In case you were wondering what Stanley Fischer thinks about Donald Trump’s ongoing efforts to commandeer the Fed, the answer is that the former vice chair believes the president has created a “really awkward thing”.
Fischer, speaking Sunday at a workshop at the Interdisciplinary Center Herzliya, also predicted Trump would not reappoint Jerome Powell.
“If President Trump wins the 2020 Presidential elections, then he will not reappoint Powell to a second term, he will find somebody else”, Fischer, who resigned as vice chair in September of 2017, said. “That will lead to very different monetary policy, so the Fed is not fully independent of politics”.
Right. And if anybody was in any way unclear on that, the Stephen Moore/Herman Cain charade made things crystal.
Moore’s near nomination was a blatant effort to influence monetary policy by installing a raving sycophant whose claim to fame is being a moronic, supply-side sock puppet on cable television (when he’s not penning Op-Eds for not-so-venerable outlets such as IBD and The Washington Times). It said a lot about how far off the rails things were when, out of a pair of potential Fed candidates, Herman Cain was the more qualified of the two. Of course, Herman had his own baggage, which ultimately doomed his confirmation chances.
Although it looks like Trump will be unsuccessful in turning the Fed into a complete circus by injecting people like Moore into the mix, that doesn’t mean he won’t succeed in politicizing the institution with controversial but nominally qualified picks.
And that’s to say nothing of the president’s now habitual public berating of Powell. During his remarks on Sunday, Fischer noted that Trump has set the Fed up to take the blame if recession comes calling, but not necessarily the credit if it doesn’t:
At the end of 2018, [Trump] said that the Fed does not need to raise rates because that would lead to a recession. So if there is a recession he’ll say ‘I told you so’ and if not he’ll stay quiet. That creates a very uncomfortable situation for the Fed Chair.
“What the president has understood is that he can have a one-way bet by announcing what he thinks they should have done”, Fischer went on to say. “He has a perfect option and he will use it, and he’s much more sophisticated in the media, I think, than previous presidents have been.”
I’m not sure “sophisticated” is an adjective that ever works when discussing Trump, but Fischer’s point is duly noted, as is his contention that Trump accidentally undermined his own cause ahead of the December meeting by creating a situation where Powell felt like the Fed needed to hike again in order to assert its independence. If you ask Fischer, the December hike might not have happened were it not for Trump’s badgering.
Ultimately, Fischer’s message was simple: “It’s not a desirable thing to have the president pronouncing on monetary policy”.
Suffice to say Trump isn’t inclined to agree. Asked by ABC’s George Stephanopoulos whether he was concerned that incessant public lashings are putting Powell “in a box”, Trump said “Yes, I do, but I’m gonna do it anyway.”
“I’ve waited long enough”, the president added.
Watch Trump’s Fed conversation with Stephanopoulos
