Trump doesn't see himself as President of the United States, he sees himself as President of the Trump States of America. Every decision he makes is about enriching himself and his family and building the "brand". He believes only in his own decisions. He is the ultimate micro-manager where everyone is an idiot but him. His fiscal experience is from bankruptcy decisions. His military thinking is from Clint Eastwood movies and his morals are in his other pants he left at the cleaners 30 years ago. We'll all be lucky if he doesn't start another war and send a carrier and thousands of troops to the bottom of the Gulf. And he'll never admit he was wrong.
8
Were it not for the Dem-controlled House, the entire govt would be made of Trump's puppets. A once-proud country with solid institutions has been reduced to a banana republic in just 2 years, its vaunted Constitution in tatters. I agree with others commenting that a hard fall awaits us, which even a Democratic next president will be powerless to stop.
4
No matter who engages who in this discussion, Trumpsters will keep insisting that as long as "the economy's up; unemployment is down.." that's good enough for them. Too bad, however that their own ingorant myopia won't save them when the economy adversly hits them like a sucker punch to the gut.
2
Why hasn't Powell said a thing about the stupidity of Trump's tariff madness? is it that Republicans in general and Trump in particular excell at intimidation and brow beating - both people and institutions?
4
Just to play devil's advocate: isn't the conceit that any federal authority is immune to politics just that -- a conceit? If it were really possible for the Fed to be truly independent and make its decisions purely objectively there would be no need for a human staff.
Again, really just playing devil's advocate.
1
Forget all those ridiculous Republican talking points about socialism this and that.
This is how you turn the country into Venezuela.
7
Trump is a con man who spent his "business" career puffing up his net worth for headlines and misunderestimating his property values for tax fraud purposes.
Is there ANYONE with half a brain who is surprised that he is willing to do the same thing with the entire US economy?
These are things that happen when we confuse a presidential election with a "Who Is the Worst Person Alive Today?" contest.
6
Every move by the Fed is political. Economics is always political (Economics as a "hard science" is a neoliberal myth).
There is no evidence Powell did anything that escaped the scope of neoclassical Economics (bourgeois Economic Theory). He's no an heterodox economist by any means, and is not doing any heterodox moves in the Fed.
Until ten years ago, there was the false sensation the Fed was apolitical for the simple reason we were still living in the Pax Americana era -- so every move was consensual. When things keep consensual for a very long period of time, there's the illusion of the absence of politics/"scientificization" of the institutional process.
2
trump is out to destroy the government and the gop couldn't be more delighted.
3
Trump: The economy is amazing! I fixed it! America is great again!
Also Trump: We need a rate cut.
These statements together only make sense if you missed 10th-grade economics.
2
In a few years the common R'n refrain will be "It wasn't me..I wasn't in office then"
3
and R's remain silent, once again, as DJT lays waste to another institution.
2
America is home of trickleup economics. And the Federal reserve is private. Americans don't even have the right to print their own money. So sad.
1
Paul, apparently you did not see yesterday's WSJ.
What the donnie knows about economics can be inscribed on a dime with a jackhammer.
4
"And I’m sorry, but in Trump’s America no institution can ignore the political ramifications of its actions, if only because these ramifications will affect its ability to do its job in the future."
Trump has poisoned every well in America for the forseeable future. Policy makers are damned if they do, damned if they don't, unable to please anyone. What appeal do these jobs have anymore for compent people of conscience? At this point the attracted to positions on the FED, or positions in the Trump administration, are exclusively self-serving grifters.
3
If we were to descend into a financial hell there is no one better and more qualified to get us there than Trump. Trump's qualifications for financial chaos are legendary even with much of it still hidden from public view. How in America can there be a legal Trumpification of the Federal Reserve with al these ongoing investigations? We still do not have Trump's financial statements, know his true net worth or who he owes world wide? How can we dare allow Trump to touch our most scared and honorable financial institution when he has no honor and a truly reckless history of horrendous financial dealings? This is the fox guarding the hen house on opioids.
3
Trump runs the government as if it was his family's business. He has acting Secretaries, is constantly threatening his other "employees" , and uses Executive Orders in place of legislation to keep all the power in his hands. He doesn't trust or care about anyone but himself. Trump will pressure Powell to do what he feels is in Trump's best short term personal interest.
103
From my perspective Trump acts like a typical american executive. And like most american companies, the board of directors (in this case congress) do nothing to correct the executive’s short-term, self-enrichment mistakes.
Presently, Boeing is an obvious example. Raise your pay when things go well, defer blame and responsibility otherwise.
21
Too much credit is given to Trump. He was duped by Paul Ryan, who was advocating tax cuts for the rich and the corporations for years. Trump main interest is to get re-elected. Another tax cut and more deficit spending is unlikely with Democrats controlling the House. So, the only thing that is left is Federal Reserve and so the attack on Powell. It is yielding results. But, Trump will not get re-elected irrespective of the state of the economy. People basically believe that he lies routinely and doesn’t mean a thing what he says. They rightfully doesn’t give him any credit for better economy. Obama ghost is still haunting him, even though Obama himself is quite and not saying anything. Trump is a sick man, doesn’t hurt to pay a visit to psychiatrist.
1
Trump spends money, his and others like there is no tomorrow! Low interest rates make him and others feel as though there is free money.They, therefore spend money speculatively on whatever will benefit them in the moment.Companies buy back stock or buy other companies.This does wonders for the market.No one worries about debt because interest rates are low.Spending and debt keep increasing until there is an exogenous event or until money managers get too greedy and invent financial instruments which blow up.We have seen these scenarios before-it is NOT different this time.The Fed should shut out all of the Trump noise and run monetary policy with economic prudence so that this recession recovery can last longer than others.
2
Trump will never do a thing for infrastructure, lest he become known as the Bridge-and-Tunnel President.
1
Powell should do whatever is best for the economy.
4
Trump is attacking every institution of our Constitutional Republic as the media response is, "so what else is new."
Krugman describes an attempt to turn the Fed into Trump's campaign booster with all the excitement of watching grass grow.
I'm actually for reforming the Fed. It seems obvious that the Federal Reserve Bank, a "quasi-government agency" is mostly interested in padding the bank accounts of global banks, many not even headquartered in the U.S. For example the Fed just spent a decade giving away a NET of $3 trillion to global banks ($9,000 per citizen or $36,000 for a family of four) under Qualitative Easing II. (BTW, we know this because Bernie got legislation passed to audit the Fed.) They gave them so much money that they must be paid to increase rates now!
As the economy grows, the money supply must grow so there are enough dollars for all of the transactions. In the past, it may have be necessary to distribute this new cash through banks. In the age of the internet, this is no longer the case.
New dollars, "printed" by the Treasury are the property of We the People, not global banks. Instead of lending to global banks at almost zero interest, then hoping that they will do what the Fed wants them to do, new money should be equally divided among all citizens. This would be a more direct way to control the money supply, more fair, and better for the U.S. economy.
Taking banks out of the loop would reduce that corrupting influence in the Fed.
2
With the Trump tax cuts we got 2.6 Million jobs in 2018
We got 3 Million jobs in 2014 and 2.7 Million jobs in 2015.
And without tax cuts to be paid for us.
8
The Fed isn't the one & only re: the national economy. There's Congress: What could it do?
1 -- Reverse the focus of the Trump/GOP tax cut from corporations & the wealthy to primarily benefit middle & working classes. The wealthy & corporation's primary use of the tax cut windfall has been to enhance wealth, e.g., share buy backs, not R&D, new & improved facilities, training workers -- & boosting worker pay. Redirect the tax cut $s to the workers, whose spending will boost the economy. Senator Harris's tax cut plan offers a model of what this redirection might look like.
