The Fed’s left-face decision on Jerome Powell reign

As this column goes to press, the Wall Street C-suite class is giving Jerome Powell slight odds to be reappointed as Federal Reserve chairman. Yes, he is disliked by progressives such as Elizabeth Warren; they have a big say in just about anything the Biden administration does these days and they think Powell is some pawn of Wall Street because of his banking background.

That aside, Warren has been unusually silent in recent days as President Biden’s selection deadline looms, which Wall Streeters say signals some kind of deal is in the works. The most likely outcome given that silence is that Powell will get the nod for another term, and the markets will breathe a sigh of relief that an out-and-out socialist isn’t tapped to run the nation’s central banks.

Don’t be too quick to celebrate, though, because what’s good for Wall Street isn’t necessarily in Main Street’s best interest. To appease his pal Warren, Uncle Joe will likely have to fill some of those Fed vacancies, like vice chair, with some lefties that will force the “moderate” Powell to run the Fed in a more dovish fashion than he has been (and yes, that’s possible).

For example, he may be forced to postpone his plans to taper the Fed’s money-printing bond purchases, and he will definitely work to keep interest rates at zero as he tries to navigate the Dems’ efforts to remake the US economy into a European-style welfare state.

Again, this may or may not be the scenario that emerges. Fed Governor Lael Brainard, who is adored by the progressives for her easy-money advocacy, may get the nod because Biden is about as tough with the progressive wing of his party as he was with the Taliban.

Either way, if you think the Fed has been too easy with the money supply and inflation is here to say, this isn’t a time to rejoice. The nation’s supposedly independent central bank is about to take a turn to the far left, and officially become an arm of White House fiscal policy, no matter who is named chair.

For starters, despite Powell’s reputation on Wall Street as a moderate, he’s been a horrible Fed chairman, usurping its political independence. In 2019, he allowed himself to be bullied by President Donald Trump, backing off necessary Fed rate increases amid a booming economy that would have given the central bank extra juice when it needed it during the height of the pandemic-fueled recession.

Without much wiggle room to cut short-term rates, during the COVID-19 crisis the Fed had just one real weapon in its arsenal: the heavy hammer of “quantitative easing,” economic-speak for printing money. Sure, it helped smooth out the impact of business closings and lockdowns, but it also created massive economic incentives to speculate, setting the stage for a market crash and, of course, spiking ­inflation.

It’s one of the reasons why weird crypto assets are trading the way they are and meme stocks of money-losing…