Federal Reserve Chairman Jerome Powell on Friday issued his sternest warning yet that politicians should not interfere with interest-rate policy, in what appeared to be a message to President Donald Trump, reports Politico.
In a speech in Sweden, Powell indirectly referred to a previous Fed chairman, Arthur Burns, who was pressured by President Richard Nixon in the lead-up to the 1972 presidential election to keep interest rates low. (See: Nixon used Alan Greenspan to get into the head of Burns.)
“For a quarter century, inflation has been low and inflation expectations anchored,” said Powell, a Trump appointee. “We must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions.”
This is an interesting warning from Powell. Why is he doing it now?
Did Powell issue this warning because someone close to Trump has attempted to influence him?
Remember, in his recent book, the well connected Henry Kaufman wrote:
Perhaps presidential preferences [about Fed policy] are conveyed through operatives; certainly they are no longer public.
-RW
How about his analysis of the root cause of inflation?
ReplyDeleteTranslation: "Mr Trump, don't interfere with the Fed fleecing the American public. It's been very profitable for me and my cronies and we don't want you screwing it up."
ReplyDelete