Email of the day
Comment of the Day

October 22 2012

Commentary by David Fuller

Email of the day

On Romney and Bernanke appointment:
"I am struggling to find an answer to my query, and was wondering if you have the answer!

"In the event that Governor Romney was elected as the President, would he have the power to remove the Chairman of Federal Reserve from office?

"I am thinking of the profound implications for QE3, gold etc., in view of Governor Romney's known opposition to Mr. Bernanke and his latest indefinite monetary stimulus."

David Fuller's view The US Federal Reserve is an independent branch of government so a President Romney could not oust Mr Bernanke. However, he could refuse to reappoint him when the Fed Chairman's current term expires on 31st January 2014, and Mr Bernanke could retire before his term expires should he wish to. Meanwhile, once inaugurated, a President Romney could also replace other members of the Fed as their terms expire.

Regarding QE, a President Romney might try to dissuade the Fed from extending Operation Twist when it expires at the end of this year but it is unlikely, in my opinion, that he would risk any public disagreement with the Fed. Moreover, I think it will be some time before short-term interest rates rise, let alone move to levels which make gold look like less of a currency haven. Also, Republicans have briefly mentioned some monetary role for gold, albeit without specifics, and a stronger dollar is unlikely to appeal to any president while the economy remains soft.

This article: How Romney could end quantitative easing, by Bruce Bartlett for the Financial Times contains additional information.

See also, GOP: In Gold We Trust.

Back to top