2 -- And, corporations have brought back few $s from the hundreds upon hundreds of billions that they have stashed overseas. Bring it back & invest it in R&D, facilities, training workers & increased worker pay OR pay a very stiff US tax.
3 -- While making the middle and working classes (& those with needs) the primary focus of a redirected tax cut, the Congress should use a meaningful portion of reclaimed $s for needs here at home, e.g., infrastructure, and health promotion & care.
Of course, this is dead in the GOP Senate and with Trump, which is why the Senate must be decisively flipped Democrat, the Democrat majority retained (ideally, substantively increased) in the House, and a Democrat elected president.
So, protect the independence of the Fed while focusing major efforts where non-economic technocrat (Fed) economic change should be sought, in the political arena.
The craving to have day without night will lead to a far darker and longer night.
5
Commercial developers always want lower interest rates to borrow more cheaply and reap additional profits. So Ivanka, Jared, Don Jr. and Eric have bushels of reasons to ask Daddy to emasculate the Fed and push Powell for lower rates. After all it is a small family business, just the like ones Republicans have been chanting about since Reagan.
7
I see that Krugman is still pushing the delusion that the US economy is good, and that most jobs are paying decently. Much like Trump that.
Submitted June 21st 2019 1:34 PM eastern
1
“They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”
Yep, that is all of the magic under the MAGA lid, or should I say bib.
Thanks for link to WaPo's "Trump Slams Fed Chair..", 27 Nov 2018. And NYT's "Trump Accuses Europe..", 18 Jun 2019.
Savior says “They have been getting away with this for years, along with China and others.”
So, THROW penalty flags - present, past, everywhere, and PLAY the victim as world's largest economy by scoring only Zero Sum LOSS on an America First scoreboard. Oh, I forgot, people wearing KAG fashions only hear: Savior says...
The rest of us read and can "get" the nuances that you point out, Mr Krugman - What drives the Fed? Personally, I think that the recent invertion of the yield curve HAS AMPLIFIED that recession predictor of their own making. Announcing a probable rate cut drowns-out their village's whispers of the dragon siting.
https://www.newyorkfed.org/research/capital_markets/ycfaq.html
Deficits went up under Reagan and W Bush.
Deficits went down under Clinton and Obama.
And Clinton got almost 50% more jobs than Reagan.
And Obama got almost 400% more jobs than W Bush.
And Obama got us through the worst recession since the Great Depression.
And 20 Million people got healthcare.
11
I think all of this explains why the Fed needs to - and be seen to - be independent of the White House and Congress. Failing that, US economic management just sinks to the level of your familiar stereotype of a banana republic. That would usher in a further drop of international investor confidence, an unloading of US debt and currency holdings, resulting in higher interest rates, some inflation, recession and unemployment. If all of this is going to happen, one can only hope the timing will be close enough to the next election to have the predictable impact.
4
Consumers are too afraid to spend, the government is too broke to spend (recent tax cut), which leaves us at the whim of the corporate sector. How are the S&P 500 corps feeling about Trump these days?
2
We're at full employment and inflation is tame, so the Fed should do nothing. If it wants to do something, it could reduce the size of its balance sheet a bit faster.
Further, Trump is running nearly $1 trillion annual deficits despite full employment, so that's plenty of stimulus. Why does the Fed have to add to that?
Trump's unnecessary tariffs are placing upward pressure on prices and will be paid by U.S. consumers (not China), as hundreds of companies have announced their intent. So if the worry is deflation, the Fed has some support there.
1
Yes Paul, the FED should have raised interest rates. They need to slow down the economy, raise unemployment, make the low inflation rate a deflation rate instead, so as to assure Democrats will be elected.
1
For most of us who are not Americans nor live in the US, the American system of governance was supposed to be a masterpiece of checks and balances. This article only makes sense if the much-heralded independence of the Federal Reserve is not that effective, and pressure from the Executive can affect its decisions. Which means that it is not really independent. As has been proven to be the case with the American judiciary, and appointments to the Supreme Court.
What Trump has revealed, by being a bully, is that America has a hyper-presidential system, with relative and often ineffectual checks and balances subject to the good manners (and lack of Congress support) of the incumbent.
1
Having lived and invested through several recessions now, my senses tell me that a rate cut is not called for. The only ones who’d benefit are real estate speculators like Trump and corporations that would borrow money on the cheap to buy back stock and raise executive salaries.
3
@Marc Mayerson: Trumpism is even causing Wall Street investors to buy up starter homes, closing off another path to wealth-building to young people.
3
You might be right about the feds move being "political", Paul. It certainly wouldn't be the first time. We do need to note that current rates are in the "crazy-stage" (not the only thing is that stage) in that short term rates are BELOW the Fed's targe of 2.25%. Buyers of short term US debt are paying a premium (!?) for 30-60 notes. wouldn't lowering rates help balance the market? Nobody seems to care that lowering rates is NOT a good sign for the economy. (See, "crazy-stage" above)
1
Paul's quite right and any sensible policy analysis would reach the same conclusions. Trump's revolting attacks on Powell are solely motivated by his political agenda. Unfortunately, he's weakening yet another US institution - exactly what Putin and the Kremlin gang hoped for.
3
Dare it be said, "The President wasn't really up to the job when he was elected and doesn't appear to be growing into it. His touted business and deal making acumen results fall way short of his soaring rhetoric. His New York street bluster is wearing thin. Actual implemented trade agreements, 1. Tax cut stimulus has run its course. Infrastructure stimulus amounted to a joy ride in a stationary truck. Looking to rate cuts as a savior amounts to a campaign year hail mary. The economy moves on in spite of him not because of him. While investors are still wary of unpredictable decisions he and his crew may take that may adversely impact markets. For the President, that's par for the course. For many it's more like double bogey ball.
3
Is anyone wondering why Gold has jumped about $100.00 an ounce. It is close to or at $1,400 an ounce.
Think about that for awhile.
Trump just gave a medal to the author of the LAUGHER curve (oops, I may have misspelled that). That shows how much he knows about the economy. Only the well being of Trump matters in his economic philosophy.
4
@Mark F: The sweet spot that maximizes combined economic product of mixed economies lies somewhere between one third and two thirds public sector for most countries. If Laffer understood the science, he would have stated his hypothesis in these terms.
2
I have the sense sometimes that if Trump in one day cured cancer, diabetes and heart disease the media headlines the next day would be about all the morticians he'd put out of work.
1
@Wilbur Clark-but he didn't cure cancer, diabetes or heart disease and likely will not anytime soon.
3
@Wilbur Clark: Biotechnology is another topic Trump will never begin to comprehend.
1
Just like Trump lost money for ten years for bad management; "US Inc." at the end of his presidency, will also lose its shirt with this guy in the White House.
2
Trump is running your life and the rest of the globe, so why not the federal reserve?
1
Hey, Trump always gets a bailout, e.g., the laws that permit bid'ness bankruptcy but not personal bankruptcy for college or mortgage debt.
This time, it's a bailout for his incredibly stupid trade war.
2
On that whole “the tax cut gave the economy a boost” thing:
https://twitter.com/bencasselman/status/1055806369134190593?s=21
The Koch Brothers are my Brother [HP]
--Facing accusations of patent violations, Koch looked abroad, including what was then Stalin-era Russia, where he set up Russia’s oil refineries. After setting up Stalin with refineries, Stalin kicked Koch out of Russia. Back in the US, Koch went about fighting Stalin for payback.
