Is Trump Starting To Lean On The Fed Or Setting It Up?
Via Global Macro Monitor,
ZeroHedge.com
Fri, 07/20/2018
President Trump said in an interview with CNBC’s Joe Kernan yesterday morning he “does not agree”, is not “thrilled” or “happy” with the FOMC’s interest rate hikes. The full interview and transcripts will be available tomorrow.
You Heard It Here First
Presidents never, or rarely, comment on monetary policy or currency market moves for that matter (ex, the hackneyed meme “a strong dollar is the best interest of the United States.”)
President Trump hit them all in this interview, from the Fed to the Euro and Chinese RMB (“dropping like a rock”). It doesn’t surprise us.
Recall our March 21st post, The Biggest Risk At The Fed.
But this doesn’t concern us as much as the Fed’s independence.
“Just let it rip”
That is we are worried more about the freedom from White House pressure and interference in conducting monetary policy than getting a few bps wrong on the Fed Funds rate. This is especially true and relevant given the strongman tendencies and lack of respect for institutional norms of the current president.
Here is Larry Kudlow, the president’s new chief economic adviser:
“Just let it rip, for heaven’s sake,” Kudlow said of economic growth in the U.S., during a more than hour-long interview Wednesday on CNBC. “The market’s going to take care of itself. The whole story’s going to take care of itself. The Fed’s going to do what it has to do, but I hope they don’t overdo it.” – CNN
– Global Macro Monitor, March 21, 2018
We were assured by Fed insiders shortly after that post in March Chairman Jerome Powell was tough and we should not underestimate his independence. He has thus far proven to be an extraordinarily competent Fed leader.
Moreover, the president seems to have appointed very competent and independent Board governors to fill the many vacancies on the FRB.
Nothing Here, Move On
Other than committing another faux pas by publicly criticizing the Fed – and it really wasn’t that critical – the president’s comments, taken in isolation, were relatively benign and does not pose a threat to central bank independence, in our opinion.
But the totality and cumulative mistakes of amateur hour at the White House, from foreign to domestic economic policy, are slowly chipping away at the world’s confidence in the management of America, Inc..
Just look at the rise of crypto and mobile payments in the past decade?
Who is to say that a replacement for the dollar won’t come along in the next few years? That would be a huge game changer and could render the U.S.economy to the dustbin of highly indebted countries, with large deficits, and irresponsible monetary policies. And you know who they are.
Is Trump Setting Up The Fed As The Fall Guy?
CNBC’s Steve Liesman raises an interesting question: is Trump setting up the Fed to take the fall for his trade policies gone bad? Farmers are really starting to feel the pain.
As Dale grain and beef cattle farmer Dennis Whitsitt watches his crops grow in the fields, he also watches grain prices tumble as tariffs between the U.S. and several other countries take effect.
The Trump administration began talking about imposing tariffs on Chinese imports in January, starting what has come to be called a trade war. Trump’s threats led China to threaten retaliatory tariffs on U.S. goods, including soybeans and pork. Both countries enacted the threatened tariffs on July 6. The administration also imposed tariffs on goods from the European Union, Canada and Mexico, leading those countries to impose retaliatory tariffs as well. Those tariffs also included farm goods as foreign leaders looked to hurt areas that voted for Trump. In Whitsitt’s opinion, the tariffs have hit their mark, as far as farmers go.
“It doesn’t seem like a good strategy,” Whitsitt said of the trade war.
— The Herald, Jasper, IN
The Rest…HERE
