Most Wall Streeters despise the Fed, unless of course you’re at the top of the Wall Street food chain. Then you love them. The idea of what the Fed does it synonymous with cheating, and that is reviled by most moral men. The President’s non-stop shitting on the Fed is now discarded as Trump being Trump. But if you look at what he’s saying, essentially, it makes sense.
“And if we had a Federal Reserve that worked with us, you could have added another 25% to each of those numbers, I guarantee you that,” Trump said.
“But we all make mistakes, don’t we?” the president added. “Not too often. We do make them on occasion.”
It wasn’t immediately clear which “mistake” Trump was referencing: His choice to nominate Fed Chair Jerome Powell to lead the central bank or Powell’s preferred course of monetary policy.
“We are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan, known as negative interest,” he said. “Who ever heard of such a thing?”
“Give me some of that,” he said. “Give me some of that money. I want some of that money.”
The entirety of Europe is in a ZIRP world, negative even. Governments borrow money and make money off those loans, incredulously. What Trump is positing to the American people, who are deaf and blind, is the idea that we should be offered terms similar to Spain. Is that woefully absurd?
In the past, a Presidential speech shitting on the Fed would draw the ire of the media and stocks would plunge. That institution is tethered to the fate of markets. Without it, dare I say, markets would fucking plunge into the depth of hell. The reason for this is simple: we should’ve died in 2009 and have been artificially propped up since. If you do not believe me, simply look at the banks and their returns since 2009 — all down.
Now a cynic might argue that what Trump is really trying to do is destroy the credibility of the Fed, which in turn would hurt stocks and ultimately his Presidency and the country. A true Russian agent. Trumpsters would have you believe he’s doing this selflessly out of love of country. Option #3, one I ascribe to, is Trump shit-posting in real time — trying to find a foil or a party to blame for anything that might go wrong during his administration.
These comments are hilarious and probably won’t do much to effect policy change. But it should be noted that it is being noted, and the Fed’s hegemony on the world banking system, for the first time ever, is being called into question.