--The Koch brothers didn’t just inherit their father’s fortune. They also inherited his politics. In 1958, Fred Koch was a founding member of the John Birch Society, the right-wing extremist group that opposed civil rights and claimed that both the Democratic and Republican Parties were infiltrated by the Communist Party. In his 1960 self-published book, A Business Man Looks at Communism, Fred Koch wrote that “The colored man looms large in the Communist plan to take over America,” and that welfare was a secret plot to attract rural blacks and Puerto Ricans to Eastern cities to vote for Communist causes and “getting a vicious race war started.” The John Birch Society helped fuel a wave of hysteria against unions, civil rights groups, intellectuals, public schools, liberal clergy and others whom they considered a threat to America…
--You can see their father’s words in David Koch’s 1980 presidential campaign platform AND in the actions of the republicans of today. The Koch’s spent a billion dollars to purchase and put the republicans into office. The John Birch Society was instrumental in Trump’s campaign (Politico)
9
Most investors now believe three things about the Federal Reserve, money and interest rates. They think that the Federal Reserve is artificially depressing rates below what would be a "normal" level. They believe that in the process of doing so the Federal Reserve has enormously increased the supply of money and they believe that the USA is on a fiat money system.
All three of those beliefs are incorrect. One benchmark rate that he Federal Reserve has absolute control of is the rate paid on reserves deposited at the Federal Reserve. That rate is now 250 basis points, after being zero since the inception of the Federal Reserve in 1913 until recently. If the Federal Reserve had left that rate at zero t-bill rates would now be even lower than they are now. The shortest t-bills rates would now probably negative.
Paying interest on reserves is keeping t-bill rates positive. Absent those policies the rate on t-bills would be actually negative. The Chinese and others all over the world are willing to pay anything for the safety of depositing funds in the USA.
Today it is mostly your credit card that allows you to spend. We no longer have a fiat money system. Today we have a credit money system. Just because there is still some fiat money does not negate the fact that we are on a credit money system. When we were on a basically fiat money system there was still a small amount of specie in circulation. a nickel has 5 cents worth of metal, …"
https://seekingalpha.com/article/1514632
Vote Progressive.
Vote Bernie/Williamson
1
Too much 'Trumpification' of this and that, including Democrat Rep. Ocassio-Cortez. She is'Trumpian' in her ignorant comments (comparing southern border to concentration camps....however horrific situation is there is no moral equivalency with the Holocaust) aimed at getting her attention on social media.
1
Trump is hell bent on destroying every institution
of government The Fed will be next. Trump knows
a recession means defeat and then a trip to jail.
1
"But if that’s what happens, Trump will have only himself to blame."
Paul...Paul...you must be dreaming, nice thought, however.
Ah, but Trump will blame the Fed, not himself. In his mind, all good things are thanks to Trump; anything adverse is someone else's fault.
3
If I were Trump's economics professor at Wharton I would ask to be placed in a witness protection program.
4
May be an Econ course was not required in his Real Estate degree program!
However, pressuring the Feds to keep interest rates low helps his real estate empire.
He can borrow money cheaply and enrich himself.
Isn’t this a clear violation of Emoluments Clause?
2
Paul Krugman is a very witty man. I love the humour he inserted at the end of the piece. " But if that’s what happens, Trump will have only himself to blame." Man that is funny.
1
Trump, though his warped understanding of economics, is tanking a perfectly good economy he inherited 76 months of, from the Obama administration. He wants the Fed to bail him out of his extremely poor decisions regarding trade and tariffs. Too bad so sad.
I hesitate to criticize my brothers and sisters here, first, because I may well be wrong, and, second, because who am I to judge?
Nonetheless, as the result of some mysterious and moderately strong inner urging, I ask: Instead of perusing this newspaper and spending time composing lucid comments, why don't we go out and help the poor ourselves, now and as often as possible?
Mea culpa: I'm too selfish, tired, and lazy, true, but, also, I like reading these comments and responding, because I learn interesting, helpful, and even amazing things. It's the life of the mind. (The mind might be called the spirit; if so, it's true, in my case, that the spirit is willing, but the flesh is weak.)
What saith thou? (I need your response to get me back on track. [Surely, I'm off the rails with this dark comment. Shouldn't have taken that overlong nap, I guess.])
Trump is wed to the notion that the DJIA represents his approval rating. Cutting rates will take money out of debt and move it to equities - raising the Dow.
What a mess we have made. It will take decades to repair all of the damage that this sociopath has caused.
1
The last sentence is funny: Trump will have only himself to blame. Heh. The man never ever ever accepts personal responsibility! I think I'll wander thru the comments to find the cogent rebuttals of trump supporters. Just kidding about the cogent part. Hate is all they have, and the generations of Americans who have worked in U.S. monetary policy? They were all stooges or something; only dearleader knows economics!
I am thankful for the expertise of Dr. Krugman and other educated people who provide input. It's too bad the republican version is "burn the witches!"
In Nov. 2017 AT&T's CEO promised to spend $1 Billion on expansion and create 7,000 new jobs if Trump's tax bill passed.
Since Trump's tax bill became law in Dec. 2017 AT&T has eliminated more than 23,000 jobs and reduced internal investment by about $1.5 Billion.
Similar tales can be found across corporate America.
The tax cut may have been a "political bust" but for a select few it was an economic bonanza. Consider Wells Fargo that bought back hundreds of millions of shares worth almost $23 Billion and gave it's CEO a 36% pay raise.
3
Yes, an interest rate cut will have a limited impact right now. But what about a cut in tariffs? Do these tariffs not represent a large tax on consumers? How much of a tax - has anyone come up with a good measure of this?
The same conditions that created the 1930s depression exist today, in the exact same form.
a) inequality today is precisely the same as the record inequality created in the 1920's. Inequality has never been higher.
Inequality results in "underconsumption", where workers (as a mass entity) cannot purchase/consume their output. The rich have extracted vast quantitires of cash from the economy and literally hoarded it in digital accounts - to vast for a bank, to much for investment even, they have accumulated the money via the "trickledown" policies of tax cuts and privatisation, of monopoly power and cronyist capitalism.
b) record debt. The same super-high debt/GDP levels were present in 1929 - and not since
c) super-low interest rates - again, the 1929 interest rates were at zero, and they have never been this low - until 2019
d) anti-Keynesian - Spending stimulus, of course, was not developed until 1936. In 2019., the major economies have turned their back on tax-spending - because they have reduced taxes and have nothing to spend
e) trade barriers - the 1920s were a decade of trade wars - protectionism was the prime economic tool. Not since 1929 have trade barriers become a prime economic growth tool
f) globally synchronised slowdown - the "Great Recession" reset all major economies - we are in lockstep, and there are no growth spots anywhere.
g) The US is in its last year of a bull run - no business cycle has exceeded 11 years
Once the downturn begins ...
135
@Axis. Any chance of getting references for these points, and possibly some indication of your credentials? I'd love to quote you and don't have much time to fact-check!
7
@Axis So, when does the trickledown begin?
4
@Axis
To this, also add politicians arguing for competitive devaluations.
4
He won't blame himself...he'll blame you, me, your grandmother and all the non-white illegals...anyone but himself.
He takes no ownership of anything bad he does; he just blames it on you.
Ever notice that?
155
@signmeup Notice it? That's like noticing gravity.
35
@signmeup
Republicans go on and on about personal responsibility when a poor family needs help.
When they make disasters, however, the "party of personal responsibility" blames everyone but themselves.
They spend decades buying cheap Chinese junk at Wal-Mart, then blame Coastal Liberals because their downtowns are dead.
They demanded the Iraq War, called those of us who opposed it traitors, lied to start it, but the moment the 2008 campaign started, they said mentioning Bush was old news, Democrats started the war, and our was Obama's fault. (A majority of Democrats actually voted against the Iraq War. Google and count the votes.)
