I want to (briefly) address the recent idiocy coming out of the White House regarding the recent Federal Funds rate hike, but I should preface this with a disclaimer, to cut off the predictable flak I’m going to catch anyway from the conspiracy nutjobs that infect the otherwise reasonable movement to “end the Fed“.
I am personally all for restoring the constitutional function of printing and valuation of our national currency back to Congress. I simply don’t trust Congress, as it is, to do this. Do the nutjobs really trust either the Democrats or Republicans to do so without compromising to banking lobbies? No? Then simmer down, nutjobs.
That out of the way, let’s talk about Donald Trump’s embarrassing spat with his Secretary of the Treasury, Steven Mnuchin, and the Federal Chairman, Jerome Powell. So, real brief, during the most recent Federal Reserve Board meeting, they members of the board voted to raise the federal funds rate from 2.0% – 2.25% to 2.25% – 2.5%.
Donald Trump was vocally opposed to the increased rate, even though, under the Constitution, it is the Legislative Branch, not the Executive Branch, that has oversight of the Federal Reserve (not that Trump has read, let alone understood, the Constitution). As is normal with the Tweeter-in-Chief, things got public fast.
Mnuchin and Powell must have reminded Trump who owns majority shares of most of his heavily leveraged real estate empire (hint: it’s not Trump), and he quickly stopped all of his criticisms of the former Goldman Sachs executive and Fed Chairman. So, what was Trump’s beef with the Federal Reserve that has the nutjobs restless?
The Federal Reserve did its job and raised the federal funds rate 0.25 points to just half the long-term average of 5.0%, so the Fed edged back from a stimulative 2.25% rate to a slightly less stimulative 2.5% rate, which would, under normal circumstances, indicate an improving economy, which has been what they’ve been selling.
It’s not like the Federal Reserve Board didn’t explain the reasoning behind the increase at length (they always do). Trump, however, infamously doesn’t like to read, not that it matters, because Trump understands that rising interest rates would (and did) drive the stock market down, which means he can’t brag about it.
And that really is the whole sordid and idiotic story. Donald Trump whined about the Federal Reserve doing what it has to do to cut off rising inflation rates, but that means fiscal policy is tightening, which raises the price of borrowing potential investment capital beyond a reasonable rate of return.
So, ultimately, Trump can no longer brag to his gullible supporters about something he had nothing to do with to begin with, and he’s mad at people who don’t have to care about how he feels. If there is one thing Trump hates more than anything (a long list), it’s people not taking him seriously, and, especially now, no one should.
Liberty is For The Win!