Trump’s Threat to the Fed’s Independence Is No Joke
He’s blissfully unaware of the risk his posturing on monetary policy poses for the economy. Voters need to wise up.
He also understands monetary policy.
Photographer: Doug Mills/Pool/Getty Images
A second Donald Trump presidency poses grave dangers for the US. Weighed against the chances of exploding public debt, the collapse of global trade and the erosion of democratic norms, the risk that he’d attack the Federal Reserve’s independence might seem trifling. It isn’t. An effective central bank is indispensable for economic stability — and a politically subordinate central bank cannot be effective.
Last week, in an interview with Bloomberg, Trump was asked to clarify his position on interfering with Fed policy. He began as you’d expect by mocking the institution and its chairman. Running the central bank is the greatest job in government, he said: Show up once a month, flip a coin to set interest rates and be treated like a god. He said he understands monetary policy better than Fed Chair Jerome Powell (his own appointee, by the way) and expects to have a say on interest rates even if, as president, he couldn’t just tell the central bank what to do.