Republicans controlled Congress for most of the eight years of Bush, but when the economy crashed, they blame it on the Democrats, even though the Democrats kept trying to head off the disaster and Republicans did not take up their legislation.
Soon Republicans will be blaming Democrats for Trump. They already say that Trump can commit crimes because Hillary did. Trump's crimes are not excited by someone else's crimes.
Of course, if the Republicans had to take responsibility for all of the disasters they create, from Iran Contra to the ballooning debt, they would all have to resign.
10
I give the GOP credit for talking about values and convincing a certain number of voters - when they are really utterly cynical.
They are perfectly happy to wallow in big spending and debt if it keeps political power in their hands. When they lose power - they can go back to babbling about fiscal conservatism.
That’s exactly what they will do in 2020....watch.
268
@strangerq-The GOP digs the hole for the country and then blames it on the Democrats and gives them the job of digging us out.
36
@strangerq
And Democrats keep helping them by by telling workers there is no longer for the things they need.
@Ann -- and blames the Democrats for the cost of digging out of the hole.
7
Trump has changed politics and economic policy into a constant effort to reinforce the idea that the economy is Trump's personal political instrument. Tariffs and huge one sided tax cuts are Trump's weapons at self aggrandizement. The stock market must roar ever higher. There was plenty of pent up demand with the end of the Obama presidency. Which the GOP were largely responsible for. Now Trump and the GOP are on a wild stimulus joy ride. But Trump is ever the sower of discord has started using tariffs as a personal toy. China has been reckless in their use of trade and currency to benefit themselves against the US. China has also engaged in great efforts to steal intellectual property. In steps Trump with unilateral efforts to reverse the game. Many Americans applaud him but the unintended consequences could blow back against Trump. Interest rates are a safety blanket in Trump's mind. One which he will not suffer any independent entity to have the potential to harm him politically. Even unintentionally.
Trump once bragged he was the “King of Debt”. He lived like a king, as his properties and casinos racked up unsustainable debt...and eventually foreclosure and bankruptcy. Trump’s creditors, shareholders, suppliers and laborers were burned but the “King” with the help of his court of attorneys maneuvered him into a new phase of financial success.
Trump is trying to sustain his reign of error by utilizing the same game plan: artificially buoy up the economy by pumping (the GOP hating) stimulus of tax cuts, military and government spending exploding he national debt. He and his party cynically derided Obama for seeking to stimulate a moribund economy with government stimulus spending, but are now using that policy when it is not needed, and actually reckless.
Trump may be re-elected, especially if he is able to keep the economy humming on this sugar high. But eventually, when he has reinvented himself again as a business mogul, his “base” and the rest of us will pay the price for his profligate policies, just as those he stiffed in his bankruptcies.
1
Same for the AG. Who thinks Justice will return to its non-partisan, detached status as independent law enforcement?
The insidious thing is, we're becoming inured to Trump.
2
Krugman fails to mention the built in Trillion dollar fiscal deficit in the US budget. This huge deficit spending by itself whould normally provide a big economic boost (at least temporarily) to the economy. The fact that in spite of huge deficit spending, tax breaks and an extremely low Fed interest rate (in real terms meaning the Fed rate minus the inflation rate) the economy is providing little wage / income benefit for workers. Sure there are plenty of jobs but a big percentage are part time, gig contract work and low paying service jobs. In spite of this massive stimulus the economy is just puttering along. The breeze of global recession is in the air and when the next recession hits it will be a doozy.
4
And you don’t seem to know that we did not HAVE a trillion-dollar deficit in 2013-2016, when You Know Who was President.
1
@Robert
Afraid you miss the point. You seem to assume I am complaining about the Trillion dollar deficit. I am not. I am simply pointing out that even with a highly stimulative Trillion dollar deficit (as well as big tax break and historically low interest rates) the economy is failing to produce real worker wage / income growth or a higher percentage of solid full time work.
2
The last paragraph in the essay notes that even if the Fed does cut rats, it will not help Trump during the next presidential election. And if it does happen, "Trump will have only himself to blame." I agree wholeheartedly, except Mr. Krugman could have finished with one more line or clause, "though he'll certainly blame the Fed in any event."
2
One thing about this which seems never to be mentioned by anyone is the effect the (artificially?) low interest rates of the last few years has upon older, retired people like me. And, of course, upon millions of older, white Republicans who, evidently, don't have the brains of a bat, considering that they also oppose in-migration, to the effect that there's not going to be enough people working and paying taxes to pay for their Medicare and Social Security. In fact, we desperately need those people. Sure, low rates were needed to get us out of Bush's depression, but forever?? With Trump, of course, it is nothing but self-interest, which is the definition of Trump.
7
@Donald E. Voth: The Fed relieved banks of the obligation to pay interest on deposits to help them to recover from their pre-crash excesses. Retirees own preferred securities of banks too.
1
Economics is not my bailiwick, nevertheless, there are some pretty obvious trends re the US economy. One is that the current low Fed interest rate, that is, cheap money- the rate paid by banks to get money from the Fed- is a continuing indication that the economy is still fragile. Our recovery from the Great Recession, begun at the onset of the Obama administration, took eight long years of slow, steady improvement in order to stabilize, then grow the country's economy. We are still nowhere near the interest rate levels considered normal in pre-Great Recession America. That is a serious cause for concern. Another worrying trend is the unprecedented growth in the stock market. The Dow experienced eight slow years of steady recovery, from a low of about 7,000 to 16,000, one of the many things for which President Obama got scant credit. In the (false, IMO) euphoria of the moneyed class over the 2016 election, the Dow skyrocketed to well over 28,000 in less than two years. That's a bubble, not dissimilar to the housing bubble that largely caused the Great Recession in the first place. All of this is added to Mr. Krugman's correct contention that the Fed is being politicized as never before, and we're back to a point that has been talked about for 2 1/2 years, namely, that the current administration is a serious danger to both the country and the world at large. Anyone reading this knows what must be done.
3
@TRA: Historically, interest rates on bank deposits were higher than dividend rates on stocks because stock investors expected their companies to re-invest some of their profit to grow.
2
@Steve Bolger
And as Mr. Krugman correctly pointed out, the enormous windfall of free money given to corporations, AKA the tax cut of 2017, was used by corporations primarily, not to re-invest, but to buy back their own stocks, thereby increasing the value to their shareholders' stocks. That's a double-whammy to everyone else.
4
@TRA
That is to say, if we're still here on November 3, 2020, we must vote this menace, and I include Congressional Republicans in this, out of office.
1
All Trump policies, not merely monetary policy, are based solely on what benefits Trump’s interests. Trump is and has always been only about Trump.
2
"Trump will have only himself to blame." Mr. Krugman makes a joke. Trump never blames himself for anything.
4
Trump has already allowed a tax break that benefits wealthy real-estate investors while sucking vital tax dollars from surrounding communities. Why should he not be consistent with other self-interested economic policies.
Trump supporters seem to, by way of justifying their continuing support for his economics, suggest something akin to 'someday the Messiah will come.'
2
@Mitch ~
Your ending prompted a smile. "...suggest something akin to 'someday the Messiah will come.'"
Well he does have strong Evangelical support.
1
In spite of what commenters say, every President has tried to jawbone the Fed in one way or another.
1
@Rich Murphy: It is impossible to maintain a stable value of money while playing with its value to influence employment levels.
"But if that’s what happens, Trump will have only himself to blame."
C'mon, Paul! Trump blaming himself for anything?
His presidency, his life in NYC, the pathetic GOP and his mindless supporters are all about scapegoating.
