Child President

Trump is Privately Attacking The Fed Chairman

JM Ashby
Written by JM Ashby

Accusing our trade partners (mainly China) of being currency manipulators is one of Trump's favorite things to do, but he's privately attacking his hand-picked Federal Reserve Chairman Jerome Powell for not doing enough to manipulate currency.

Trump attended a fundraiser in the Hamptons on Friday where he reportedly complained to his rich donors about Powell because he believed Powell would deliver "cheap money."

President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.

Trump has publicly lamented the central bank’s recent rate increases, but his private remarks to donors are the most personal criticism of Powell’s performance to emerge so far. The people who described the comments asked not to be identified because the fundraiser was closed to the public. [...]

About 60 people attended Trump’s fundraiser at the Southampton home of Howard Lorber, the chairman of hot dog company Nathan’s Famous. Guests included Chicago Cubs co-owner Todd Ricketts; John Catsimatidis Jr., the son of Red Apple Group Chairman John Catsimatidis; Republican National Committee Chairwoman Ronna Romney McDaniel; Commerce Secretary Wilbur Ross; Treasury Secretary Steven Mnuchin; White House Chief of Staff John Kelly; and senior White House aides Jared Kushner and Dan Scavino.

Interest rates are still extraordinarily low by historical standards even after several marginal rate hikes. In fact, interest rates are so low there's some concern that the Fed may not be able to adequately respond to the next economic downturn or recession because interests rates can't go any lower than zero. Interest rates were over 4 percent before the 2008 financial crisis and were reduced to nearly zero for the first time ever in response to it. The Fed's interest rate is currently 2 percent so reducing it as much as they did in 2008 is not possible.

Now, there's plenty of reason to think Trump doesn't understand any of this nor could he explain his desire for "cheap money." He may not even be able to tell you what "cheap money" means.

Trump has personally contributed to the rising inflation and strong dollar value that has compelled the Fed to slowly raise interest rates. It would be fair to say that the Fed is only reacting to what they see and much (but not all) of what they see is a direct consequence of Trump's global trade war and his tax cuts for the rich.

To put everything more simply: Trump wants low rates and a weaker dollar (which is better for exports), but his own policies are putting it further out of reach. He is a walking contradiction.

By the way, the chairman of the Federal Reserve does not make decisions all by himself. Decisions are made by committee and the chairman or chairwoman are the public face of those decisions. I'm sure Trump doesn't understand that either and that's why he takes this personally from Jerome Powell.

  • muselet

    I believe the best way to describe Donald Trump’s grasp of economic concepts is “magical thinking.”

    –alopecia

  • swift_4

    Oh! Woe is me! I accidentally hired someone who knows what the fuck they’re doing!

  • Ken Kohl

    You had me at “a fundraiser in the Hamptons.”