Trump Is Being A Dick
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, we’re talking about:
Trump Is Being A Dick
By that, of course, I mean President Donald J. Trump is behaving like disgraced former president Richard M. Nixon.
What did you think I meant?
That is correct, the Don is pulling a page straight out of the Nixon playbook.
“Hey Google, hit us with a history lesson.”
If you didn’t read that because it is too many words, I gotcha.
Nixon said: Lower interest rates at all costs or “ELSE!” to the Federal Reserve Chairman. (He definitely was an all-caps tweeter kind of guy.)
The Fed caved, which was good in the short term and extremely bad in the long term.
I do encourage you to read the Google summary, though, because it uses the word “jawboning.”
I wasn't familiar with the term "jawboning" before, but that is exactly what the current president is doing. He is a jawboner to the max.
In fact, Trump has got to be one of the biggest boners in history.
“Hey Google, what has President Boner been saying about the Fed chair?”
Trump is pressuring the current Fed chair to lower interest rates.
Now, not only is he using his classic Trumpisms the base loves him for, with such eloquent haymakers like “moron,” “numbskull,” and “loser.”
(Miss Lippy’s first-grade class must love this president.)
But the fat Dick impersonator is pulling another tool out of the toolbox:
Weaponizing the DoJ
You remember the Department of Justice?
They’re the people who are supposed to be releasing the unredacted Epstein files as mandated by Congress.
They said, “We can’t give you any person in any way at all related to Epstein BUT…
We can go after the Fed chair for an over-budget construction project!”
Ya see, Powell went before Congress and said of the building renovation:
“There are no new water features, there's no beehives, and there's no roof terrace gardens.”
And the DoJ is saying:
“If there is so much as a drinking fountain in that building, your ass is going to prison!”
Trump has been setting this up for a bit now, as who can forget the legendary “Gotcha” moment when Trump toured the Fed and tried to dump a third building on Powell’s head in front of reporters.
Trump literally says in the interview that he will back off if Powell lowers interest rates.
Which is what this entire thing is about.
So what’s the deal with interest rates?
I hope you remember your market flashcards.
But the summary is this:
Lower rates = lower unemployment = higher inflation = economic boost
Higher rates = higher unemployment = lower inflation = economic pullback
You see the conundrum. Changing interest rates has a positive effect on one aspect of the economy and a negative effect on another.
Donald Trump, like Nixon, is a politician who wants to stay in power. Like any politician, he wants to spur economic growth in the short term to look better to the public.
What do you think a political figure is going to do if given the option between:
Looking good by boosting the economy
Looking bad by cooling off the economy
Obviously, every windbag will choose to boost the economy by lowering rates. This is exactly the reason we have the Fed: to be the bad guy and do the unpopular thing for the long-term health of the country.
The Fed’s job is to have low unemployment AND LOW INFLATION. This is called the “dual mandate.”
No, not that duel man-date.
“Hey Google, what’s up with the dual mandate?”
Would you look at that?
Congress gave the mandate in 1977 as a direct response to the mess Nixon got us in!
So what do you think?
Who should interest rates be set by?
The twelve members of the Federal Open Market Committee who have devoted their lives to reading economic and banking data, who meet and participate in discussions about the best course of action for the economy?
Or one guy acting like a Dick?
Final Thought
"When the President does it, that means that it's not illegal." – Richard M. Nixon
