The pretext is a pretext
If Donald Trump were really a Russian agent, would he be doing anything differently? Or so goes the speculation. One might also ask that if he really were trying to wreck the U.S. economy, would he be doing anything differently? Like the way his anti-immigration policies are lowering “the annual rate of economic growth by almost one-third.”
Or by pretextually threatening Federal Reserve Chair Jerome Powell with a criminal indictment to gain his compliance with Trump’s whims. Powell until now has reserved criticism of Trump’s strongarm efforts to dictate how the Fed sets interest rates. If nobody knows how to goose U.S. economic growth like Trump (see above), then the toddler must also be the nation’s foremost expert on managing interest rates.
Powell is finally speaking out. He’s calling Trump’s threatened criminal indictment what it is:
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress’s oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
And how is the economy (as seen in the markets) responding this morning?
Gold leaps to record high, dollar drops as US prosecutors target Fed’s Powell
‘Sell America’ returns to Wall Street after Trump ups the ante against Jerome Powell and the Fed:
Investors took one look at the Trump administration’s criminal investigation of Fed Chair Jerome Powell, and they decided to resuscitate the “Sell America” trade, selling off US stocks, bonds and the dollar.
Stock futures traded lower Monday morning. Dow futures were down 350 points, or 0.7%. S&P 500 futures fell 0.6%. Futures tied to the Nasdaq were 0.9% lower.
The US dollar weakened against other major currencies. The dollar index, which tracks the dollar’s strength against six major currencies, was down 0.4% – a sharp move for the greenback.
Treasuries fell somewhat, too. The benchmark 10-year yield, which trades in opposite direction to prices, rose to just under 4.2%, near a one-month high. Bond yields’ move higher suggests the Trump administration’s action against the Fed could backfire, and rates may not start sinking as the president has demanded.
Nobody knows economics like Trump.