We're still a couple of weeks out from the next Federal Reserve meeting, at which Chairman Jerome Powell and the board of governors are expected to lower interest rates, at least a little. In the meantime, Donald Trump, who's been a little hysterical at times about the Fed raising rates in 2018, has become fairly explicit in giving his advice to the supposedly independent board.
President Trump urged the Federal Reserve Friday to lower interest rates to spur "unparalleled" growth, telling the central bank, "Don't blow it!""This is our chance to build unparalleled wealth and success for the U.S., GROWTH, which would greatly reduce % debt," the president tweeted. [...]Mr. Trump said there is almost no inflation, "but it is no thanks to the Federal Reserve."
There's no need to guess as to why the president is engaged in such an aggressive lobbying campaign. Trump realizes that higher interest rates mean slower growth, and slower growth may interfere with his re-election campaign.
What often gets lost in the shuffle, however, is the fact that when the Fed raised rates, it was following Trump's advice.
"We have a big, fat bubble coming up, you watch. We have artificially induced low interest rates," Trump said two days after announcing his candidacy in 2015. "I borrow money ... you pay like nothing; they give you free money. Now that's bad, that's not good."
A few months later, as regular readers may recall, Trump complained bitterly that Janet Yellen, the then-chair of the Federal Reserve, "should have raised the rates," but she's "not doing it because the Obama administration and the president doesn't want her to." He added that Yellen was "obviously not independent" from the Democratic White House.
As Election Day drew closer, Trump again insisted not only that the Fed should raise interest rates, but that Yellen was part of some kind of conspiracy to help Democrats by keeping interest rates low and the economy revving. The Republican said in September 2016 that the Fed had created a "false economy" through "artificially low" rates.
"I think she should be ashamed of herself," Trump said about Yellin.
There's nothing subtle about any of this. Trump wanted higher rates when a Democrat was in office, and he wants lower rates now because he's in office.
Trump complained then that Yellen wasn't independent enough, and he complains now that Powell is too independent. He saw a pro-Democratic conspiracy in 2016, and he's outraged by the lack of a pro-Republican conspiracy in 2019.
When it comes to monetary policy, Donald Trump is driven by one simple question: "What's good for Donald Trump?"