4
In accordance with Trumpthink, there’s always a simple solution. In this case fire Trump
Fascinating: https://youtu.be/i6TQ7ljcsjk
I'm quite sure that Trump is Westley, but I'm not sure who is standing in for Vizzini. Any thoughts?
Trump blame himself? Seriously, Dr. Krugman, I'm surprised you even wrote that. You know he will blame Hillary Clinton and Barack Obama!
I think Paul we will need to use your superpower. We should leverage the collective genius and create mega Lefty funds. I would invest in the Krugman fund.
You could pledge X% profit to whatever.
Trump politicizes everything he lays his eyes on, no question about it. And he has Powell exactly where he wants him. Powell is our reality TV President’s fall guy. Will Powell “land the plane safely”? In case you’re not sure where we are in this little drama, there’s no need to follow the details the Trump/ Powell drama. And there’s no need to follow employment or other economic statistics. Just keep your eye on the stock market. If it goes down in any meaningful way, things will really heat up.
1
@KM: Corporations will continue to buy back their own stock as long as net interest costs of borrowed money are cheaper than paying dividends.
2
Trump politicizes everything he lays his eyes on, no question about it. And he has Powell exactly where he wants him. Powell is our reality TV President’s fall guy. Will Powell “land the plane safely”? In case you’re not sure where we are in this little drama, there’s no need to follow the details the Trump/ Powell drama. And there’s no need to follow employment or other economic statistics. Just keep your eye on the stock market. It’s President Gollum’s “precious”.
1
Trump's typical ignorant and self contradictory take on policy, whether domestic or foreign. On the one hand we have "maybe the best economy in history" while on the other hand we desperately need the Fed to REDUCE near record low interest rates, on top of huge stimulus spending and deficit causing tax breaks just to keep that "strong" economy on track. Which is it? Are we record strong, making a gradual and necessary interest rate increase no big deal or are we teetering on the edge of recession, requiring a return to zero interest rate emergency action? Can't be both.
Trump makes everything rancid. Truly, everything. There is no way to avoid the appearance that he has bullied yet another of our critically independent institutions, and its leader(s), into doing his bidding. I guess it's his greatest "talent", though there should be a more pejorative word for it than talent. I'm reminded of the scene from "It's a Wonderful Life", when George Bailey is almost seduced by Potter's "generous" offer in exchange for George's very soul, and when George shakes Potter's hand, he pulls it back, rubs the metaphorical slime between his fingers, and declines just in the nick of time to save himself ... and his soul. Would that there were more George Bailey's and fewer spineless political hacks in the ranks of our government. But sadly, the vast majority seem quite comfortable, if not eager, to fall in line and hand this devil their souls and more.
1
The "strong case that the Fed was too quick to raise interest rates" implies that the economy is too weak to support moderate interest rate levels. This weakness is not cyclical; it is structural - financialization, income and wealth inequality, rent seeking monopolies - these are the ills that have long weaken our economy.
And who benefits from these three plagues? The rich and powerful - our rulers. Our economy will not be cured of these problems until people recognize who is running the show and take back power from the "power elite".
https://whorulesamerica.ucsc.edu/power/class_domination.html#power_elite
With all the "deconstruction of the administrative state" ...downsizing, eliminating, unfilled positions...that is going on, these republicans clearly wish for some oligarchal dictatorship.
The future is rather scary, and equally distressing are the dems not sounding the alarm.
1
"Once to every man and nation, comes the moment to decide,
In the strife of truth with falsehood, for the good or evil side..."
James Russell Lowell's verse on the eve of the illegal war with Mexico, fought to increase the wealth and power of slave states, resonate today:
"Some great cause, God's new Messiah, offering each the bloom or blight,
Parts the goats upon the left hand, and the sheep upon the right,
And the choice goes by forever 'twixt that darkness and that light.
Then to side with truth is noble,
When we share her wretched crust,
Ere her cause bring fame and profit,
And 'tis prosperous to be just;
Then it is the brave man chooses
While the coward stands aside..."
This iteration of the Republican Party is a modern metastasis of the robbers who waylaid the traveler on the road to Jericho. Either we destroy them, or they will destroy everything our ancestors labored to build and fought to defend. Trump must go to prison as an example of just punishment for amorality, cupidity and mendacity. Or he and his cabal of soulless vandals must be hanged.
1
The Trumpification of the Federal Reserve is just another example of Trump trying to control everything and at the same time knowing nothing about anything. Then Trump wants everyone to bail him out when his cons don't pan out.
The New Gilded Ones want money. They take what they can from us by giving us low pay low benefits jobs. They have taken about all they can get through low taxes leaving us the bill. Now they want money at low to no cost. And what will we get? A new war to die for and again we get the bill. Vote these leeches out, put the people back in charge!
1
I am so tired of supposed experts like Krugman referring to our "low unemployment".
Why do none of you ever think about the employed by the gig economy, with the Uber and Lyft drivers living in their cars, the house cleaners and health aids working in fast food after their 'regular' jobs, the IT and business 'consultants' with no benefits and no retirement, the seasonal farm workers, all the illegals employed by people like Trump?
Oh sure there are lots of jobs. Unfortunately many don't pay enough for even one person to live.
What a booming economy, unemployment so low!
3
In nearly every recession or depression, no one saw it coming. Sure, there are the occasional persons who made a prediction that came true, but like everything in economics it was always a guess that just happened to come true. It's not like they really had any true understanding of what was going to take place. It's not like they could make a correct guess again if they tried.
It matters not how Trump, the GOP and the DFL try to confuse the issues and spin the information to serve their political ambitions. We are headed for problems, and the economic problems are the least of these.
We are constantly at war. Disinformation is more commonly believed than fact. We are destroying the planet. In the next 30 years we will suffer great strife from wars and climate change and we will have fascist governments in control of all nations.
The people are serfs and prefer to be so. They fear their own deaths and so join cults and they hate the others. Fearful, hateful and ignorant people cannot sustain a democracy.
I am certain the leaders will develop final solutions for what lays ahead. Many will support them.
@Chris: We are all supposed to believe that the economy resembles the weather because public mood fluctuations are unpredictable.
"Monetary policy should be whatever serves Donald Trump’s interests. Nothing else matters."
Hasn't Monetary policy always been what serves Wall Street and nothing else since the 1970s?
Starting with the asinine assault on interest rates by Paul Volcker in the name of combating inflation to the dismantling of Glass-Steagall in the Clinton era, the Fed has shown itself ALWAYS on the side of Capital, ALWAYS on the side of income inequality and ALWAYS on the side of laissze-faire economics benefitting rapacious and unregulated speculation. The Fed is not an autonomous body but rather a creature of Wall Street. The American nation is the host and the parasites that feed on its flesh are the Wall Street banks. For a brief period between 1920 and 1965 when Keynesian economics reigned supreme, the Fed was true to its charter of ensuring full employment and low inflation. After the Powell memo galvanized Corporations to organize against government regulation, Corporate money flooded into Economics and Business departments to fund Austrian economic philosophy handed down from the Hayekian Mont Pellerin society. Milton Friedman was its well known Messiah, Alan Greenspan its High Priest and Bill Clinton the obsequious water carrier. The passage of time has revealed the Fed for what it truly is, a docile servant of Wall Street and the 1%. Krugman drums on wearily 'the emperor has no clothes' while we tire of telling him that the Emperor's nakedness was revealed a long time back.
@Paul Art: Monetary policy was created to stabilize the value of money, by regulating the amount of it in circulation. The value of fiat currencies rests on their capacity to be loaned to others for interest. None of this works properly when monetary policy becomes confused the fiscal policy and an incompetent Congress punts on fiscal policy by assigning a "dual mandate" to the Fed that forces it to play with interest rates to regulate employment levels. This policy created the fluctuating rates policy that sustains mountains of derivatives of far greater ostensible worth than the securities that underlie them, which created a liquidity crisis in 2008 by becoming payable all at the same time.
