Apparently at wits’ end with the White House’s relentless assault on Fed independence and Donald Trump’s incessant berating of Jerome Powell, former chairs Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen rode to the rescue on Monday with an Op-Ed in the Wall Street Journal.
“We are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons”, the four said.
Earlier this year, the White House counsel explored the legality of demoting Powell at Trump’s direction.
Read more: It’s Official: White House Weighed ‘Legality’ Of ‘Demoting’ Jerome Powell
“Monetary policy based on the political (rather than economic) needs of the moment leads to worse economic performance in the long run, including higher inflation and slower growth”, Volcker, Greenspan, Bernanke and Yellen went on to chide, effectively reminding America that Trump is setting the country on a path to becoming a banana republic.
Trump’s demands for rate cuts even as the unemployment rate loiters at a five-decade nadir and the economy continues to grow at a healthy pace, smack of autocratic overreach and a desire to overheat the economy at all costs.
The fact that the president’s exhortations come alongside the implementation of debt-funded fiscal stimulus late in the cycle only underscores the inherent precarity of Trump’s preferred policy mix.
“It is critical to preserve the Federal Reserve’s ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians”, the four chairs declared.
Trump’s derision aimed at Powell and the Fed is now a near daily spectacle on Twitter. At his worst moments, the president has tacitly suggested that the Fed is being unpatriotic by not aggressively cutting rates in order to help the US “win” a trade war of the White House’s making.
The president has repeatedly characterized the Fed as the biggest threat to his administration and reelection and his advisers have echoed that sentiment either implicitly (in the case of Larry Kudlow) or explicitly (in Peter Navarro’s case).
Mario Draghi earlier this year criticized Trump’s various encroachments on the Fed, which mirror a global trend as manifested most flagrantly in Turkey, where President Erdogan has effectively commandeered the central bank.
Now, we’ll all sit back and wait on Trump’s tweets lambasting Yellen, Greenspan and Volcker.
Read more: ‘Like It Or Not, The Heyday Of Central Bank Independence Is Behind Us’: Pimco
Rates should have been increased. A cut was a big mistake
Bids are strong for bonds now perfect time to unload them BIG LEAGUE
I bought a long term bond fund about 4 months ago……it is currently performing better than any equity fund I own.
You have no idea why that is…..do you?
I assume your bonds are now worth more.
My mom told me tonight that “they” are going to crash the economy just before the election so Trump will not get re-elected….look what happened with Bush and Obama….
They?
You seriously think Wall Street is going to cause a recession….just to make sure Trump isn’t re-elected?
GW wasn’t running for a third term…….are you suggesting that there was some conspiracy to cause the biggest recession in our lifetimes…….just so Americans would elect a black man?
Where do you guys come from? Why do you read a Report that disagrees with everything you believe to be true.
Dude chill. I’m pretty sure Brian is relaying his Mom’s opinion, not his. My mother-in-law, 83, a white god-fearing Christian, forwards the family all kinds of unbelievably crazy conspiracy theory chain emails, outright fake news, all the time. Truth has no way of reaching Trump supporters. I never imagined Tumpers could blame the economy crashing under Trump on Democrats.
Tell your mom that Trump is trying his best to crash the economy NOW so he can come to the rescue and fix the problems he created. Also tell your mom Trump is a socialist when it comes to “bailing out the farmers” again from a problem HE created
Please educate her so there is one less Trump voter. Try to get through to her please.
Perhaps…….I decided to respond to what was posted. Directed more at Anonymous than Brian.