When the recently appointed Federal Reserve Governor Stephen Miran spoke at the Economic Club in New York this September, he broke one of the Fed’s unspoken rules. Dissent is officially noted in the central bank’s meeting minutes, but the identity of the dissenters is hidden in anonymous “dot plots.” But Miran revealed himself to be the solitary deviating forecast, the lone “Miran dot” signaling opposition to where the Fed was heading.
“The world the forecasts are trying to measure no longer exists.”
He used the moment to challenge the foundations of United States monetary policy. “I think it’s important to take these models seriously, not literally,” he said. He warned that models do not take into account the scale and speed of policy changes in light of the Trump administration’s re-election. The problem with the Fed isn’t wrong technique or bad data, he suggested, but rather that the very structure of its models is embedded in the economic and political assumptions of a bygone era. The world the forecasts are trying to measure no longer exists.
If the neoliberal economic model that has prevailed since Paul Volcker’s tenure as chair of the Fed is breaking down in the Trump era, Miran is trying to sketch a post-neoliberal framework to preserve American dominance. If he is right, he may be the first major figure inside the Fed to begin thinking beyond neoliberalism.
To call Miran “post-neoliberal” means more than the Trump era GOP rejecting market fundamentalism and free trade and embracing state planning. It means he accepts that the institutional world built under Reagan and Thatcher has exhausted itself, and is asking what new tools might be required to achieve growth, stability, and transformation.
Major crises in global capitalism have given rise to new economic theories that explain the causes of the breakdown and provide new operating models. John Maynard Keynes wrote his General Theory in the midst of the Great Depression; Milton Friedman rose to prominence during the stagflation of the 1970s. Neither produced their theories out of whole cloth. Instead, they tried to explain outcomes that existing models couldn’t account for and used those failures to expose the limits of the prior orthodoxy. Keynes relaxed some of the rigid assumptions of classical economics to explain the persistent downturn of the 1930s, while Friedman augmented the popular “Phillips curve” to make sense of the era’s mix of high inflation and high unemployment.
Like these famous predecessors, Miran is trying to follow through on tendencies that have emerged in the neoliberal era in order to be ahead of the curve of changes in capitalism. His aim is not to liquidate US-led global capitalism, but to adapt it to new realities.
Miran emerged in the public spotlight in the early months of Trump’s second term. Prior to that, he received his doctorate in Economics from Harvard and worked in the asset management industry until March 2020. He briefly served as an advisor in the Treasury during the final year of the first Trump administration, resigned when Joe Biden took office, and returned to the private sector to work as an analyst and strategist. From there, he began writing publicly about monetary policy.
Miran set his sights on the Fed’s abandonment of price stability after watching an uptick in inflation during the first two years of Biden’s presidency. Under Ben Bernanke in 2012, the central bank had introduced an explicit 2 percent inflation target as a way of reassuring markets that the Fed would prevent runaway inflation as well as deflation. While this may have been temporarily justified, it soon became a means to assert an alternative economic reality. For Miran, the near infinite ways of measuring inflation meant that any explicit inflation target would be subordinate to subjective “methodological quirks.” Political pressure on the Federal Reserve soon became a way of gaslighting the public that the economy was doing well when consumers felt the sting of rising prices. When the White House insisted in 2021 that rising prices were “transitory,” Miran called it “an exercise in data mining,” with officials actively massaging data to suit their policy objectives.
“The supposed guardians of stability had become a major source of distortion.”
Behind this complaint is a deeper critique of technocracy. The neoliberal ideal of a politically neutral central bank, free of democratic pressures, had degraded into rule by models and backward-looking formulas that served to validate policies that no longer work. By committing to the 2 percent rule, one that was regularly challenged as increasingly irrational, the global economy fell into what Miran called an “overreliance on the Fed as an engine of growth.” The supposed guardians of stability had become a major source of distortion.
