Battle of the Boneheads
More Donny Trump soundbites are hitting the airwaves. The leader of the free world is fighting a battle he can’t win with the Federal Reserve, but what really is “Trumponomics”?
He wants interest rates cut “to zero, or below.” Low rates fan the flames of the stock market, allowing businesspeople to borrow cheaply for new business ventures. Unnecessarily taking them to zero, however, is like getting high on your own supply. If the economy took a turn for the worse, but rate cuts had already been exhausted, what could we do to put a smile back on investors faces? How can we pump the brakes on a stock crash?
Some say there’s no greater honor in finance than being appointed Chairman of the Federal Reserve. As Fed Chair, it falls to you and your colleagues to play the economy by ear, and make these tough interest rate decisions to ensure a secure economy long-term. When Jerome Powell took over the job last year, he probably had hoped for more than to be called a “bonehead” by the President. Alas, JayPow has no choice but to laugh it off. The poor guy’s been blamed for everything short of Brexit, so maybe he should just drop his tools, hand in his notice, and end it all.
If he actually wants to keep his legacy alive, then he should know thy enemy. Trump has an election around the corner, and he needs the stock market firing on all cylinders as he campaigns for a second term in office. The interest rate cuts he wants would come from powerful Powell, who now finds himself in the driving seat of Trump’s political destiny. Let’s not kid ourselves, though; Jerry doesn’t care! His job is to pace the US economy carefully, so an instant sugar-rush to the stock market is not in the cards. Trump won’t get his way this time!
