Why is Donald Trump the only villain in the Jerome Powell investigation?

Before Donald Trump is re-elected president in 2024, it has been leaked from his camp that he would like a seat at the FOMC table once he returns to the White House. Trump’s expressed desires to explicitly influence central bank rate-setting unexpectedly drew all sorts of ridicule from the beloved former and future president, but for one problem: Trump centrally planning the cost of credit would be no more ridiculous than people with names like Greenspan, Bernanke, Yellen and Powell.

Seemingly forgotten by Ph.D. types who are all too eager to exalt their economic intelligence by vilifying Trump is that they often reveal their own limitations while explaining Trump’s limitations. The former and future president supposedly setting a price that is the result of infinite decisions taking place every millisecond of every day around the world is certainly stupid, only for “macroeconomists” to magnify the stupidity by ascribing to themselves an ability they mock Trump as pretending to have. In reality, central planning always fails.

Hopefully, it’s a useful way of dealing with the Trump administration’s bare-bones political criminal investigation into Fed Chairman Jerome Powell. Powell cheered answering to Trump that “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best estimate of what will serve the public, rather than following the President’s preferences.”

Thomas Friedman was particularly excited by Powell’s response. Write to New York Times that “I am rarely left speechless, but I find it hard to find the words to express my respect and gratitude to Federal Reserve Chairman Jerome Powell for doing something that so few Republicans were prepared to do: Stand up to President Trump’s lies and bullying…”

Phillip Magness of the Independent Institute wrote to RealClearMarkets (which I’m editing) about Trump’s alarming politicization of the Fed as something “This usually means pressure on the central bank to spur growth through easy money.” Where do I start? Why is Trump the only person being criticized?

Implicit in Magness’s comments is that money is actually wealth, that a government with no resources can somehow inject resources into the economy through the Fed, and to intervene with interest rates and money, the Fed can somehow trick the world’s most dynamic economy into growth mode…until blinded markets belatedly discover that government intervention is bad and right things. For a free market guy, Magness implies here that markets are pretty stupid. The very idea that futures markets would be fooled even for a second by something Magness seems to think he sees clearly…

As for Friedman, cheering for Powell now ignores that Powell wanted the job in the first place and wanted it knowing full well who Trump was. On that note, does anyone seriously believe Trump didn’t convey to Powell long before his 2017 nomination what he expected from a Fed Chair?

However, Powell accepted Trump’s nomination regardless. Where was Friedman’s outrage then and where is the outrage now among economists as people with names like Hassett, Warsh and Cochrane are openly political about the roles of the Federal Reserve? Without defending Trump, he rates the defense a bit to at least be honest about his intentions.

The good news is that none of this matters. See the recent commentary on Trump’s call for a 10% maximum interest rate on credit cards. The left and the right have once again “raised” their genius by showing how Trump’s price controls would fail. Why yes, they will.

What is true of credit card price controls is equally true of Fed price controls. as in the Fed at zero it will not coincide with zero lending rates. Markets always have an opinion. Translation, don’t worry.