The overreliance on the Fed, Miran argues, meant that technocracy and politics became increasingly entangled. The Federal Reserve has been nominally independent since 1951. But following the 2008-2009 financial crisis, writes Miran, the bank’s mandate “expanded to include inherently political activities such as credit allocation, the selection of economic winners and losers, and bank supervision.” The 2023 banking turmoil, for example, was not an isolated failure but the unintended result of reforms meant to fix the last one.
Even well-intentioned reforms deepened this politicization. The 2010 Dodd-Frank Act, which essentially replaced the earlier Transaction Account Guarantee Program, codified what Miran and Dan Katz called “perverse incentives” in the federal guarantee of bank deposits. As they explain, by promising to cover losses, the legislation encourages major investors (e.g., big banks) to let distressed banks crash and be propped up by governments before buying the failed-but-now subsidized banks. In other words, a policy meant to prevent panic instead rewarded vulture-like behavior.
The 2008 rescue programs already blurred the line between monetary and fiscal power. Because the Fed’s emergency lending facilities required Treasury authorization, every crisis intervention drew the executive branch deeper into monetary management. What was supposed to be a wall between independent central banking and government spending effectively crumbled.
In a white paper co-written with economist Nouriel Roubini, Miran argued that the Treasury had come to act like a shadow central bank. Despite the Fed hiking interest rates at the end of 2021, the Treasury continued to loosen financial conditions by changing the interest-rate risk faced by holders of government debt. Simply put, even a bond with a fixed yield carries risk because market conditions such as inflation expectations or prevailing interest rates can change before the bond matures. The longer the maturity, the longer the horizon of uncertainty.
To manage that risk, the Treasury bought more long-term debt, lowering yields on those maturities, and issued more short-term debt. This encouraged investors to hold short-term securities that functioned almost like cash, while discouraging investment in longer-term bonds that would have tied up their money for years.
Because the president directly oversees the Treasury, these policies provided the administration in power with the means to go over the head of the “independent” Federal Reserve, leading to a world of “politicized business cycles.” Of course, the Biden administration denied any such coordination, but Miran and Roubini argued that it is ultimately the “Fed-Treasury balance sheet that matters for markets and the economy, not either in isolation.”
They estimate that this activist Treasury policy had the same effect as a “100-basis-point reduction in the Fed’s policy rate” or a complete offset of the 2023 interest rate hikes. Thus, when most economists were expecting a recession in 2024, Miran was preparing the audience of The Wall Street Journal for a brief economic boom driven by this hidden monetary stimulus.
This might explain why the fastest rate hike cycle in recent decades was unable to trigger a recession in 2023-24, as it had done in the neoliberal past from the Volcker Shock to the early-1990s and mid-2000s recessions. Old policies were still being used, but in ways that required a new understanding of how the system works.
For Miran, the de facto merger of the Fed and Treasury revealed the end of the old neoliberal order. The pretense of central bank independence has collapsed. Monetary policy is now politics conducted by other means. But if the Fed is already political, Miran argues, the answer is not to restore a lost neutrality. It is to make that power accountable. The only way out is through.
Miran’s striking proposal to democratize the Federal Reserve is not entirely out of left field. In recent decades, Bernie Sanders and Ron Paul have both proposed auditing the Federal Reserve. As Miran and Katz put it, “diluting the power of the [Federal Reserve Governor] board in favor of newly democratized Reserve Banks,” would safeguard independence more effectively than the current law does. In other words, the goal of central bank independence can be achieved only by new means. Miran even calls his proposal “monetary federalism,” invoking the American ideal of dispersed power through local institutions.
For Miran, rethinking the structure of the Fed is just one piece in a larger effort to redesign the institutions of global capitalism itself. The culmination of these efforts came at the end of last year with “A User’s Guide to Restructuring the Global Economy,” better known as the Mar-a-Lago Accord. Published shortly after Trump’s second election, the paper lays out Miran’s attempt to rescue US-led global capitalism from the contradictions of the neoliberal era. He insists that the white paper is not “policy advocacy” but rather an effort to “diagnose the economic disequilibrium in the terms of trade that underlies the nationalists’ critique of the current system.” Put differently, Miran is offering a political economy of Trumpism that seeks to understand rather than simply condemn the forces that have disrupted the post-Cold War order.
