Thank you for hard data, Peter (even if the BLS input is suspect). You know, on balance, however analysts quibble over the data, things aren’t doing too badly. We’ve certainly lived through worse times.
But I’m unsure of what to make of Trump’s threat of a major lawsuit against Powell. It will cost Powell money to defend himself, and it will cost him even more if he loses. But what do you make of the threat - that it’s primarily to intimidate him into doing what Trump wants? Is there some Fed rule that he must resign immediately if he loses the lawsuit? Is the threat meant to intimidate the rest of the Fed’s board to replace Powell themselves? You certainly understand these types of machinations better than I do, Peter, so I’m interested in your assessment…
The contretemps between Trump and Powell has escalated into an all out blood feud. Among Powell's greatest failures as Fed Chairman has been allowing the FOMC rate cut decisions to become political footballs. Trump can see that the same as anyone else, and Trump is responding in his classic Trumpian fashion--with pressure tactics.
(And for anyone who finds Trump's habits of bullying people who get in his way distressing or distasteful, crack open a biography of Lyndon Johnson. Trump is hardly the first bully to sit behind the Resolute Desk.)
If Powell loses the lawsuit does he have to resign? No, but it's a meaningless point anyway. Any lawsuit filed won't resolve itself before Powell's term as Fed Chairman ends.
What the lawsuit does do is open up a new angle for Trump to highlight Powell's manifest incompetence. A simple set of building renovations has turned into a billion dollar boondoggle on Powell's watch. If Powell can't manage something small like giving his own office a facelift, how much confidence should people put in his stewardship of the nation's interest rates?
Moreover, it is just one more way Trump makes Powell's life a living hell between now and when Powell's term expires next year. Powell wants to be stubborn and not be seen as "giving in" to President Trump on interest rates; Trump wants to make Powell pay for the privilege.
Powell could make all of this go away just by slicing 50 basis points off the federal funds rate. He could make Trump's day if he convened an extraordinary session of the FOMC to push rate cuts earlier rather than in September (Volcker kicked off his rate hike strategy in 1979 with an unscheduled FOMC meeting so there is definitely precedent). At this point even Wall Street is siding with Trump on rate cuts, so it is not as if Powell would face a barrage of criticism from financial markets.
But Powell won't do that. So Trump keeps grinding on him, and will grind him down to nothing if that's what it takes.
And look how valuable Trump’s tactics are to our nation. He backs down from no one. I once heard J D Vance admiringly refer to Trump as a “badass”. Yes! In a world with leaders like Putin, Zelensky, and Xi, that’s just what America needs at our helm.
Thank you for hard data, Peter (even if the BLS input is suspect). You know, on balance, however analysts quibble over the data, things aren’t doing too badly. We’ve certainly lived through worse times.
But I’m unsure of what to make of Trump’s threat of a major lawsuit against Powell. It will cost Powell money to defend himself, and it will cost him even more if he loses. But what do you make of the threat - that it’s primarily to intimidate him into doing what Trump wants? Is there some Fed rule that he must resign immediately if he loses the lawsuit? Is the threat meant to intimidate the rest of the Fed’s board to replace Powell themselves? You certainly understand these types of machinations better than I do, Peter, so I’m interested in your assessment…
The contretemps between Trump and Powell has escalated into an all out blood feud. Among Powell's greatest failures as Fed Chairman has been allowing the FOMC rate cut decisions to become political footballs. Trump can see that the same as anyone else, and Trump is responding in his classic Trumpian fashion--with pressure tactics.
(And for anyone who finds Trump's habits of bullying people who get in his way distressing or distasteful, crack open a biography of Lyndon Johnson. Trump is hardly the first bully to sit behind the Resolute Desk.)
If Powell loses the lawsuit does he have to resign? No, but it's a meaningless point anyway. Any lawsuit filed won't resolve itself before Powell's term as Fed Chairman ends.
What the lawsuit does do is open up a new angle for Trump to highlight Powell's manifest incompetence. A simple set of building renovations has turned into a billion dollar boondoggle on Powell's watch. If Powell can't manage something small like giving his own office a facelift, how much confidence should people put in his stewardship of the nation's interest rates?
Moreover, it is just one more way Trump makes Powell's life a living hell between now and when Powell's term expires next year. Powell wants to be stubborn and not be seen as "giving in" to President Trump on interest rates; Trump wants to make Powell pay for the privilege.
Powell could make all of this go away just by slicing 50 basis points off the federal funds rate. He could make Trump's day if he convened an extraordinary session of the FOMC to push rate cuts earlier rather than in September (Volcker kicked off his rate hike strategy in 1979 with an unscheduled FOMC meeting so there is definitely precedent). At this point even Wall Street is siding with Trump on rate cuts, so it is not as if Powell would face a barrage of criticism from financial markets.
But Powell won't do that. So Trump keeps grinding on him, and will grind him down to nothing if that's what it takes.
Smart, eloquent, and wise, Peter!
And look how valuable Trump’s tactics are to our nation. He backs down from no one. I once heard J D Vance admiringly refer to Trump as a “badass”. Yes! In a world with leaders like Putin, Zelensky, and Xi, that’s just what America needs at our helm.