It looks like the serious criticism that have been pouring out from within President Trump’s own administration aren’t going to slow down any time soon.
From a recent summit in Sweden, Federal Reserve Chairman Jerome Powell issued a stern warning to the Trump administration that politicians should not interfere with interest-rate policy.
Mr. Powell indirectly referred to a Nixon-era Federal Reserve Chairman chairman, Arthur Burns, who was pressured by Nixon in the lead-up to the 1972 presidential election to keep interest rates low. Isn’t is strange how often Nixon and Trump lumped together, whether explicitly or implicitly? I’m not sure Nixon got as much press during his own presidency, including actual Watergate. How does Trump think that bodes for his own presidency, one wonders.
Powell’s anecdote about Arthur Burns was intended to remind everyone — perhaps one person more than the rest — that Burns’s actions to help Nixon ended up contributing to a rapid rise in prices. One of Burns’s eventual successors, Paul Volcker, had to combat the inflation by raising interest rates as high as 20.
During his speech, Chairman Powell said:
“For a quarter century, inflation has been low and inflation expectations anchored. We must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions. In this environment, central banks cannot take our measure of independence for granted. For monetary policy, the case for central bank independence rests on the demonstrated benefits of insulating monetary policy decisions from shorter-term political considerations. Public transparency and accountability around both financial stability and monetary policy have become all the more important in light of the extraordinary actions taken by central banks in response to the global financial crisis.”
The problem seems to be that Donald Trump views our nation’s economy as he views his transactional business acumen as a real estate developer. Not only is that so far removed from relevance of our national economy — let’s not forget he filed 6 times for bankruptcy protection with respect to the field of business in which he considers himself an expert.