Before we start, I’m going to need to go into a bit about the Board of Governors of the Federal Reserve System of the United States of America (AKA the Federal Reserve Board). If you think you have enough context and just want to read about Stephen Moore, you can skip ahead to the “Now it gets interesting!” tag below.
Stephen Moore has been stealth-nominated by the White House for a position on the board of governors of the Federal Reserve System (AKA “the Federal Reserve”). Someone in such a position is called upon to make decisions about many things, but most often and most centrally decisions about the availability of credit in the United States. The Board of Governors’ principle tool to influence monetary policy is the ability to raise and lower the interest rate that banks must pay to borrow money from the Federal Reserve. Not only does this affect directly many interest rates for consumer and mortgage loans, but it also affects the total amount of money in the economy. For instance, if a bank has an opportunity to loan money out at a specific interest rate, but it doesn’t have enough to do so, it can borrow the money from the Fed at a low interest rate and then lend it out at a higher interest rate. This allows them to use the income from the higher interest customer loan to pay the interest they owe to the Fed and pocket the difference. But if the interest rate the Fed wishes to charge is high enough, the rate charged to the customer might be so high the customer does not want the loan or perhaps so high that the customer does not have credit sufficient to qualify for the same size load at that higher rate (the required monthly payments would be larger, and the customer many not be able to comfortably afford those higher payments, in the judgement of the bank, even if the customer believes they could).