With the economy and stock market starting to feel the strain of an unprovoked trade war, and the massive tax cut to billionaires and corporations failing to trickle down to the average worker, Trump doing what he does best: looking for someone else to blame for the consequences of his own actions. His next candidate: Jerome Powell, chair of the Fed.
Trump reportedly wants to fire Fed chair, a move that could wreck havoc on financial markets
Powell must be the problem, right? I mean, when in US history has the economy ever grown under the burden of short term interest rates above 2%? OK, don’t answer that question.
The point to understand for next week is that Wall Street can be really naive about some issues that may seem obvious to readers on this site. Wall Street believes in the independence of the Federal Reserve and the President.
This may be news to you. The average DKos reader realistically knows Don the Con as the man who believes he has total sovereign immunity, and can do anything he pleases. He can violate any law he pleases, from shooting a man on 5th Avenue, to paying hush money in violation of campaign finance laws, to entering into real estate deals with foreign adversaries in exchange for policy concessions. And, if investigated, he thinks he can tamper with witnesses, obstruct justice and fire anyone who investigates his crimes. He can’t be indicted, he can publicly coach witnesses on what to say during an investigation, and if it all goes bad he can pardon himself before he is either impeached or indicted.
So if I started a poll yesterday, and asked DKos readers whether Trump thought he had the right to fire Fed Chair Powell, I might have the first poll with a unanimous “yes.”
But trust me on this one. The financial community will be shocked. They don’t think the President should criticize, let alone try to influence the Fed chair. There is no law saying the President can fire the Fed chair, so it never occurred to them that Trump might do this. This is an issue they only see in emerging markets, where some autocrat like Erdogan thinks he should take control of both fiscal and monetary policy, and the market there crashes.
Don the Con is perfectly happy to retain the services of the least qualified Treasury Secretary in recent US history. He has surrounded himself with the weakest set of economic advisors of any modern President. And we all know that weak advisors don’t hurt that much, because Trump can’t read what they write and he doesn’t take their advise anyway.
But somehow Don the Con is apparently not getting mad at the people who told him to hire Powell. This nation had a brilliant, highly qualified Fed chair in Janet Yellen. She did not, and would not, have treated the office as political in any way. I was sad (for the country). when she was not reappointed by Trump when her term expired. But now, I think I’m glad for her. When Trump looked at Janet Yellen, he saw a trap. Obama appointed someone who was smart, and qualified, and did a great job. And how would Don the Con take credit for reappointing her? He had no choice to appoint someone else.
So now the advisors to the Idiot in Chief have to go into damage control mode before the market opens on Monday. The market doesn’t like, but can get used to, the notion of a two week partial government shutdown.
But the very thought that this President can control US monetary policy by serially firing Fed chair appointees will be truly frightening to people who are betting on the growth of the US economy.
Sunday, Dec 23, 2018 · 6:30:58 PM +00:00 · oc hope
Per my comment on the need for advisors to go into damage control mode before the markets open Monday, both Mulvaney and Mnuchin have stated that Trump knows he can’t fire the Fed Chair:
Mulvaney and Mnuchin Say Trump Knows He Lacks Authority to Fire Fed Chair
That should reduce concerns about this issue on Monday. (Its a bit of a relief, as Trump defenders like Stephen Moore went on CNN saying : “Because you can only fire the Fed chairman for cause, but if there ever was a reason to cause, right, it would be now with what the Fed has done.”) But, sometimes even in this administration, there is a bit of nuance. Trump didn’t tweet that the story was fake news, and that he would never fire the Fed Chair. Two aides, who better understood the gravity of the situation, made the statements. But Trump is silent, which allows him to revisit the topic and change his mind later. If you are not a family member, your longevity in the Trump administration is always uncertain. That’s one reason Mulvaney requested the title “acting” Chief of Staff. In three months, they could both be gone, or Trump could deny the story, and try to fire the Fed Chair anyway.
My thanks to the intelligent and thoughtful comments stating the legal authority that Trump cannot fire the Fed Chair. I agree. But in this environment, one always has to ask, what if he does it anyway? Does Powell go to work the next day? Does he go to court? Does the good cause argument apply to all who unanimously voted for the rate increase? Who will be in charge while the courts resolve the issue? Hopefully, we will never have to answer those questions.