Trump governs day to day hoping to get re-elected. There are no policy goals.
He has created a problem with Iran . Short of an invasion , Iran has the leverage . It got rid of Carter and it will get rid of Trump.
Trump can only hope to change the Iran subject so he may demote Powell and buy himself some headlines till he heads off to the G 20 which he hopes checks off another week. Or maybe he demotes Powell after G20. It's inevitable and pointless however as Iran has him on the run.
1
While Trump may well see it in a totally self centered way, it is also true that many others see things in a totally defeat-Trump way.
Thus, "Monetary policy should be whatever serves Donald Trump’s interests," morphs into "Monetary policy should be whatever best serves the defeat of Trump in 2020." A little pain in flyover country might serve the good of those already doing better.
Krugman himself ventures into this, writing "If it does cut rates despite low unemployment . . .."
It isn't low unemployment everywhere. It specifically is still not low where Trump gets his votes.
That cuts both ways for Trump. He hasn't delivered low unemployment to his voters. He is their hope against those who would be happy to see them suffer in service of defeating Trump.
This could offer huge opportunity to Democrats, if only they'd take it. They'd have to prioritize attaining low unemployment, including underemployment and participation rates for those abandoned. They'd have to make that believed. But if it was, Trump would be left with nothing.
2
As you note the quandary is realizing Trump may be right occasionally--even a monkey will type an intelligible word if you give him enough time at a keyboard.
But what he has done is to show how easy it is for a President to overwhelm supposedly independent, non political institutions.
We like to believe the Fed, the Supreme Court, the Congressional Budget Office, the Weather Service, the FAA, the Center for Disease Control are all "non political" data driven parts of the government.
But this man has said, "I am going to be held responsible if the economy tanks, if things go wrong, so I am going to seize control of what I can."
He does, after all, know more than the generals, and he has all the best words, so why are we not grateful?
1
Remember the movie where Dustin Hoffman as a young college graduate is told by one of his father's friends that the future is plastic? My late father was a gold-bug guy, but that's long over. Amber once worked and there's the bit-coin bit. There's so much wrong with the current president and altho numbers look rather good as in stock market, much else not so great. And what has taken over? Plastic and interest rates that are so usurious as to cause more pain to those who do not make enough to live on, pay-day lenders, and the difficulty of making it in the USA on a low-income job.
Here again, Trump doesn't think about the non-millionaires.
I'm trying to make a little bit of interest by investing in CDs through online banks that have better rates than the brick and mortar bank where I have my checking account. If the rates go up, I will make more. Obviously I won't get wealthy but every little bit of interest is better than what I can get in a simple savings account. But Trump wants the rates to go down because low rates don't hurt him.
The little guy can't get ahead.
4
You are 25 years too late.
The Fed should not cut rates. Give Trump any sense that he has power over the Fed and he will be relentless in the future, especially in 2020, pressuring the Fed to reduce interest rates even more to help his re-election. The Fed, although imperfect, remains the last bastion of credibility in Trump's Washington. It needs to remain so lest the rest of the world decide that the US is not the safe haven it once was and starts dumping Treasuries. Which will increase interest rates across the curve, and depreciate the dollar. Exactly what you would think Trump wouldn't want.
2
Raise rates! We need a decent return on savings; at least greater than inflation.
A constantly growing economy means increasing environmental destruction and more CO2 producing more global warming.
We need to change the world wide economies, not grow them.
The planet is not in equilibrium. At this rate, we are toast.
1
@Patrick Hunter Yes, it's crazy that older folks have to expose their savings to the equities markets, rather than have them more safely in the bond market etc. As for CO2, how is your town going to reduce its Carbondale footprint? jk.
S&P hit a record high yesterday (yes, even with a threat of a war with Iran). So, that means interest rates should be cut to help investors and businesses more. Huh?
THere is something basically wrong in the world economy that cannot function with 2%+ interest rates.
3
One issue regarding Trump and the Fed is that he will soon realize, if he hasn’t done so already, that he can force the Fed to cut rates by making purposefully bad policy decisions. For example, the Fed is thinking of lowering rates in part because of the trade war, which was created by the tweeter-in-chief. Then Trump gets both credit among his base for looking tough and gets the Fed to protect him from the economic consequences.
6
Whatever the comments below may imply, TRUMPCONOMY so far has been extremely good for the economy. Under any circumstances no one can exactly predict the future and market trends even with the most sophisticated computers. available today. Maybe in the future quantum computers may be used to predicts more accurately economic trends. Thus Trumpification of the Federal Reserve maybe a good thing.
@lieberma
No, with all respect, that's entirely false.
Look at no matter what economical graph, and you'll see NO Trump dent AT ALL.
So this is merely the continuation of the Obama economy, which was lowering the unemployment rate month after month, for the longest consecutive period of months in decades.
Trump also promised an annual 4% GDP growth. He didn't achieve that at all, as predicted by all experts.
Finally, he didn't pass ONE single economical policy. Which explains why there is no Trump dent to be seen either, you see?
As to the Fed: it's CORE job is to keep monetary policy out of the hands of politicians and private corporations, because once that's no longer the case, as the past has proven, then markets quickly become extremely unstable, and a Great Depression is never very far away.
That's why traditionally, ALL presidents had the discipline to refrain from ANY public comment about Fed policies, and why they systematically rejected the option of starting to fire a sitting chairman, simply because that chairman respects the Fed's fundamental independence.
So this is bad, you see, very bad.
6
@Ana Luisa
read your comment.Nevertheless still think that Trump had a major impact on the the strength of the economy today.
Sadly, and in the long term, it won't matter. The newest data indicate that the air is dirtier. Clean water is in danger and climate change is being ignored at our peril. In my state the estimate for addressing climate change is $74 Billion, far greater than any other state. We are all in trouble because of the Trumpification of the environment. And Congress does nothing. Our children are doomed.
6
The key part of this article is "straight economics says that the Fed should try to get ahead of the curve" and cut rates. Every other word is just Krugman trying to nudge the Fed to bring about his own desired electoral outcome in 2020.
1
@Rex Nemorensis
With all respect, you don't get it.
Today, getting ahead of the curve, from an economist's point of view, means cutting rates indeed.
BUT that ONLY works when businesses trust the Fed, and are convinced that they have real, economical data that force them to do so.
As soon as a president starts publicly meddling with Fed policies, however, and even worse, starts threatening the Chairman to fire him if he doesn't give up the Fed's independence and starts to merely do what politicians would like it to do (in this case, Trump), then businesses can no longer be certain that what the Fed does says something objective about the economy, and as a consequence, they won't trust it anymore, whereas it's precisely that kind of trust that allows the Fed to predict the effect of rate changes and as such do its job, you see?
So to now regain that trust, the Fed HAS to prove independence from the presidency.
And the only way to prove it today is to NOT do what the president tells them to do.
That will be bad for the economy, but at least they maintain their independence and their future capacity to protect the economy, once a president who again understands why the Fed exists and goes back to the traditional discipline of US presidents to refuse to comment on the Fed's policies, takes over ...
Krugman's point is that they SHOULD cut rates, but he's afraid that now they won't, because of Trump's unprecedented meddling, you see?
3
So far Powell has resisted Trump's bullying and threats, and rightly so. If he gives in and lowers interest rates just to help Trump win re-election, what's he going to do when the U.S. economy slows down, as it surely will if his trade wars continue to damage the global economy?
6
@Christy
Trump will tell his sheep that it's the Democrats' fault, of course.
