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Trump Wants More Low Interest Rates From Federal Reserve but Isn't Getting Them

Trump worries that the Fed chief's predictable interest rate policy could impair the economic growth needed to make his tax policies viable.

Critics appalled that President Donald Trump publicly expressed unhappiness about the possibility of more Federal Reserve interest rate hikes are being naive if they think Fed policies have not traditionally been subject to political pressure. In this case as in others, Trump is openly engaging in behavior that a more seasoned politician might keep private.

Jerome Powell wikipediaJerome Powell wikipedia

Trump's dissatisfaction with Fed Chairman Jerome Powell flies in the face of what was expected when Trump appointed him: a continuation of the Janet Yellen status quo, which included a slow glide of rate hikes. As a candidate and a businessman, Trump echoed Fed critics who viewed the decade-long reign of super-low interest rates as dangerous and bubble-building.

Trump insisted this week that "my views haven't changed," although they are different now than they were before the economy's paper performance was his problem. He added that he intends to let the Fed's governors "do what they feel is best" even if he fears it may slow down the economic growth he craves, making his administration's deficit-exploding policies even more dangerous and raising fears of a sovereign debt crisis.

As Market Watch reports, the Federal Reserve of the near future will be nearly entirely Trump's:

Trump has had the unique ability to appoint six of seven members to the Fed board of governors. So far he has put forward five nominees. None were seen by Wall Street as Trump loyalists who would rock the boat at the central bank. Two of his picks, Powell and Randal Quarles, the vice chairman of supervision, are already on the Fed board.

Three more nominees—Richard Clarida, an economist who advised Pimco; Michelle Bowman, a Kansas City bank regulator; and Marvin Goodfriend, an economics professor at Carnegie Mellon University—are waiting for final Senate votes.

Since the financial crisis of 2008, as Jeffrey Rogers Hummel pointed out in a 2014 Reason article, the Federal Reserve has morphed dangerously "from a central bank confined primarily to managing the money supply into an institution that is now a giant government intermediary borrowing massive sums in order to allocate credit." In 2009 I wrote about the early days of the movement, fueled by Ron Paul's presidential campaign, opposing the Fed's policy of keeping interest rates very low—a policy that Trump now defends—as a danger to the economy. Sen. Rand Paul (R-Ky.) believes Trump would sign an "audit the Fed" bill, a longtime Paul family desire, even though Trump doesn't talk about the idea as president and his appointee Powell is against it.

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  • Juice||

    Trump wants a bubble and that spells trouble. With a capital T.

  • Palin's Buttplug||

    Sen. Rand Paul (R-Ky.) believes Trump would sign an "audit the Fed" bill, a longtime Paul family desire, even though Trump doesn't talk about the idea as president and his appointee Powell is against it.

    The Dotard ran a family business that answered to no one. He doesn't know what an "audit" is.*

    *Neither does Rand Paul because The Fed is already audited by Deloitte & Touche.

  • Juice||

    Toilette & Douche are the best auditors, aren't they folks?

  • bevis the lumberjack||

    Audit the Fed refers to a "policy audit" - letting the GAO audit their policy deliberations - not the financial audit that DT is already doing.

    I understand that reflexively bashing the other tribe is what you do, but you might want to slow down enough to at least understand what the fuck you're talking about first.

  • Palin's Buttplug||

    I know exactly what the fuck I am talking about. I scanned over the fucking Fed audit years ago.

    The sham bill is misnamed "Audit the Fed" to fool the rubes into letting Congress determine FOMC decisions. And idiots like Louis Gohmert and Maxine Waters + about 433 others in the House are not qualified to do that - partly because they would politicize it like Trump wants to.

  • bevis the lumberjack||

    You're so fucking dishonest.

    20 minutes ago you said that Paul's support for Audit the Fed shows that he doesn't understand that the Fed is already being audited. Since this bill purports to do something different than a financial audit, obviously Paul knows that the Fed is already subject to a financial audit, otherwise he'd be - you know - trying to get a financial audit done.

    But now you really already knew that (even though it means that what you posted above makes zero sense). Right. Arrogance + stupidity is not an appealing personality trait. In fact, it's what makes Trump so loathsome. Hey....maybe that's why you're so irrationally obsessed with trashing Trump. You're just like him and you can't stand it.

