"He's making a listAnd checking it twiceGonna' find outWho's naughty or niceSanta Claus is coming to town."J. Fred Coot and Haven Gillespie, 1934
President Trump is more ominous than Santa Claus.
Yesterday I wrote that President Trump is using financial leverage and threats to expand personal power. Knuckle under, or he will jerk funding to repair a damaged bridge, rescind a university grant to pay for health research, or remove a Space Command center and send it to a bright red state. President Trump has another tool: prosecution of people who get in his way. That creates a chilling effect. The path of least resistance is to stay out of the line of potential fire. Obey in advance. Trump is targeting the Fed.
I called upon my Canadian classmate Sandford Borins for commentary on the impact of the Trump administration on Canada. Early in his career, he studied decision making at the Federal Reserve. In today's post, he contrasts the situation under Presidents Johnson and Nixon with the situation under Donald Trump.
The Bank of Canada is independent of the government of Canada. Canada has its own monetary policy independent of the U.S., but both the Bank and the government closely watch capital market conditions in the U.S.
Big Brother is Watching You
Donald Trump has ramped up his war on the Federal Reserve System, in particular its Board of Governors, with his attempt to terminate Governor Lisa Cook for a very questionable cause. Trump’s objective is to appoint a chair and a majority of the seven governors who will robotically do his bidding. Put differently, Trump wants to be able to control monetary policy and regulation of the financial system. He wants to apply the theory of the unitary executive to the work of the Federal Reserve, though its enabling legislation gives it considerable autonomy from the President. Trump’s anger at the Fed Chair whom he appointed, Jerome Powell, speaks to the intrinsic nature of central banking that sets it at odds with any president.
Researching the Fed
Central banking, and especially the Fed, has been an interest of mine since I wrote my undergraduate thesis about the influence of monetarism on the Fed in the Sixties and early Seventies. As I discussed in a previous post, part of the thesis was based on a detailed reading of the minutes of the Fed’s Open Market Committee, a group that includes the seven governors of the system and the presidents of the twelve regional banks and that sets the most direct policy instrument, the federal funds rate.
This was a period when President Lyndon Johnson wanted to run a low-interest rate monetary policy to support borrowing for the Vietnam War, and when President Richard Nixon wanted to do likewise to ensure his re-election in 1972. Military terminology had been assimilated into the halls of the Fed, and staff and observers discussed which governors and presidents were doves (favouring lower interest rates to stimulate employment and reduce the cost of federal borrowing) or hawks (favouring higher interest rates to counteract inflationary pressure). I found that the policymakers espoused a broader institutional goal of contracyclical stabilization, so that what could have been ideological debates between hawks and doves about values were transformed into evidence-based discussion about the interpretation of changing data. The data could be hard, such as reports from the Bureau of Labor Statistics, or anecdotal. I was impressed at how an institution facing ongoing political pressure from the likes of Johnson and Nixon had developed a self-conception that allowed it to maintain internal cohesion and collegiality as well as external autonomy. I was one of the first authors to study Fed minutes but, as more thorough transcripts have been released, other authors have followed suit.
The Fed Now
What do debate and discussion at the Fed look like now in contrast to how it was then? Big brother is watching now. Do governors appointed by Trump concoct economic theories that always accord with Trump’s wishes? If so, what sort of evidence-based discussion and collegiality does that create? Trump regularly denounces governors, especially Powell. The Trump Administration is poring over the personal records of governors appointed by Democratic presidents to find something to use as cause for termination, as is now the case with Governor Lisa Cook, the first Black woman to serve as a Governor. Hitherto, central bankers have been relatively low-profile, unlikely to arouse the ire of the MAGA hordes. Being denounced by Trump on social media could make governors concerned about their personal safety. Trying to prove wrongful dismissal in court is expensive, as Lisa Cook well knows.
Central banks think about a nation’s economy as a whole, and over the long term. Donald Trump is trying to destroy this key institution of the U.S. and indeed the global economy to win the next election and to satisfy his lust for domination. Jerome Powell and Lisa Cook did not, as Mark Carney says, choose this fight. But they are fighting for the survival of an institution and their honour. I hope they win.
7 comments:
This is just one example of Trump’s lust for power, but it will have a global impact. What have we done?
It has been noted that Trump succeeds by appealing to people on an emotional level. He foments fear, anger and hatred. Many Americans have become so warped that they perceive his malevolent criminality as strength, his racism as liberation from tolerance and his sexual abuse as manliness. They are as sick as he is.
Just think: the first Republican president was Abraham Lincoln, who appealed to “the better angels of our nature.” Now this.
It's generally considered by competent economists that undermining the Federal Reserve will have negative effects, and there is historical evidence to support this. Trump is trying to boost his own political fortunes with the looming midterms by pushing for a rate cut, in typical narcissistic fashion only concerned with short term results. MEANWHILE THE WHITE HOUSE THREATENED REPUBLICAN REPS WHO SUPPORTED THE EPSTEIN DISCHARGE PETITION AND THEY BACKED OFF, SO NOW THEY ALL ARE COMPLICIT WITH THE COVER UP OF CHILD RAPE. TRUMP CALLS THE EFFORT A "HOAX", AND YOU CAN SMELL THE FEAR, WHILE THE VICTIMS ARE UNITING AND COMPILING THEIR OWN LIST. JUSTICE DELAYED IS JUSTICE DENIED. THIS IS NOT GOING AWAY!!
