It never stops.
On Monday evening, a scant 12 hours after calling the Fed a “spoiled child” in a truly outlandish set of tweets, Donald Trump took aim at Jerome Powell again, this time in an exclusive interview with The Hill.
Trump took issue with the Fed’s contention that the law is on Powell’s side when it comes to the one-sided war of words with the White House. Specifically, Trump said Powell is “incorrect” to say, as the Fed chair did during his Wednesday press conference following the June FOMC meeting, that he is entitled to serve a four-year term.
Last week, Bloomberg reported that White House counsel explored options for demoting Powell in February at Trump’s request. Hours after the Fed meeting, Jennifer Jacobs, citing sources, said the president continued to believe he had the authority to remove Powell if he chose.
Asked by The Hill if he could remove the Fed chair, Trump was unequivocal. “If I wanted to”, he said. “But I have no plans to do anything”.
Or at least he doesn’t have any plans to “do anything” right now. But you can be sure that if Powell doesn’t deliver at least 75bp worth of rate cuts by the end of the year, Trump will remove him as chair or else compel his resignation, Jeff Sessions-style.
Normally, I wouldn’t quote Charlie Gasparino, but on Monday afternoon, he opined that “Jay Powell is Trump’s new Jeff Sessions and he will continue to serve as a punching bag until, like Sessions, he quits”. Charlie is exactly right.
Trump has variously suggested the Fed is the biggest threat to his reelection. On Monday morning, in his “spoiled child” tweets, Trump again insisted that were it not for the Fed’s recalcitrance, the Dow would be “thousands” of points higher and GDP would be running at 4% “or even 5%”. While his contention about the Dow might be some semblance of true, there is no chance (as in zero – none) that the US economy would be expanding at a 5% clip right now under any monetary policy regime.
The Hill, bless their hearts, asked Trump if he really believes Powell is involved in a conspiracy to undermine the presidency. “I don’t think he knows”, Trump said of Powell, condescendingly. “I don’t think he understands. He doesn’t get it.”
It goes without saying that Powell (and the Fed as a whole) most assuredly “gets it”. In fact, the irony of this whole situation is that Powell “gets it” so much, that he was arguably forced into the December hike by Trump himself.
Former vice chair Stanley Fischer, for instance, recently said the Fed might not have hiked in December were it not for the necessity of defending the central bank’s independence in the face of Trump’s incessant public attacks. That irony is completely lost on the president, which means that if anyone “doesn’t get it” here, it’s Trump.