Breaking tradition, Donald Trump Says He’s ‘Not Happy’ About Federal Reserve Interest-Rate Increases.
President Donald Trump said Thursday he hoped the Federal Reserve would stop raising interest rates, delivering an unusual censure of the central bank.
“I am not happy about it,” Mr. Trump said about interest-rate increases during an interview conducted Thursday by CNBC.
Mr. Trump said he was “not thrilled” because every time the economy strengthens “they want to raise rates again.”
But he also said he wouldn’t interfere with the Fed. “I’m letting them do what they feel is best,” he said.
Easy Money
Europe’s “making money easy, and their currency is falling,” Mr. Trump told CNBC. “China, their currency is dropping like a rock. Our currency is going up. I have to tell you, it puts us at a disadvantage.” A stronger greenback makes U.S. exports relatively more expensive on world markets.
A Federal Reserve spokeswoman declined to comment Thursday.
Mr. Trump said he knew some people didn’t think it was appropriate for the president to comment on interest rates or the dollar, but he said of those concerns, “I couldn’t care less what they say.”
During his presidential campaign, Trump was highly critical of Fed Chair Janet Yellen. He accused her of keeping interest rates low to help Democrats. Ms. Yellen denied the accusation and said politics didn’t factor into the Fed’s decisions.
In addition to not understanding trade, Trump just proved he does not know anything about currencies either.
“Easy money”? Sheeesh! And what about that selective memory?
Mike “Mish” Shedlock
A strong dollar makes imports cheaper. Imports with higher tariffs generate tax revenue. President Trump should welcome a strong dollar.
It’s difficult to say how much Trump understands here. If he does indeed know how powerful the Fed is, as well as grasping their ability to torpedo his presidency if they desire, why would he take the job? Why would anyone want their name stamped on the economic calamities headed our way in general?
If these wimpy quarter point increases are enough to endanger the bubble economy, that alone is a tacit acknowledgement of how shaky things are. So much for all of last month’s bravado about the “greatest ever” US economy.
Trump is right about the consequences of higher rates, although he may not understand that the Fed kept rates too low for too long to prevent popping the sovereign debt bubble. He also may not appreciate the impact low rates had on pensions and insurance funds. What I don’t think many understand is that no one is going to be able to stop the dollar from rising. Whether it’s now or later in the fall, stocks are going much higher due to global capital seeking a safer haven, and the Fed will think they can stop it by raising rates, which of course will only exacerbate the problem. Proving, that it is the Fed that is truly clueless.
So what does Trump understand when it comes to economics or finance ? What happen to that Wharton education.