CNN recently reported on GOP presidential front runner Donald Trump’s stance(s) about the Fed:
[J]ust two days ago, Trump tweeted that he thinks the Fed should be audited. This is something that fellow Republican candidate Ted Cruz supports as well as former candidate Rand Paul.
Trump chided Cruz in his tweet for missing a Senate vote on an “Audit the Fed” bill in January. The bill failed 53-44.
Trump, in his usual way, by way of baiting his rivals and confusing voters, omitted two crucial points.
First, Cruz’s Senate vote would not have led to a different outcome. It would have been purely symbolic. And Cruz was one of the original co-sponsors of that legislation, and of the even more important Brady-Cornyn Centennial Monetary Commission. Ample symbolism. CNN:
Trump’s tweet was the first time he specifically came out in favor of a full audit of the Fed. Could an audit make the Fed great again? Hmm.
Trump’s tweet looked, and looks, like an opportunistic way to bash a rival. Not a serious proposition. If Trump believed that auditing the Fed was, in the words of his tweet, “so important,” why did he wait until late February 2016 to say so?
And why in a tweet rather than in a major policy speech? CNN:
But Trump actually has already accused the Fed of being too political.
In an interview with The Hill in October, Trump said Yellen was keeping interest rates low so President Obama “doesn’t want to have a recession-slash-depression during his administration.”
That interview took place before the Fed raised rates for the first time in nine years in December. But rates remain extremely low.
Trump has repeatedly expressed concerns that the stock market is a bubble waiting to burst because of Fed policies.
As I wrote, shortly thereafter, in my column at Forbes.com:
Donald Trump’s mouth remains a hot mess. In a recent exclusive interview with The Hill he gets monetary policy both sideways and backwards.
Trump also accused Federal Reserve Chairwoman Janet Yellen of keeping interest rates low in order to shield Obama from having to leave office during a recession.
“She’s keeping the economy going, barely,” Trump said. “The reason they’re keeping the interest rate down is Obama doesn’t want to have a recession-slash-depression during his administration.”
While admiring Trump’s empathy for the thrifty … if indeed ignorance is bliss Donald Trump must be among the most blissful people on the planet. And apparently he busily is attempting to make us all blissful, here regarding Fed policy.
Thanks, Donald. Love you back! But … no thanks.
I myself have been and remain publicly critical, even harshly so, of the Yellen Fed. That said defaming Yellen’s motives is foul ball. What’s next, charges of monetary policy by “blood wherever?”
Furthermore, Trump’s position, on which he doubled down for Bloomberg, seems to be that raising interest rates will produce “a recession, or worse.” And then he berates Yellen for not raising rates. This, at best, is perverse.
Interestingly though, Trump seems to have a soft spot for Volcker — who raised interest rates aggressively in the 1980s to fight inflation.
Trump told Bloomberg in August that even though he always loved low interest rates as a real estate developer, he thought that Volcker was a “terrific guy” who was “doing what had to be done.”
But based on what Trump has said about Yellen, it seems he would want someone who is willing to hike interest rates far more dramatically than the current Fed.
The stock market may not like that very much though.
Let’s get this straight.
Trump is on record, at least twice, bashing the Fed for not doing what Trump himself says would cause, in his own words, “a recession-slash-depression.”
In the last GOP debate of 2015, Sen. Rand Paul, critiquing Gov. Chris Christie’s wildly hawkish prescription, one that could well precipitate a war with the Russian Federation, said “Well, I think if you’re in favor of World War III, you have your candidate.”
Memo, from me, to Voters:
Well, I think if you’re in favor of Great Depression II, you have your candidate.
To give Donald Trump his hyperbolic due…
not merely Great Depression II.
The Greatest! Depression! Ever!
As I also wrote in Forbes.com:
The Tax Foundation has assessed Donald Trump’s tax plan as a $10 trillion deficit bomb. Trump also has criticized the Fed for not raising interest rates, in the next breath saying that doing so would cause a “recession-slash-depression.” His proposed tariffs surely would cause not merely another Great Depression but, in Trumpian terms, “The Greatest! Depression! Ever!”
A $10 Trillion Deficit Bomb.
A “recession-slash-depression” hike in interest rates?
Declaring tariff wars that will, at very least, drive household prices through the roof?
As the great H.L. Mencken once wrote, in A Little Book in C major (1916):
Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
As for me . . . I’m looking into Cape Bretton Island.
If the Trumpocalypse hits, meet me there.
Ralph Benko, internationally published weekly columnist, co-author of The 21st Century Gold Standard, lead co-editor of the Gerald Malsbary translation from Latin to English of Copernicus’s Essay on Money, is American Principles Project’s Senior Advisor, Economics.