As they ignore that this is still the Obama economy, they already falsely imagine that Trump strongly improved it during his first two years in office (thanks to massive Fox News and GOP fake news and propaganda), so he'll argue that if they want the economy of his first years in office back, they certainly shouldn't vote for Democrats ...
2
Economic expansions do not go on forever and a recession appears to already be on the horizon, near term enough to make Trump nervous, very nervous . Clearly Trump is already looking around for someone to blame for the coming recession and its associated ballooning federal deficits, naturally it will be Chairman Powell
Powell is the perfect target, he uses data, economic realities and is measured in his approach and continues to focus on inflation and unemployment. Expanding the economy is not his main job, for that we have the government and its use of taxation, tariffs, regulation, laws and its use of stimulus programs.
Trump, other than his tax cut has done little to reduce the potential damage of a recession, in fact he has helped export recession to other counties with his tariffs, cut the resources of government agencies and not been able to put together a budget for an infrastructure stimulus program, the very type of program that would be needed if we fall into a deep recession. Instead of real economic accomplishments, Trump plans to vilify Powell at his rallies for the state of the economy so those that call themselves his base can have someone to blame other than Trump for recession. Will his base buy into his fantasy...hopefully not !
2
Super low rates when the economy is doing well seems to be problematic. After all, what happens when the economy goes into recession as it will inevitably at some point. The Fed could take interest rates negative by buying assets. Maybe that's the plan. While conservatives railed at this policy when Obama was President, I imagine investors like it quite a bit.
2
trump's belief in anything that will help him look good to his fans (a strong economy), and may help him get re-elected may only be part of the story.
trump is the self proclaimed "king of debt." His assets are in real estate properties: golf courses, overpriced apartment buildings and overpriced hotels. His debts are payable in cash. High interest rates are costly to people carrying large debts.
How much does each increase in the interest rate cost trump and his family? How much would they save if the Fed cuts interest rates again?
I think the easiest way to understand trump's policies is to ask, how will this affect trump?
3
Dr. Krugman, I doubt you read all of the comments. If you do could you address this question? I am a rather financially conservative business owner and cannot believe I am going to write the next sentence. Are you sure the economic reports are real? Last month six economists in the Agriculture Dept resigned en-masse because they were told to fudge the reports to make the current administration look better. I can not speak to the whole economy but my business and those closest to me, are experiencing gut-wrenching contractions. Two out of three are looking like they are not long for this world. How are the indicators the government does not control looking? Cars sales? Home sales? Loan delinquencies? Do you trust the economic reports? I cannot believe I could even think to pose such a question.
17
Great questions. I hope you, and all of us, get answers to the question. Are the government’s economic reports accurate?
9
@Stephen
I ask myself this question on many topics. Like with Iran and whether the drone was shot down in their airspace or not - I don't trust our government. Europe is starting to ask for more proof as well.
When you start to erode institutions and public trust, people and businesses don't know what to react to, policies meant to pursue one end may not have the desired effect (as no one knows which signals to believe), and things deteriorate. I believe @analuisa was trying to explain this exact thing. Government data must be believed, and policy must be made on objective data. Otherwise, people like yourself, rightfully, question what they are hearing.
It's a mess we are in, and it's only going to get worse before we have a chance to fix it.
3
@Stephen: Trump is a master chef of book-cooking. It is written all over the testimony of Michael Cohen.
3
Do short term rates even matter when ten-year Treasuries at 2% are yielding just enough to offset inflation?
There seems to be too much money sloshing around in the financial system, chasing yields, chasing assets, yet somehow it isn't helping the economy grow. The price of stocks and real estate cannot continually increase faster than the economy grows.
6
@David: Stock prices rise when the supply of securities to invest in is reduced. That is happening now, as public companies use tax relief to buy back their own stock and take themselves private.
1
Don't forget Trump's personal financial interest in low interest rates. The Donald probably has more debt than any other American. We don't know much about his finances, but what we do know is that his empire is heavily leveraged, most likely with billions of dollars of debt. The interest rate on most of that debt is indexed, tied to the U.S. bank prime rate which moves in lock step with the upper limit of the Federal Open Market Committee's target range for the federal funds rate. Since he was elected, the bank prime rate has increased from 3.5% to 5.5%. For every billion in debt Trump's annual interest payments have increased by $20 million. Put another way, if he can push the Fed to cut rates, for each 25 basis point cut, his annual interest payments on each billion in debt will decline by $2.5 million.
12
"Monetary policy should be whatever serves Donald Trump’s interests. Nothing else matters."
I think we can generalize this as the Trump doctrine:
Policy should be whatever serves Donald Trump’s interests. Nothing else matters.
2
@Larry Roth
Even that doesn't seem to be true.
Because what could better serve Trump's interests as to sign his signature campaign policies into law? And yet, he didn't even TRY to do so.
Why not?
To sign bills into law, you have to know something about negotiating political agreements (= win-win agreements, not win-loser business deals), and he clearly doesn't even know where to start here.
And why would he actually care, if a constant barrage of daily tweets and Fox News propaganda keep his ratings high even though he does almost nothing in DC?
1
What a great argument Paul! In order to protect its independence the fed should be more political, particularly if it harms a Trump. What will you think of next?
1
@DRS
With all respect, you don't seem to get it.
Being independent from politics means taking decisions based ONLY on the state of the economy - whether those decisions might benefit or hurt a political candidate during the next elections.
What Trump is asking the chairman to do is to stop this decades-long tradition, and to instead do what he believes might increase his reelection chances, even though it would hurt the country.
He's even threatening to take the unprecedented action to replace the current, by him appointed chairman of the Fed, in order to replace him with someone who takes decisions based on what the president asks him to do, rather than on what the economy asks him to do.
THAT is politicizing the fed, you see?
6
That wasn't his argument. His argument was that, because of Trump's blatant attempts to influence the Fed, the only move that the Fed could make, that wouldn't be perceived as political, would be to wait until the data was incontrovertible before making a move. Trying to make a preemptive move would be seen as doing Trump's bidding.
4
The background for the next recession is building: massive public and private debt, deregulation of, well, everything, the costs and consequences of climate change, and the costs of uncertainty. One of Powell's concerns should be the tools available to the Fed to deal with concerns in the future, and, as Dr. Krugman points out, interest rates are already so low this, the only tool the Fed has, is limited. With record low unemployment and inflation, in an economy still growing despite the world's turmoil, we can only hope Powell stands up to the politics and does his job for the good of the country. Lower rates serve no purpose today other than to placate the bully in the White House and to guarantee a more bleak future.
4
With the yield on 10 year Treasury notes just above 2%, once again the savers are penalized to the benefit of the debtors. As a retired baby boomer who followed "the rules" and accumulated a retirement nest egg far above the national average, I resent having to take additional risks to earn a adequate return on my savings. At this stage of the economic cycle with unemployment below 4%, I would expect the interest rate on 10 year Treasury notes to be around 5%. Instead, the low interest rates benefit the private equity firms, hedge funds and investment banks who use cheap money to fund their acquisitions and other speculative investments.
Cutting the Federal Funds rate now is simply a political move. The Federal Reserve is becoming a tool for achieving political goals rather than trying to rationally manage the economy.
14
You know Paul, the Fed's best defense against losing its independence, let it be from Trump and his Twitter feed, or AOC and MMT is to get things right. Their track record the last dozen years has been nothing short of abysmal. In 2017 Bernanke was going around talking about the benefits of the new technology of securitization and the bank supervisors were confident in their view that banks could effectively self-regulate.
They get some credit for unconventional policy after the crash but preventing total collapse from an event they did not and should have seen coming is not a stellar performance.
