Donald Trump never takes responsibility for his own actions. For a man who values the opinion of his gut over that of experts, he is unsurprisingly misinformed. Yet, that did not stop him for jumping up and down on his choice for Federal Reserve Chair, Jerome (Jay) Powell. He firmly believes that Powell caused something that hurts the president’s image.
Trump told Fox Business that he was “not a little bit happy” with Powell, because “the Fed is raising rates too fast.” The president believes that it was the Fed chair’s fault the stock market dipped this week and General Motors sent nearly 14,000 well-paying jobs offshore. POTUS might consider a bromide for his gut.
The commander-in-chief spent nearly half an hour talking with The Washington Post. One of his greatest peeves was Powell. The reporter asked Trump about GM layoffs, but he answered with what was on his mind — the Fed as “my biggest threat. Yet, the 45th president was intent that he had no worries about a potential recession:
‘I’m doing deals, and I’m not being accommodated by the Fed. They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me. So far, I’m not even a little bit happy with my selection of Jay. Not even a little bit. And I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.’
The purpose of the Federal Reserve is to serve as the country’s central bank. One of its responsibilities is to set interest rates. That determines how much it will cost to borrow money. When, it is hard or too expensive for people and business to borrow money, the economy suffers.
Trump insisted that the stock market had increased 38 percent in the two years since he took office, in the interview. That was one of his lies. It was up 25 percent. He would not like it, if he knew that President Barack Obama’s first two years resulted in a greater stock market increase.
The U.S. has been able to keep its interest rates extremely low for nearly a decade. A healthy economy would see those rates increase relatively slowly to keep inflation (the cost of products, services, and homes) from unsettling the economy.
The president listened to his Treasury Secretary, billionaire Steve Mnuchin about who to run the nation’s bank. Normally, the sitting chair will stay in place for a while, so as to not rock the economy even slightly. Yet, Trump bumped Janet Yellen out of office.
Although she impressed him, the president’s people wanted him to have his own man in office. Then, too, POTUS had a real problem with Yellen’s height. The leader of this nation actually believed that Yellen was too short to be in charge of such an integral institution. She is 5-foot-3-inches tall, which Trump mentioned repeatedly to his aides on the National Economic Council.
Powell was an odd choice, because he is not an economist. However, President Obama appointed him to a Fed governor position previously. Both Yellen and Powell approved of a gradually increasing interest rate.
Since Powell took office early in 2018, he has increased interest rate three times with another raise in sight. That put him on the president’s hit list. Trump has been publicly bad-mouthing him even though the president admits:
‘Look, I took recommendations. I’m not blaming anybody.’
Former Federal Reserve vice-chairman Donald Kohn disagreed with Trump about the Fed chair. He said:
‘The Fed is doing exactly what it should be doing, which is to prevent overheating and boom- bust-type conditions in the future.’
Economics professor at the University of California at Berkeley, Brad DeLong, said that it was actually Trump’s slanted economic approach, including the vast tax cut for the wealthiest and big business, that has helped create the need for the interest increases. He said:
‘The Federal Reserve cannot be expected to do otherwise than raise interest rates. This is what Trump bought when he made his Fed appointments. So why is he surprised?’
Featured image is a screenshot via YouTube.