  • Palin's Buttplug||

    Rand Paul just regurgitates anti-Fed propaganda like some high school junior that just read that CT filled fictional account of the Fed called 'Creature from Jekyll Island' written by some loony weirdo that also scammed people with fake cancer cures.

    There is no evidence Rand Paul understands anything about the Fed.

  • Palin's Buttplug||

    refers to a "policy audit"

    Why not create an "Audit the Supreme Court" bill to "audit" their decisions?

  • loveconstitution1789||

    The supreme court is an equal branch of government.

    The fed is caabal of dipshits who extended the Great Recession by years to save Obama from losing in 2012.

  • Jerryskids||

    a continuation of the Janet Yellen status quo, which included a slow glide of rate hikes

    The Janet Yellen status quo for almost the entirety of the Obama years was keeping the rate flatlined. Some people might find it suspicious that it wasn't until Obama's last year in office that the Fed decided the economy was over-heating and needed some cooling down. Not me, of course, I don't subscribe to the conspiracy theory that the Fed is part of some mythical Deep State that did their damnedest to help out Obama and now would like nothing more than to trigger a recession just to screw with Trump.

  • Don't look at me.||

    Just because it looks to be obvious what happened.

  • Palin's Buttplug||

    Trump's dissatisfaction with Fed Chairman Jerome Powell flies in the face of what was expected when Trump appointed him

    Powell is actually a surprisingly good choice.

    It's almost like the Con Man said "Hey Cohn, I don't know any real New York bankers because they won't loan my deadbeat ass a dime. Can you Goldman guys find me one?"

  • Rev. Arthur L. Kirkland||

    I was surprised the new Fed chairman was not named Evgeni, Aleksandr, or Mikhail. Those guys are the only bankers who would have anything to do with Trump for decades.

  • Palin's Buttplug||

    Evgeni, Aleksandr, or Mikhail.

    Sounds like the money-launderers who bought into Trump properties in the 90s.

  • loveconstitution1789||

    Trump got a recommendation from the Clintons.

    Trump didnt need the body disposal crew the Clintons use though.

  • Bronze Khopesh||

    a sovereign debt crisis.

    This isn't a thing. the government is not a business and does not need to show a profit or use it's assets efficiently. It also does not have creditors as we commonly use the term.

    There is no one anywhere that can foreclose on the federal government regardless of it's balance sheet. It will keep on going until wiped out by conquest, the super-volcano, a plague, or some other unforeseeable major event.

    Does it spend on some amazingly stupid, wasteful and even evil things? Yes it does, but the spending itself is not a problem. Because it can create money at will to cover ANY expenditure it might need to make.

    So it does not matter, at all, how much in outstanding liabilities it has. When necessary the bills will be paid.

    Relax.

  • Leo Kovalensky II||

    Yes, at the cost of the dollar. When inflation hits what happens to your savings?

  • Leo Kovalensky II||

    *At the cost of the value of the dollar

  • Bronze Khopesh||

    Inflation can be controlled and has. It has not been a worry for awhile now and this country has never suffered from hyperinflation and likely never will.

    So it's not a problem.

  • loveconstitution1789||

    Inflation has not been controlled. Prices have been going up for a decade. The Great Recession hit in 2008 and the fed and Obama tried to control it. As government often does, they made it worse.

    Trump picked a bad chairman as this guy thinks raising the interests every quarter after them being at zero is a good idea. The interest rates need to be raised but if you raise them too much too fast it causes skewing of the already managed market.

    Higher interest rates causes borrowed money to cost more. The interest rate shsould have been a few times over the last 5 years to slowly move away from zero.

    What is the magic interest rate that these TOP MEN think it should be?

  • Agammamon||

    Next he'll tell you the government can just raise taxes to syphon off the excess money in the economy.

  • Longtobefree||

    The same thing that is happening while the feds keep interest rates very low to minimize the impact on the budget, so they can get re-elected.

  • bevis the lumberjack||

    "This isn't a thing."

    Tell that to Greece. Or Iceland. Or Zimbabwe. Or Venezuela. Or Argentina. Or....

  • Don't look at me.||

    Yes, but American money is magical.

  • Bronze Khopesh||

    Greece does not produce it's own currency. It is thus not in control of its destiny in fiscal matters. It has to rely on EU and the ECB which is not a good position to be in.

