For the third time, President Obama has nominated Peter Diamond, an MIT professor, to the Federal Reserve System’s Board of Governors.  Although an astute academic and winner of the Nobel Prize, Diamond has no place at the Fed.  Diamond is a major advocate of Keynesian economics who has openly supported higher taxes, a second round of stimulus funding, and financial bailouts.  And aside from these seriously ill-founded views on fiscal policy, he has no significant experience with monetary policy – the primary mission at the Fed.

On top of this, Peter Diamond is not even legally permitted to serve on the Board of Governors.  Current law, under Section 10 of the Federal Reserve Act, states that there may not be more than one member from the same Federal District serving together on the board.  Diamond, a Massachusetts resident, is not allowed to be a member by law, unless Fed Governor Dan Tarullo, also from Massachusetts, plans on resigning. The White House has pushed back on this claiming Diamond is from Chicago – not Massachusetts.  Their justification: he taught a lecture at Northwestern University.

The bottom line: Peter Diamond not only lacks the experience the Federal Reserve position requires, but is legally barred from serving.  His positions promoting government run healthcare, raising taxes to fund Social Security, and other detrimental fiscal policies would be better (though not ideally) contained in ivory tower classrooms than destroying our already crippled economy.  The authority enjoyed by the Federal Reserve requires the nominee to have outstanding and lengthy experience in managing monetary policy and financial crises; both of which Diamond lacks.