On Saturday, in a rare move reflective of growing international alarm at the increasingly precarious situation in America’s democracy, Mario Draghi weighed in on Fed independence amid incessant attacks on the central bank emanating from the Trump administration.
You can read extended highlights from Draghi’s remarks here, but suffice to say this was the line that grabbed headlines:
I’m certainly worried about central bank independence in other countries, especially in the most important jurisdiction in the world.
The fact that Draghi would wade into this debate underscores just how worried folks are about the prospect of Donald Trump commandeering monetary policy. No longer is it far-fetched to suggest that Trump is going the Erdogan route. In fact, it’s the opposite of far-fetched. Rather, it is playing out in real-time, on a daily basis. Our most incisive exposition on this yet can be found in “‘Growth-Phobiacs’ And Rates That Will ‘Never Rise Again’” – here’s how we described this situation:
Over the past couple of months, this push has gone into overdrive. In the nine months since Trump first assailed Jerome Powell during an interview with CNBC’s Joe Kernen, we have gone from shocked at the president’s audacity vis-à-vis encroaching on central bank independence to totally desensitized. Now, Americans are subjected to daily calls for rate cuts from the president, his advisors, his central bank nominees and, as of Thursday, the vice president.
It never, ever stops.
Fast forward to Sunday and Trump was back at it.
“If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points”, he tweeted, without providing any evidence to support those figures. Do note that the upper-end of Trump’s “range” would have the Dow sitting at 36,400. That is, frankly, laughable.
He continued, reiterating what he told Maria Bartiromo on March 22 about where he imagines GDP would be were it not for Jerome Powell.
“GDP would have been well over 4% instead of 3%… with almost no inflation”, Trump said Sunday.
And then, he capped it off by renewing his call for the Fed to restart QE. Amusingly, Trump appeared to suggest that the Fed should have never stopped buying assets in the first place. To wit:
Quantitative tightening was a killer, should have done the exact opposite!
In other words, Trump thinks the Fed should have been buying USTs hand over fist during the past two years, a time period which, “coincidentally”, lines up with Trump issuing mountains of debt to fund tax cuts for corporations and the wealthy, a fiscal maneuver which is now manifesting itself in a ballooning deficit that’s set to reach epic proportions under the self-declared “king of debt.”
There’s little else to be said here. Trump is going to keep this up until he either gets what he wants from the Fed, or else moves to “shake things up”, either by installing sycophants like Herman Cain and Stephen Moore, or, if that doesn’t work, simply conjuring an excuse to remove Powell as chair “for cause” and letting that serve as a warning to the rest of the board.
H,
It’s considerate of you to assume that Trump is referencing the DJIA when he says the (capital S capital M) “Stock Market” would be “5,000 to 10,000 points higher,” if it weren’t for that meddling Fed. Laughable, yes, but still in the realm of somewhat-reasonable possibility.
But at this point it’s a better rule of thumb to just skip straight to the most unreasonable and nonsensical take and assume that Trump–the ‘expert’s expert’–is referencing the S&P500. Through him, all things are possible–even 300% gains on the S&P.
drunk texts Janet Yellen
I did consider making this a satire piece wherein he was talking about the S&P, but I decided it wouldn’t be very funny because it’s not entirely clear that Trump knows what the S&P even is
A satire piece is that it’s really ‘S & M’ for America. The Russians probablt have videos of that, too.
It’s been argued often that QE is essentially ‘socialism for the boomers’ and tax cuts are essentially ‘socialism for the wealthy’. I would be curious to hear Trump’s reaction to how this fits into his world view that ‘America will never be a Socialist country’?
QE is 100% robbing from the poor and giving to the rich, and telling the poor that it’s for their own good.
That’s logic for ya. Might as well go negative rates since it’s working so well in Europe.
America’s Rob Ford, on Adderall.
It’s tempting to draw comparisons between Ford and Trump, no doubt. But a lot of what Ford is doing makes sense. It’s just that, like Trump, his rhetoric is fairly extreme. If Ford could tone this down a little, he’d be a good Premier. Trump, on the other hand, is just a bag of squirrels. If someone slipped him a couple Xanax to calm down the rhetoric, his policies would still convey he’s got a 7th grade level of comprehension.
For what it’s worth, I agree with much of what Ford does, even if I don’t agree with some of his (unfounded) economic views.
I’m talking about the Rob Ford who’s been dead for 3 years. The drunk and crack addict.
Trump literally can’t go a single day without sounding like a moron.