Instagram on Friday, adding, “I think everybody will be very impressed.”

Count me among the unimpressed, no matter who Trump chooses.

Conservative Hounds Howling

The speculation shift from Taylor to Powell has the conservatives hounds howling that Powell did not act to prevent the financial crisis and that he will not hike fast enough.

“I’m particularly concerned about how we effectively unwind this balance sheet, and John Taylor more than any other candidate is well positioned to do that,” said U.S. Rep. Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee. “Jerome Powell, I don’t know, but I have my concerns.”

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Mr. Taylor, meanwhile, is facing questions about whether he would follow his own mathematical formula for setting interest rates—dubbed the Taylor Rule—if he becomes chairman. Under the rule , short-term interest rates would be around 3.5% now, compared with the Fed benchmark federal-funds rate’s current range between 1% and 1.25%, according to Michael Feroli, chief U.S. economist at J.P. Morgan.

Mr. Taylor’s supporters have said he wouldn’t be so rigid as his arguments might suggest, with some saying he would be less likely than Mr. Powell to raise interest rates to curb inflation that could stem from GOP tax cuts.

Reason to be Unimpressed

The idea that one can set interest rates via mathematical formula is ludicrous. But let's assume otherwise. If so, we should fire the whole lot of Fed governors and follow the rule.

The rule cannot possibly work because among other things inflation cannot be properly measured. Even if inflation could be measured, actual home prices are not in the formula.

Finally, the idea that a group of people with a proven track record of blowing asset bubbles will do anything other than the same thing, is silly in and of itself.

Mike "Mish" Shedlock