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What Bonehead Appointed These Boneheads?

President Donald Trump continues to boast about creating the best American economy ever, but he also continues to urge the Federal Reserve Board to pursue the sort of monetary policy usually reserved for recessions and depressions. On Wednesday he “tweeted” that the Fed should be setting zero or even negative interests, and lamented about “A once in a lifetime opportunity that we are missing because of ‘Boneheads.‘”
We can’t claim to be Milton Friedman-level experts on monetary policy, but we think we understand the basics better than Trump seems to, and we’re cautiously hopeful that the “boneheads” at the Fed know best.
Trump’s “tweet” suggests he wants those unprecedented-in-American-history zero or negative interest rates so that he can rack up further trillion-dollar deficits at a lower cost, and perhaps allow him to refinance what America owes its international creditors. The self-proclaimed “King of Debt” believes he can negotiate the same kind of deal that left him rich even after six corporate bankruptcies cost his investors hundreds of million dollars, but we worry that the country would the have the same problem getting a line of credit that Trump has had ever since his casinos went under despite having house odds.
The “tweet” enviously notes that other countries have gone to zero or negative rates, but all of those countries are going into recession, partly because of the slowdown in the global economy that has followed Trump’s trade wars with just about everyone. Recessions require interest rate cuts and deficit spending, at least according to the consensus of economists on both the left and right, which has proved pretty reliable over the past many decades, but the best economy ever should be able to cruise along on the very low interest rates the Fed has lately set. Should the recent slowdown in the American economy slide toward recession, the Fed will need to be able to make cuts, and needs to keep that ammunition in reserve.
The “tweet” didn’t mention it, be we will note that four of the five Fed board governors and the Fed chairman — the aforementioned “boneheads” — were appointed by Trump. Trump also spent much of Wednesday denigrating newly defenestrated national security advisor John Bolton, the third man to hold the post in less than three years, calling him “not smart” and blaming him for starting the Iraq war, and Trump has had similarly unkind things to say about many of the people he appointed to powerful positions.
In his election campaign Trump promised he’d only hire “the very best people,” and he’ll probably repeat the claim during his reelection campaign, but that’s like saying the best economy ever needs negative interest rates.

— Bud Norman

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Checks, Balances, and other Trump Woes

President Donald Trump seems cocksure he could singlehandedly make America great again if only certain pesky people would get out of his way, but he’s finding that’s not the way things work in America or the rest of the world. The courts and the Congress and various other institutions have their own ideas about what to do, and are increasingly willing to assert themselves without fear of Trump’s “tweets.”
One of the peskiest institutions is the Federal Reserve Board, a stubbornly independent quasi-governmental body that plays an outsized role in the American economy by setting interesting rates and therefor determining monetary policy. Fed chairman Jerome Powell is Trump’s handpicked appointee, but like many another handpicked Trump appointee he’s greatly disappointed the president, in this case by very gradually raising the historically low interest rates and slightly easing the unprecedentedly voluminous money supply. Given the low-unemployment and chugging-along-well-enough economy that Trump routinely boasts about that’s what the Fed is supposed to do, according to the prevailing and usually reliable economy theory, but Trump would prefer the easy money that keeps the economy and stock market setting records he can brag about until the hyperinflation comes along during a future Democratic administration.
Trump has tried to solve this problem by packing the Fed’s board of governors with more compliant appointees, but the latest two have failed been forced to drop out..
One was Herman Cain, the former Godfather’s Pizza chain boss who ran for the Republican presidential bar in ’12 on a catchy “Nine Nine Nine” economic plan that somehow concluded that nine was the perfect number for the national income tax and business tax and sales tax, and even before a couple of extramarital sex scandals chased him out of the race most Republicans had concluded that despite his business success and master’s degree in business and knack for catchy slogans Cain didn’t much know about economics. Once it became clear he wasn’t going to get affirmed by Congress, Cain withdrew his name for consideration for the Fed Board.
Trump appointee Stephen Moore has also withdrawn his name from consideration, although for different reasons. The damned Democrats who control a majority in the House and are only slightly behind in the Senate didn’t like Moore’s long history of undeniably sexist public statements about uppity women playing basketball, nor his habit of making arguably racist jokes while on microphone, and a sufficient number of the slight majority of Republicans in the Senate were so put off by his utter lack of any discernible qualifications for the job that they risked the wrath of Trump’s “tweets” Moore has said on camera and written in print that he favors a return to the gold standard, which economists on both the left and right sides of the sensible mainstream consider crazy talk, and when confronted with that in his confirmation hearings Moore took the Trump-ian way out and insisted that he’d never said or written any such thing, so that didn’t go well
Meanwhile Trump’s Attorney General didn’t show up for his scheduled testimony before the House Judiciary Committee on Thursday, the White House and its various executive agencies are similarly resisting Congress’ very extensive efforts to exercise its constitutional oversight powers about a wide range of Trump’s ongoing businesses, which will all be eventually settled in those pesky courts that don’t always rule in Trump’s favor, despite Trump’s serendipitous efforts to pack the Supreme Court.
Gasoline prices are also rising, despite all the “fracking” that’s going on and Trump’s chummy relationship with the unctuous king of Saudi Arabia. Trump’s greatest trade deal ever with Canada and Mexico to replace the worst-ever North American Free Trade Agreement is also facing a bipartisan tough fight in Congress despite the slight Republican majority in the Senate. There still seems to be a worry about North Korea’s nuclear weapons program, despite Trump’s love affair with Kim Jong Un and his assurances we can all sleep soundly at night. The damned Democrats have some pretty fair questions to ask Barr about his rose-colored-glasses handling of the pretty darned damning Mueller report, and the Democrats are calling on Mueller himself to sort it out in public testimony, and we expect that to take up much of the coming news cycles.
Which is mostly fine by us. We don’t think any of these damned Democrats know any better, but we’ve seen enough of Trump to root for any established institutions that might restrain him. So far as we can tell, the hated establishment and its usual way of doing things is more reliably right than Trump.

— Bud Norman