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Paul Volcker Knew Ronald Reagan And You, Mr. President, Are No Ronald Reagan

But in, like, a good way, I guess?
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By Federalreserve [Public domain], via Wikimedia Commons

By Federalreserve [Public domain], via Wikimedia Commons

Among the many taboos broken and conventions ignored by the current president of the United States, few have the chattering classes clutching their pearls more tightly than his efforts to bully the Federal Reserve into holding the line on interests rates. Sure, the man is keeping children in cages, slut-shaming potential victims of sexual assault and shoulder shrugging off the gruesome murder and dismemberment of a resident of his own country by an oil-rich foreign power, all the while sitting at the heart of the greatest grift in American history, but challenge the sacrosanct independence of the central bank? Unthinkable! And yet, he’s at it again.

In an interview Tuesday with The Wall Street Journal, Mr. Trump acknowledged the independence the Fed has long enjoyed in setting economic policy, while also making clear he was intentionally sending a direct message to Mr. Powell that he wanted lower interest rates.

“Every time we do something great, he raises the interest rates,” Mr. Trump said, adding that Mr. Powell “almost looks like he’s happy raising interest rates.” The president declined to elaborate, and a spokeswoman for the Fed declined to comment. Mr. Trump said it was “too early to say, but maybe” he regrets nominating Mr. Powell.

Mr. Trump said it was “too early to say, but maybe” he regrets nominating Mr. Powell….

“To me the Fed is the biggest risk, because I think interest rates are being raised too quickly,” the president said just before he pushed a red button on his desk, summoning an iced cola delivered to him on a silver platter….

Asked why he thought Mr. Powell was raising rates, Mr. Trump paused, then said, “He was supposed to be a low-interest-rate guy. It’s turned out that he’s not.”

Mr. Trump demurred when asked under what circumstances he’d remove Mr. Powell, whom he selected for a four-year term that started in February. “I don’t know,” he said. “I’m just saying this: I’m very unhappy with the Fed because Obama had zero interest rates.”

This is maybe not great, if you believe that there are good reasons for central banks to be removed from such petty partisan considerations, or if you don’t think monetary policy exists solely to cast the president in a warm light. On the other hand—and we don’t often to get to say this vis-à-vis the current occupant of the White House, a man who has a special button that summons forth sugar water—it could, in this particular case, be worse. In fact, it has been.

Mr. Volcker recounts being summoned to meet with President Ronald Reagan and his chief of staff, James Baker, in the president’s library next to the Oval Office in 1984.

Reagan “didn’t say a word,” Mr. Volcker wrote. “Instead Baker delivered a message: ‘The president is ordering you not to raise interest rates before the election.’” Mr. Volcker wasn’t planning to raise rates at the time.

“I was stunned,” he wrote. “I later surmised that the library location had been chosen because, unlike the Oval Office, it probably lacked a taping system.”

Trump Steps Up Attacks on Fed Chairman Jerome Powell [WSJ]
Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction’ [DealBook]


Michael Vadon [CC BY-SA 4.0], via Wikimedia Commons

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