Donald Trump wants the Fed to keep cutting rates. Did he mention that? Because if not, he meant to. It’s really, really important.
On Tuesday, Politico released an interview with Trump conducted by Dasha Burns. I’m not a fan. Of Trump’s, obviously, but not of Burns’s either. I suppose that isn’t relevant.
Anyway, rates. We all know Trump has two requirements for the next Fed Chair: Lower rates and loyalty. Those’ll be the same thing in the context of the Fed.
I’m not sure why bother asking Trump about this issue. It’s flagrantly obvious to everyone who knows anything at all about Trump’s relationship with the Fed that we’re entering a period during which the monetary policy-setting process will be overtly beholden.
There’s a reason Trump’s almost surely going to choose Kevin Hassett for the job despite the fact that Kevin Warsh, Chris Waller and Miki Bowman are all far better suited for the position and have each of them conveyed, in their own way, a willingness to play ball, so to speak.
Hassett’s a sycophant’s sycophant. He’s just a lackey, and like most people in Trump’s inner-circle, he’s given up on having any personal agency. Warsh, Waller and Bowman were all willing to be some degree of beholden, but they’re not committed toadies. If you’re Trump, that’s a problem.
Trump makes no bones about his disdain for Powell nor about his reservations regarding the independence of the Fed. You can — and most would — argue the Fed’s only nominally (i.e., wink-wink) independent in the first place, and I’ll agree. But if your contention is that Trump’s not angling for far more in the way of direct control over rates than any other president in modern history, I’ll have to call you misinformed or a liar.
With that in mind, Burns (and who better to ask this question than someone whose last name is “Burns”?) asked Trump flat out if lowering rates “immediately” is “a litmus test” for the new Fed Chair. True to form, Trump didn’t equivocate: “Yes,” he said.
There you have it. If you’re wondering whether the Fed will restart cuts (assuming this week’s rate reduction is the last until mid-2026) as soon as Powell’s no longer at the helm, there’s your answer.
Remember: In addition to the Chair role, Trump will de facto control at least one board seat (Stephen Miran’s), maybe two (if the Supreme lets him fire Lisa Cook) and he has two sympathetic board members in Waller and Bowman. That could give him leverage over rate decisions in two ways.
First, and most obviously, an effective majority on the board’s a very powerful position to be in, even if it doesn’t guarantee a rate cut. Second, the board could change the rules around regional Fed president appointments such that Trump could achieve a majority on the whole FOMC, at which point decisions would become foregone conclusions.
In the interview with Burns, Trump went on to deride Powell as he does at every opportunity. Powell, Trump sneered, is “a combination of not a smart person and doesn’t like Trump.” That’s a direct quote. Read it again: “…a combination of not a smart person and doesn’t like Trump.” Spoken like a… well, like “not a smart person.”
Burns tried to ask if Trump’s already beseeched his new Fed Chair to lower rates right out of the gate, but he cut her off. “The reason [Powell] doesn’t like Trump is because I hit him hard because he’s doing a bad job,” he said, speaking about himself in the third person.
Burns again attempted to ask if Trump’s spoken to Fed Chair candidates about cutting rates and Trump again cut her off to criticize Powell. “Look, he’s a negative, but this country is doing so well,” he went on, before launching into a nonsensical meander about foreign investment, which he put at $18 trillion.
“With Biden, we would’ve lost $10 trillion, okay?” Trump told Burns. “We have $18 trillion, and you know what it reduces itself to? Jobs. You’re gonna have jobs like you’ve never seen in the United States.”
When Trump took office, the three-month moving average for private-sector hiring in the US as tallied by ADP was 189,000. That figure is now negative 4,300.
Asked on Tuesday whether he’d advocate for markedly lower rates as Fed Chair, Hassett said he would. “If the data suggests that we could do it, then — like right now — I think there’s plenty of room,” he said, at a Wall Street Journal event.
Pressed to clarify if he meant rate-cut increments larger than 25bps, Hassett said, “Correct.”
I have concluded that what Trump is seeking is ratings. More viewers. It doesn’t matter what the cost is to the economy or the country; what matters is ratings. Robert F Kennedy Jr as secretary of health. Pete Hegseth as secretary of defense. As pointed out previously here, these people are clowns and sycophants. But what they really deliver on is ratings. A new Fed chair has the potential to bring in big new ratings. Cue Crazy Eddie.
Good ratings,….To prove to his Dad that he is not a loser ?
Yes. 100% correct. He even has referenced that a few times.
He is a narcissist, of a level that “America has never seen”! (At least since Robert Moses, who despite what you think of his tenure over the decades in NYC, got a lot of infrastructure built on time and on budget).
I believe that Trump is motivated first by power and second by increasing his wealth. Anything else that happens, both for the good or for the bad for our country, is just a byproduct of those two motivations. Somehow it relates back to his relationship with his mother. It’s always the mother! 🙂
His mother? The uneducated dirt poor economic migrant from a colonial backwater working as a domestic servant that spoke english as a second language?
“…like most people in Trump’s inner-circle, he’s given up on having any personal agency.”
I am curious to learn who you believe does have agency in WH decision making, then. Either T is a narcissist easily swayed by “last person he speaks to” (that flatters him) and makes decisions on a whim. Or he is a steadfast decision maker and does not allow anyone in his inner circle to amend his views with their agency. This extends, I believe, to influence from JD, Thiel and whoever since they’d need to influence him through someone in his inner circle first hand.
I would really like to see your points on this. I do follow your commentary but not as much as I probably should, which pieces of yours or others should i read? Both for economy and foreign affairs (and other areas of importance if you feel generous), as I reckon the answer might be different for each.
I mean, Trump’s an authoritarian (no one else has any agency) and a dupe (last person he spoke to bias). Those two things aren’t mutually exclusive. The “either / or” part of your comment’s a false choice. And to answer your question: You should read the Monthly Letters. Those are the most valuable articles on the site. Of course, that means sitting down and reading 5,000-10,000 words, which I realize is a heavy ask in a world defined by tweet-length attention spans, but I guess I’m just old fashioned.
At this point, we need to hire the actor from Happy Gilmore to follow up any Trump interview: “Mr. Trump, what you just said…is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points and may god have mercy on your soul.”
“… he’s given up on having any personal agency…”, and a personality, I might sdd.
It’s fun to waste time by watching TIK-TOCK or Reels short videos. The same applies to mocking the president.
But as our Dear Leader often reminds us, this is serious business. Unlike Japan, the US has been dependant on on sneaky foreigners to buy our bonds.
Perhaps that helps explain the resilience in gold prices?
Miami just elected a Democratic mayor for the first time in 30 years, while Trump is calling affordability a hoax again. The midterms are going to be fun.