Angell at Treasury Jude Wanniski December 6, 2000

Good news. I learned last night that former Federal Reserve Gov. Wayne Angell is on the short list in Austin to be Treasury Secretary in the Bush administration, should it happen as seems likely. Angell, chief economist at Bear Stearns for the last five years, would be another in the list of excellent selections Governor George W. Bush has made thus far. Angell told me several days ago that he was interested in the job, but it was not until last night that a source close to the action indicated he was under consideration. It now makes sense that Wayne had already been contacted about his availability when he spoke to me. After all, Larry Lindsey, who is Bush's closest economic advisor in Austin, was Angell's close ally at the Fed when the two were there in the early 1990s. Angell, a Kansas farmer and banker with a PhD in economics, was also Greenspan's soul mate in the years they served together. Angell came in early 1985 under the sponsorship of Senator Dole, a fellow Kansan, and Greenspan came in the summer of 1987. In a way, Angell's seniority at the Fed gave him an edge in standing up to Greenspan. Bush, I understand, is looking for someone who will do just that.

With Angell at Treasury, the opportunity for monetary reform would be at its zenith, hopefully resolving the deflationary paradox we have been worrying about at Polyconomics. Monetary policy was never better managed than when Greenspan and Angell worked closely together after Greenspan's initial miscues in 1987. Although the two maintained their friendship after Angell left for New York City in late 1994, there were no more weekly tennis matches at the Fed's courts. Their interests diverged as Angell had distinct corporate resposibilities, but these filled out his experience in bigtime, as opposed to smalltown, banking. It is conceivable Angell could have gone to Treasury had he stayed in Washington in 1995, as Dole wanted him to join him in his bid for the White House the following year, but that would have required Dole to win in 1996. It is my recollection that Dole was thinking of him as chief of staff.

Angell is now in his late 60s and may be 70 or so, but he keeps in perfect physical condition with daily runs of up to three miles. I learned of his fitness when we went to Moscow together in 1989 to advise the government on how to convert to capitalism (Gorbachev took the "shock therapy" advice of the NYTimes instead). In the two weeks we were there, no amount of pleading by our hosts at the central bank could persuade him to take even the tiniest sip of vodka in the endless toasts we encountered. (My resistance broke down.) Our advice to the Russians was to put the ruble on a gold standard. We subsequently made a second trip together, at the invitation of the Beijing government, where there was much more success in counseling monetary stability. Wayne had a private meeting with Zhu Rongji during which he warned of the evils of currency devaluation.

This should give you an idea of the direction monetary policy would take with Angell at Treasury, Greenspan at the Fed, and Lindsey at the National Economic Council which locates in the White House. It is also Angell's preference to manage the Fed's balance sheet to a price target that includes gold, with Greenspan hewing instead to the management of the broader economy through interest-rate management. In our conversations and e-mails over the last few weeks, Angell has not given me any indication of where he thinks the optimum gold price might be today, but definitely thinks it is too low and deflationary at its current level in the 260-275 range. I can't say for sure, but I would think Angell has discussed this with Greenspan in recent days.

This brief cannot conclude that Angell will get the job, only that it seems he is under serious consideration. Unlike some of the other names that have floated about, Angell has personal political skills that would go down well in a bipartisan atmosphere on Capitol Hill. He served several terms in the Kansas legislature, was one of the earliest supporters of Dole's first run for Congress, and felt the sting of defeat when he sought the GOP nomination for the U.S. Senate in the early 1980s and lost to Nancy Kassebaum. Keep your fingers crossed.