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Report: ‘Trillions are at Stake’ in This Election

Oct. 24, 2012 10:40pm Guest Post

[Editor’s note: The following is a cross post that originally appeared on CNBC.com]:

Wall Street is beginning to game out what will happen to Federal Reserve policy and interest rates if Republican Mitt Romney is elected president.

With Romney drawing even in recent polls, markets are taking more seriously his vow to replace Fed Chairman Ben Bernanke as well as his criticism of Fed policy, creating the potential for what one fund manager calls “a monetary cliff.”

“The election may impact everything from mortgage costs to the cost of financing the U.S. debt. Trillions are at stake, as well as the fate of the U.S. dollar,” said fund manager Axel Merk.

Merk noted that Columbia Business School Dean Glenn Hubbard is a favorite of Romney’s to head the Fed when Bernanke’s term expires in January 2014, adding that Hubbard “will be leaning toward mopping up the liquidity sooner.”

Hubbard, for his part, has suggested that Bernanke might remain in the job. Other analysts have suggested that what Romney says as a candidate could change if he’s in office, especially if economic conditions change.

But Barclays noted in a recent report: “Any new Fed chairman after January 2014 in a Romney presidency is likely to be more hawkish than under an Obama presidency. Still, changes would likely be gradual, as a new chair will still need the support of the Federal Open Market Committee.”

In the event of a Romney victory, Barclays expects the market at some point to begin to pull forward higher short-term rates in the lead up to what it believes could be an announcement of Bernanke’s replacement no earlier than the summer.

Barclays predicts little effect on the long end of the market.

There’s also a question about whether Romney would begin to push for tighter policy even before the chairman’s term is up.

Economist Stephen Stanley wrote: “If President Romney tries to force an early departure from Bernanke, the Fed Chairman could resist, triggering a potentially ugly stand-off…. Clearly Bernanke would be holding the low card, and it seems doubtful that he would risk the ire of (Congress and the Administration) that can alter the fed’s institutional structure at any time.”

The president cannot force the fed chairman to resign. But —assuming no voluntary resignations from the Federal Reserve Board of Governors — the next president will have the ability to appoint the next fed chairman, vice chairman and at least one board member through 2014. Another board member’s term is up in 2016.

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Comments (17)

Individualism
Posted on October 25, 2012 at 8:06am
lets have currency competition and take our country back from the international bankers.

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ArmedAndReallyPissed
Posted on October 25, 2012 at 5:36am
With the Murders and the Coverup of them, there is more at stake than ever before. The only votes the TRAITOR should get should be two votes, the Obozo Phone “Lady” and Miss Cinnamon. I don’t understand how some people can be so ignorant as to vote for the TRAITOR a second time.
I see that the Des Moines Register is about to OR already has endorsed the TRAITOR Obozo. I could not be more ashamed or disgusted. It was Iowa that put this TRAITOR in the White House in 2008. It was Iowa that got the ball rolling for him in a huge way. And now the State of Iowa, MY STATE, is about to do it again. WAKE UP IOWANS. ARE YOU SNIFFING TOO MANY FARM FERTILIZERS ? I swear I’ll move if the Majority of Iowans vote for this lying TRAITOR again.

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Boondox
Posted on October 25, 2012 at 4:29am
What is it with these ridiculous martial law comments? Obama may have some fantasies of being a democratic dictator like his buddy Hugo Chavez, but he’s not going to declare martial law just because he looses the election. The man is arrogant and lazy, but not that stupid. Such a move would never work while Millions of Americans still own assault rifles. A million angry rednecks would storm Washington armed to the teeth if he ever tried such a thing.

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calmandcents
Posted on October 25, 2012 at 3:25am
When are we going to audit the fed??????????????????????????????
When are we going to audit the fed??????????????????????????????
When are we going to audit the fed??????????????????????????????
When are we going to audit the fed??????????????????????????????
When are we going to audit the fed??????????????????????????????
When are we going to audit the fed??????????????????????????????

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PIGSWILLNEVERFLY
Posted on October 25, 2012 at 12:11am
How many years does it take to spend 1 trillion seconds? answer: 32,000 years

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elderbat
Posted on October 24, 2012 at 11:59pm
deeply concerned about our Constitution and our freedom more than any nearly-worthless fiat money.
rather be livin’ free
under some tree
broke tho’ I be…
at least I’m livin’ FREE!!!

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neverending
Posted on October 24, 2012 at 11:44pm
“Trillions” and that is just the tip of the iceberg of all that is at stake in this election. I don’t think we can even fully imagine how huge it is.

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- old white guy
  Posted on October 25, 2012 at 8:41am
  trillions. yep, trillions more in debt. if the debt was called today the country would have to declare bankruptcy. i know some will say just print more money but that will not work, it will destroy the country faster.
  
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Jenasus
Posted on October 24, 2012 at 11:33pm
The Constitution, the Declaration of Independence and the Bill of Rights are at stake in this election.

Even after Romney wins the election Obama can impose Martial Law and rule America as the dictator that Obama aspires to be.

The trillions of dollars don’t really matter because the money is no longer backed by anything of value.

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team1blazer
Posted on October 24, 2012 at 11:09pm
QE infinitum has effectively ended the U.S. economy…your dollars are now worth pennies…Bernanke should be hanged. If you have dollars in a 401 / IRA you are a sucker….it’s worth diddly.

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Maxim Crux
Posted on October 24, 2012 at 10:54pm
I want an end to the fed.

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Dougral Supports Israel
Posted on October 24, 2012 at 10:49pm
Nothing less than the future of this nation is at stake. If Obama is re-elected, the overspending and overregulation will push us over the edge. The trillions won’t matter. If Romney is elected, we have a chance. We may still go over the edge but we may also avoid it if we pull back from big government and rely more on our own gifts and God to support ourselves.

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- xendude
  Posted on October 25, 2012 at 8:42am
  Yes if the communist/socialist/progressive/globalist is re-elected trillions are meaningless. The republic will be lost. U.N. law will usurp national law and the as a pure democracy is mob rule, social justice dictates global redistribution, misery for all but the few who govern and then how long till the cattle cars once again fill the rail yards, this time with America not only unable to stop but rather part of the madness.
  
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BODYBAG
Posted on October 24, 2012 at 10:49pm
Ive read that Bernanke has already decided not to return:
http://www.benzinga.com/markets/bonds/12/10/3018563/bernanke-to-step-down-at-end-of-term-in-2014-bankers-need-not-apply

Romney has already indicated he’ll replace him

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justangry
Posted on October 24, 2012 at 10:44pm
Have we figured out who even owns this federal reserve yet?

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- BODYBAG
  Posted on October 24, 2012 at 10:55pm
  Nope. However, Glenn Hubbard is apparently Romney’s “Go-To” Economist and his
  favorite for Fed Chair. Hubbard apparently played a significant role in the Bush Tax cuts.
  This is worth watching:
  
  CNBC – Hubbard Details Romney’s Economic Plan
  http://www.glennhubbard.net/
  
  This sounds like a recipe for an economic explosion
  
  Report this comment
- justangry
  Posted on October 25, 2012 at 8:57am
  I don’t care who the puppet figure head is. I want to know who’s robbing us.
  
  Report this comment

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