    Zimbabwe (and the Wiemar Republic which for some reason you did not mention) had other things going on that caused major shortages in supply which caused prices to jump and thus money was printed to try and catch-up which caused hyperinflation.

    Venezuela is all about meddling in the economy which again causes shortages which cause higher prices which is followed by money creation to catch up.

    In Iceland the banks got out of line and failed and took a lot of depositors down with them. It was not an Icelandic government caused situation and in any event things are fine(ish) now.

    Argentina had a lot of regulations and corruption that caused problems and they generally seemed to be incompetent and it is still a mess but not as bad as it was.

    In any event the U.S. is not any of them. And it is very unlikely that the U.S. will ever suffer their fates.

  • Agammamon||

    Greece did produce its own money. And its fiscal performance was just as bad.

  • Happy Chandler||

    The difference was those countries had debt in currencies they did not control.

    Iceland has debts in euro. Argentina was pegged to the dollar. Venezuela borrowed in dollars. Same with Zimbabwe.

    America and most Americans only borrow in dollars and repay in dollars. The only danger is deflation.

  • Palin's Buttplug||

    Because it can create money at will to cover ANY expenditure it might need to make.

    Sounds like MMT zaniness.

  • Don't look at me.||

    Meow!

  • Agammamon||

    Ha.

    The only reason no one can foreclose on the Federal government is *solely* because we have the most powerful military in the world, bar none.

    Not because of some legal nicety like 'sovereignty'. Plenty of nations in history have been 'restructured' in 'bankruptcy proceedings' after getting the shit blown out of them.

    Why do you think men with guns *still* serve the forclosure and eviction notices?

  • Agammamon||

    'so it can create money at will to cover any expense it creates'

    You've been reading Richard Murphy again. Never a good idea

  • Palin's Buttplug||

    G. Edward Griffin (born November 7, 1931) is an American author and filmmaker. Griffin's writings promote a number of false views and conspiracy theories regarding various of his political, defense and health care interests. In his book World Without Cancer, he argues that cancer is a nutritional deficiency that can be cured by consuming amygdalin, a view regarded as quackery by the medical community.[2][3][4] He is the author of The Creature from Jekyll Island (1994), which promotes false theories about the motives behind the creation of the Federal Reserve System.[2][5] He is an HIV/AIDS denialist, supports the 9/11 Truth movement, and supports a specific John F. Kennedy assassination conspiracy theory.[2] He also believes that the biblical Noah's Ark is located at the Durupınar site in Turkey

    Wikipedia

    Unfortunately this guy has a large following among "libertarians".

  • Don't look at me.||

    Another guy I never heard of.

  • Leo Kovalensky II||

    Sounds like Alex Jones without the lizard people.

  • Just Say'n||

    I don't really think Trump fully understands what exactly the fed does. Rand needs to convince him that to get back at Powell for raising interest rates he should sign an Audit the Fed Bill.

    (insert it's happening gif)

    Nice article

  • Leo Kovalensky II||

    Yeah, I never understood what could be hurt by auditing the Fed. Why should they be allowed to make decisions in secret with virtually no oversight? That sounds right up Congress' alley to me...

  • Happy Chandler||

    The point of the Fed is that it isn't controlled by Congress and manage interests rates looking at elections. That's why fed commissioners serve multiple presidents.

    Nixon fucked with the Fed's independence and left us with stagflation.

  • loveconstitution1789||

    The fed should never be without oversight.

    The fed stupidly kept interest rates at zero under Obama to save his ass. it still delayed the recovery and market reset from the Great Recession.

  • Happy Chandler||

    How I wish I could pull out Marshall Mcluhan. That's not how any of it works! Raising interest rates would have depressed inflation, recreating the great depression. That's what the EU did, and things turned out far worse.

  • loveconstitution1789||

    Most, if not 99% of Americans dont know what the federal reserve does.

  • DenverJ||

    Bah. What we really need to audit is Fort Knox. I bet that gold's been spent at least twice and the vault is as empty as Geraldo's "Al Capone's Vault".

  • Rich||

    "Full faith and credit, biotches!"

  • Rich||

    Sen. Rand Paul (R-Ky.) believes Trump would sign an "audit the Fed" bill, ... even though ... Powell is against it.

    Why would Powell be against transparency? Is what the Fed is doing illegal or classified?

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