Central bank pays no heed to the president’s criticism
Silence is the best reaction to high-handed critics. Winston Churchill used to say he would have never reached the final point of his route if he had reacted to every barking dog. Donald Trump accosts Jerome Powell as boldly as possible. But Fed chairman pretends he doesn’t notice anything. He prefers paying attention to economics, not to politics. However, his recent speech hints to the desire to correct October’s mistake, when the mention of a long way to a neutral level of the federal funds rate provoked a slump in the stock market. One could have followed the principle “there’s so much dirt in life that the things just have to come out in the wash”, but Powell took another decision.
People don’t always grow wiser with age. Age sometimes comes unattended. The US’ 45th president doesn’t seem to be going to consider the sad experience of his predecessors. In the 1970s, Richard Nixon demanded that the rates be kept at a low level right up to the elections in a private conversation with Fed head Arthur Burns. The latter agreed, which provoked an uncontrolled inflation. No doubt, history is a great teacher, but it isn’t responsible for the students’ results. Jerome Powell understands well that Trump can make his life far more complicated, but his decisions will be judged by later generations. Of course, he can give up, turn a blind eye to economic laws and his own principles, and stop working, obeying the will of the White House. But the one who stops working is broken. It’s not about Fed’s current chairman.
The markets paid no heed to another portion of Trump’s criticism of Fed chairman, even though they used to sell and then rebuy the dollar actively in the same situation before. It’s most likely that investors understood Donald Trump’s words should be treated like Agatha Christie’s detective stories. Look for the truth in the room next door. If there was a commotion in the kitchen, Hercule Poirot would look for a corpse in the library, and so on. When the president says Fed is crazy, he must be willing to draw attention away from other problems. For example, from the increasing budget deficit of over $1 trillion or American farmers’ distress caused by the trade war with China. Undoubtedly, every good politician knows how to bury bad news and formulate an agenda correctly. But Trump sometimes reminds of a woman. If a woman keeps silent, she must be thinking what to say without thinking.
On the other hand, Trump’s position in relation to China deserves respect. First, he threatens to impose duties on all imported goods from China, then he softens his rhetoric and says he’s ready for a deal. However, he’s already happy with multi-billion tariff payments. Trump urges Beijing on compromise and acts on a big scale:
- Would you like fish or a fishing rod?
- A net and dynamite.
It seems, the US ‘president is not as narrow-minded as presented by democrats during 2016 elections. Obviously, he knows the way things should be done. But anyway, he will act the way he wants.
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