Even if this is true, the fact that he has to say this has already compromised the independence of the Fed.
People are gonna make trading/lending decisions based not on the strength of the dollar or the US economy, but based on the political environment.
Considering the volatile nature of the political environment (and this isn’t unique to the US…this is the nature of things in a Democracy), lending is gonna have a fairly significant political uncertainty priced into the rates, which is gonna lead to billions, if not hundreds of billions, of lost productivity over the next decade or so.
Of course, this isn’t something that could be easily linked to Trump, so he, unlike every President before, doesn’t care. The lowering of the interest rates boosts his reelection chances, and that’s all he cares for.
For a more honest assessment of the economy and what it would take to spur higher growth, I found this article pretty spot on:
Jerome Powell is Preshitident Skanky-Manslut and the Trump Organization’s minion. He got his job so that Cuck Kushner and the Preshitident’s friends could get cheap loans. His predecessor was far more capable and competent. Jerry is another conservative incompetent. Conservative economics have always created debt, deficits, recessions and inequality. It does not work.
There are many ways to look at this but it all amounts to Trump making headlines and drawing attention to himself as always which made the Feds words about changing policy into a humiliation for it. It was humiliating enough that the financial markets were starting to teeter simply because of what used to be a perfectly common 20% drop in the stock index averages but then to have Trump rub their faces in it made it far worse for the already tattered remains of Fed credibility.
In Trump’s defense 99% of the people in the world think central banks should be ‘easy’ at all times. Don’t kid yourself thinking the Fed or any central bank is independent of politics Maybe on some short terms they can be a bit but long term they are now the direct decendants of the first central banker, John Law.
Central banks will start ‘printing’ again probably this year and for years and years to come.
Like the proverbial frog boiling in water, central bank QE which monetizes significant parts of their government long term debts is a revolution in central banking Reversing the foundational rule of modern central banking. That being not to monetize significant portions of government debt. The Rubicon has been crossed. This is not necessarily a bad thing. History marches on. Still it is a significant change that should be noted.
The most important aspect of this in the political sphere is that central bank ‘printing’, by the necessity of the mechanisms by which it is done injects trillions of dollars directly into the financial markets which has inflated them. This is a good way to understand the huge wealth disparity in the world now. The ‘value’ of financial assets has far outstripped the growth of the GDP economy. Of course that disparity has given the top stupendous political power and they are using that to accumulate more wealth and more power in a vicious circle. They will not give that up on their own.
WIth the US deficit approaching 7% of GDP, which is accomplished via banks and financial institutions, the agents of the wealthy, lending the money when the financial system teeters a bit as it did at year end, they will demand the Fed ‘print’ again. And so it will. If they would not then the banks and financial institutions would refuse to fund the deficit at low low low interest rates and blow the entire system up. They would rather destroy the system than to lose one bit of wealth and power.
At some point, I am going to play a weaker dollar with copper and gold stocks and some ETPs. I did play a little in January and and February, I got lucky with a slight weakening of the dollar and with gold and FCX going up. The dollar just seems to defy gravity. Eventually, it will have to fall.