Trump vs Federal Reserve Central Bank – Is the Fed Set to Raise Interest Rates to Attack Trump?
Battle of Titans: Showdown looming between Donald Trump & US Central Bank
Published time: 27 Jan, 2017 13:32
Although the US stock market is smoking, and the unemployment rate is low, there remains an underlying feeling of dread among some analysts who say America has yet to pay the piper for its gains. Will Donald Trump bear the cost of disastrous Fed policy?
On the 2016 campaign trail of tears, many observers were mud-wrestling with the question: Was Donald Trump the real deal, or was he – like the snake-oil salesman who preceded him – just another silver-tongued orator with a gift for bamboozling voters?
Just one week in office, the results are in: the maverick from Manhattan is pure 100 percent anti-establishment gold; the real deal. He’s already signed off on a raft of executive orders undoing a chunk of Obama’s last-minute legacy, including withdrawing the US from TPP and ordering bricks for his Mexican Wall.
The Washington elite, comfortable for so long in their lobbyist-bought fortress, are holding their breath as Trump continues draining the proverbial swamp. However, the real estate developer probably understands better than anyone that when you drain a fetid body of water you are bound to wake up some monsters.
And we’re talking about Loch Ness-size monsters here. And while Trump’s mighty pen may have already slain some dragons, other creatures will require a bit more work. And there is no more fearsome creature in Washington, DC than the US Federal Reserve, which possesses the power to make and break presidencies.
Battle of titans: Trump vs. Yellen
Much like the US Supreme Court, the Federal Reserve is designed to serve as an apolitical institution operating beyond the pale of Washington intrigue and influence. However, trying to remove political inclinations from any Washington agency would be like trying to tell a New York Yankee fan to ignore baseball statistics.
Trump acknowledged as much in the heat of the campaign when he accused Federal Reserve Chair Janet Yellen, 70, of suppressing interest rates due to political pressure from the Obama administration.
“Well, it’s [the interest rate] staying at zero because she’s obviously political and she’s doing what Obama wants her to do,” Trump told CNBC in September, saying Yellen should be “ashamed” of what she was doing to the economy.
Indeed, ‘doomsayers’ say the US economic recovery is a grand illusion conjured up by the Federal Reserve, which is printing money faster than toilet paper, propping up “too big to fail” institutions that should have gone the way of the dinosaurs. The Central Bank has raised interest rates just once since slashing them to zero following the 2008 financial crisis.
Now it appears that Janet Yellen is wielding the magical power that could sink the mighty Trump: higher interest rates.
Trump the shrewd businessman, however, fully understands the threat that hangs over his presidency like the Sword of Damocles: “Any increase at all will be a very, very small increase because they want to keep the market up so Obama goes out and let the new guy…raise interest rates…and watch what happens in the stock market,” Trump said.
In other words, any popping of the bubble created by all of this loose money sloshing around inside of the US economy will be blamed on Donald Trump, a man who the Washington elite view as a lethal threat to their globalization plans.
Former economic adviser David Stockman fully agrees with the Republican leader, even advising him to remove Yellen before her policies sink his pledge to “Make America Great Again.”
“Ask for resignation on January 20th because unless this bubble is lanced, there is a huge bubble in these markets, the Trump administration is never going to come out the other side,” said Stockman, who served as the Director of the Office of Management and Budget under President Ronald Reagan.
“And he would be well advised to clean house, if you want to drain the swamp, the place to start is in the (Federal Reserve) building because where this entire false economy, this big fat, ugly bubble that Trump talked about during the campaign actually originates,” he said.
Jim Rogers, the American businessman and investor, told me President Trump would be wise to relieve Yellen of her duties, but he doubted the US president has the powers to demand her resignation.
“I do not think he can since she has a fixed term,” Rogers said via email.
Indeed, it seems that the US Federal Reserve Chair, like the Bishop of Rome and the Supreme Court justices all enjoy life tenure regardless of their performance. Yet it has been this very private corporation, the US Federal Reserve, created on December 23, 1913 (while most lawmakers were away on Christmas break), which seems to have been largely responsible for the financial crisis of 2008.