The Mar-a-Lago Accord extends Miran’s domestic critique of neoliberal models to the international economic order. The global economic models that sprang up over the past half century, he argues, tried to understand deviations from the ideal by reasoning that these were simply temporary fluctuations that would balance out in the long run. But, he says, “the long run is here, and the models are wrong.”
The reason lies in the unique role of the dollar. As the world’s reserve currency, it is used by competing exporters and importers alike to finance production and consumption. Demand for dollars is “insatiable,” Miran says, and “too strong for international flows to balance, even over five decades.” The same mechanism that is supposed to stabilize global exchange also prevents it from adjusting.
This helps explain the persistence of US trade deficits. Trump’s claim that foreigners are “ripping us off” may be demagogic, but for Miran it points to a real structural problem. The United States provides a “security umbrella” as a public good to allied countries who benefit from a “peace dividend.” Furthermore, countries even benefit from the US dollar when they trade bilaterally, because the “depth and liquidity” of the dollar system makes it the cheapest way to exchange between currencies.
Domestically, the global reserve position of the US dollar was supposed to help buttress the transition from a manufacturing economy to a services economy by maintaining a supply of cheap imports and low borrowing costs. This worked for a while, but when employment became an issue in the late 2000s, the system began to break down.
The cost of reserve currency status was not noticeable at first, because, as Miran says, the United States was “large relative to the rest of the world,” so the externalities seemed minimal. But the very success of this system created a tipping point. The growth of the Chinese economy was solidified when it joined the World Trade Organization in 2001. For Miran, the global system of tariffs and trade rules is now “locked into a configuration designed for a different economic age.” Tariffs, therefore, are not protectionist in the old sense but diagnostic: a way of exposing and renegotiating the hidden imbalances built into the global economy.
Tariffs, then, are the logical culmination of trends that have been on view for over 50 years. The global imbalances created by the dollar reserve system, Miran argues, make the standard economic critiques of tariffs obsolete. In the standard models, “trade deficits will cause the dollar to weaken, which reduces imports and boosts exports, eventually wiping out the trade deficit.” But in a dollar-reserve world, that adjustment never occurs. The demand for dollars keeps the currency strong and the imbalance permanent.
As Miran put it in an interview in March, one needs to think about tariffs in terms of who is most “inflexible.” Their purpose is to make clear just how much the global system is invested in the United States, and from this, why it is in everyone’s interest for a reset. Even China has been trying to rebalance internally towards consumption since the 2008 economic crisis, and the tariffs might encourage a shift within the CCP away from those factions most vested in export-led growth.
“He’s on a mission to modernize US-led capitalism.”
That Miran has now joined the very institution he has spent years criticizing is not a contradiction but a continuation of his project. The central theme across his work, from monetary federalism to the Mar-a-Lago Accord, is that the boundaries dividing monetary, fiscal, and trade policy have collapsed. If the Fed and the Treasury already act in tandem, Miran argues, that coordination should be made deliberate and accountable. He’s on a mission to modernize US-led capitalism, turning ad-hoc crisis management into a coherent framework for political economy.
As he states in his “User’s Guide,” the success of his vision will likely depend on renewed cooperation between the Fed and the Treasury, similar to “Operation Twist” in 1961, when the two institutions made a joint attempt to save the Bretton Woods system. But most importantly, he thinks, such coordination requires “public support from the President.” Now that Miran sits on the Fed’s board, the possibility of that alignment is no longer theoretical. His former co-author Nouriel Roubini has already noted that the activist Treasury continues under Trump.
Whether Miran’s prescriptions will work is another question. Perhaps his arguments are incorrect and his predictions wrong. But they point to a deeper reality: The neoliberal order that kept markets and politics apart is gone. If we are living through a transformation in capitalism, it would behoove us to consider the urge behind this need for new economic thinking and why it is plausible. To return to Miran’s injunction, we should take him seriously, not literally.