There is little doubt that if Trump is able to take over the federal reserve, long term prosperity will be hampered. Just look at Trump’s business ventures to see the future. Why Americans voted for Trump for economic reasons is beyond my comprehension.
What was to become the "official" Republican party of the 1860s was anything but Republican, but was purely Federalist in nature.
Abraham Lincoln orated like a Jeffersonian, but governed like a Hamiltonian.
Alexander Hamilton. The founding father of Wall Street and ....Central banking.
The first true Republican, as history shows, was indeed Thomas Jefferson. Along with James Madison, Benjamin Rush, James Monroe, and the like, created the "democratic"Republican party, and they called themselves ....Republicans.
What would ultimately become the Democratic party, furiously abhorred the idea of a Central Bank, which was the crowning idea of Alexander Hamilton. I say the crowning idea because of course Alexander Hamilton wanted the president to be a lifetime appointment ...such as a "king"
Even George Washington was aghast at such an idea.
A global central bank is the crowning idea behind the world economic forum.
An institution founded by unelectable, unapproachable, unassailable "elites" in favor of complete totalitarian control of the entire worlds economy.
Adolf Hitler took control of Germany's central banking system in order to have complete control of the German financial system.
Hitler of course was not a fascist. He was a socialist.
Benito Mussolini, who was of course known to history as a fascist, centralized banking in Italy at the same time.
Of course I only need mention the Soviet Union and you will understand the vicious brutality of a centralized economic system.
Before either of them was the true upset win to the presidency of the United States of Woodrow Wilson.
Wilson gave Hamilton his crowning achievement of the creation of the Federal reserve Bank only after, very shortly after, ...the 16th amendment.
The most abhorrent, nay, THE poison pill to true American liberty ....through the amendment process... that enslaved every individual worker to the nationalist collectivist state.
Obviously the 16th amendment and the centralized federal bank go hand in hand.
Totalitarian fascism, also known as Communism, absolutely requires total control of a nation, or world economic system. Thus a central bank.
Donald Trump orates like a jackass ....meaning, he sounds exactly like you do, except this time around he is punking your stupid asses, because he is attempting to return government to Jeffersonian "democratic" REPUBLICANISM.
But we have fallen so deep down the rabbit hole of federalist authority, that it will take a furious "political struggle" ...to use your own communist terminology... to achieve true Liberty ....and yes that absolutely requires the repeal of the 16th amendment, and the destruction, utter decimation... of the Federal reserve Bank, and all central banks around the entire world.
The begrudging reality that I have to constantly contend with in our present age is the necessity of federal action within the states in order to liberate the states from their oppressive socialist state governments ...such as Oregon.
In that sense, Donald Trump is the heir apparent to Abraham Lincoln.
How many of you even understand the original Ten amendments, or truly even understand Individual liberty? In the few years that I've been wallowing in the cesspool of this blog, it is clear to me that none of you are democratic, or even know that we are a Republic ...Not a democracy.
We have a clear historical example of what a brutal failure a full-on democracy is, Athens.
Lesson learned over 3,000 years ago and yet fool hardy idealists persist in their utopian fantasies and continue to slaughter billions in order to achieve something that cannot exist.
I have been saying since before the election that Donald Trump is merely a reprieve from full-on global hostilities, but the die has been cast once again, as like the previous global conflicts, in a place called Ukraine.
And yes, the call to CRUSADE against the barbarian hordes of the East, also known as the Barbary pirates in the time of Jefferson's presidency, must be sounded loud and clear.
"The call is coming from inside the house..."
Horsefeathers I say....!!!
https://youtu.be/29E6GbYdB1c?si=jgArsdiSiXmLtXd3
Heads up to comment readers: The above post is parody, in the form of Jonathan Swift's Modest Proposal, or more directly to the over the top Marx Brothers movie. The problem with parody in a political blog, especially this one, is that my effort here is to look at messaging with a very straight, non-ironic tone. So much of today's political talk is gonzo, hair-on-fire clickbait that I thought there is a need for a deadpan description of it. So the above Horsefeathers post is gonzo, of course, but in a deadpan context. People could get fooled.
I suppose it is the same problem funeral directors have. They cannot dare tell jokes in the presence of "outsiders."
If you wonder what the practical result of not having a central bank would be, visit the Beekman Bank in Jacksonville. There are signs on the wall there that demonstrate how confused things were before the Federal Reserve. Evidently, each party to a transaction in the days of the Beekman Bank could decide what medium of exchange to use. The medium might be a note from a bank in Timbuktu or Australia, gold or silver bullion, or something else entirely. Our Federal Reserve notes work better for transactions.
Post a Comment