Since then, it's been persistently just bad. We've watched the "dot plots" converge slowly to the forward rate. The market knew the recovery would be slow but our esteemed Ivy League trained experts care only to talk to their models and each other, convinced that people who actually operate in the economy aren't worth the trouble to interact with.
The result has been a terrible undershoot in the inflation target, and unnecessary pain for workers and the poor. With the inevitable result of the horrible regime we now endure.
So the greatest fear of the tut-tutters may not be the Fed's loss of independence, but concern that people will finally realize that all those MIT PhD's aren't wearing anything under their academic regalia.
1
You know Paul, the Fed's best defense against losing its independence, let it be from Trump and his Twitter feed, or AOC and MMT is to get things right. Their track record the last dozen years has been nothing short of abysmal. In 2017 Bernanke was going around talking about the benefits of the new technology of securitization and the bank supervisors were confident in their view that banks could effectively self-regulate.
They get some credit for unconventional policy after the crash but preventing total collapse from an event they did not and should have seen coming is not a stellar performance.
Since then, it's been persistently just bad. We've watched the "dot plots" converge slowly to the forward rate. The market knew the recovery would be slow but our esteemed Ivy League trained experts care only to talk to their models and each other, convinced that people who actually operate in the economy aren't worth the trouble to interact with.
The result has been a terrible undershoot in the inflation target, and unnecessary pain for workers and the poor. With the inevitable result of the horrible regime we now endure.
So the greatest fear of the tut-tutters may not be the Fed's loss of independence, but concern that people will finally realize that all those MIT PhD's aren't wearing anything under their academic regalia.
Paul,
My view of the economy is this: When Trump came into office the economy did pick up. You yourself said that Obama's economy was good, but sluggish. Business leaders thought that, since Trump was businessman, he would be pro-business. He has was - at the expense of people and the environment. In the short term, businesses responded favorably.
But Trump being Trump couldn't help mucking it up. His tax cuts have caused the deficit to soar; his trade war - excuse me, trade wars - have caused distress in the markets, which are only exceeded by the distress caused by his threat to shut down the border. Since big business loves certainty, they eventually are going to pull back as the President continues to play some sort of amoral Don Quixote.
A number of commenters have said they wished for a recession because it will get rid of Trump. I don't wish that, but thanks to Trump being Trump, I believe it's inevitable.
(My use of the word "amoral" may have been too generous.)
1
@Thucydides
Look at ANY economical graph of the last ten years, and you won't see ANY Trump dent at all. Not one.
Only wages ticked up slightly - but 15 Democratic Governors increased the minimum wage.
Trump also didn't pass ANY major economical piece of legislation.
His tax cuts for the wealthiest bill has had NO proven positive effect on the economy whatsoever.
There are also NO studies available that show that if you allow big businesses to pollute more and allow Wall Street to become more deregulated (= the only thing that Trump has done, and through mere executive action, "for businesses") somehow that would increase annual GDP or create more jobs or increase wages.
In the meanwhile, Trump's promised annual 4% GDP growth didn't happen at all. GDP growth remains perfectly comparable with Obama's averages.
So if there's ONE president proving that you can be a business man and not help the economy at all, it's Trump.
7
@Ana Luisa I take it you feel that the Dow going from 17,000 to 25,000 under Trump, and the unemployment rate going to the lowest in decades, has nothing to do with Trump?
I am sure that Trump skipped the week at Penn in Economics class where his Wharton Professor when thru the steps during the Depression where it was decided why and how Monetary policy would be decided by an independent Fed regardless of politics.He was probably busy either preventing someone from renting from his Dad or evicting someone they felt didn't fit their tenant profile.
5
From the moment of its inception in 1913, the Federal Reserve has been a private club, with its focus on looking after the banks, not the "little people".
Other than depressions, recessions and bouts of inflation (other than that), it has had an unbroken record of success.
Its most distinguished alumnus is Timothy Geithner who became Secretary of the Treasury in 2009, after serving from 2003 to 2009 as President of the New York branch of the Federal Reserve, where he was at center ice observing the financial abuses that took place.
Mr. Geithner and the Federal Reserve were well-placed to go after the scoundrels and rascals who had stolen billions during the run-up to the 2008 financial crisis. And of course, they did so. Or, maybe not.
As an academic, Professor Krugman is most likely a great admirer of Alan Greenspan, who famously used his bathtub to read voluminous reports on a shelf - instead of doing the mundane homework involved in going out in the field (maybe as often as once a month, which would have been a lot to ask) and seeing how loose lending standards were perverting the process of obtaining mortgages. An hour in a mortgage broker's office in 2007 would have sufficed to open his eyes.
Maybe, it's time for Professor Krugman to get out in the field too.
4
The Fed should have been gently raising rates to a higher level as soon as we began to emerge from the Great Recession...for three big reasons:
1. Conservative (as in careful, risk averse) investors have entered the equities and more risky bond markets in a desperate attempt to seek yield. These same people would have otherwise relaxed with CDs or other less risky income producing vehicles. Too many people are in the markets that don't belong there. When the bubble bursts they will flee and suffer losses.
2. Savers have been punished by low rates. Higher rates would have boosted consumption. Consumer spending represents 2/3 of GDP and it has been crippled.
3. There is little the Fed can do with rates as low as they are now. A rate drop to zero from this level will not give companies confidence to invest new capital or boost hiring. There is too much fear of President Pinball undermining trade relationships, disrupting supply channels and punishing consumers with a tax on their purchases.
The Fed has essentially rendered itself useless to the general population but quite helpful to the Oligarchs who borrow money at almost no cost - rather than use the trillions they have accumulated in cash and stock.
Want to boost the economy the "right way"? Increase savings rates. Decrease credit card interest rates and slash student loan rates. Restrain payday lenders.
Regulate the Heck out of greedy lenders of all kinds.
12
@Bob Bruce Anderson Well thought out. Makes sense. Easy to understand. Seems logical. Looks like it would be beneficial to those who want to "save" money for their future, pay off student loans more quickly so they can spend (and put more dollars into the economy), and pay off credit cards and payday lenders so they can gain control of their budgets and lives. Will never happen.
If there is one thing we have learned from this debacle of an administration it is that we as citizens have no means to rid ourselves of a loose cannon president. Congress must start asserting its prerogatives as a co-equal branch of government or it will become totally irrelevant. And a future president could be even worse than the pretender we have now.
5
Economics and business have become a short-term affair and, in Trump, they has their perfect short term president. Public companies are now essentially managed quarter to quarter due to the pressure of activist investors and the business media, and Trump is “managing” the economy in a similar way—poll to poll and economic report to report.
The problem is, Trump has few economic levers left to pull. He has already slashed taxes to the wealthy and corporations during a time of historically low unemployment and relatively robust economic numbers, and as a result the government is borrowing money at or near record clips. So badgering the Fed into reducing rates is truly the only he has tool left to try to stimulate an economy which shows ominous signs of a coming downturn, if not a recession. I would suggest this is because of the instability and uncertainty he has wrought, all at the same time—the China trade dispute, tariffs or threatened tariffs against other countries, his termination of or withdrawal from various treaties, saber-rattling at Iran, Venezuela and North Korea, insulting our allies in Europe, Canada, Mexico and elsewhere, a manufactured immigration crisis and the overall lack of confidence in his ability to competently run the government.
Business likes predictability and stability. Trump has offset any positive economic momentum with the chaos he has wrought. He has created or worsened uncertainty. He himself is the biggest drain on the economy right now.
311
You vastly overestimate the impact of the economy on presidential elections today. Trump's numbers are down notwithstanding a rosy current economy. His core doesn't care when he creates tax laws that harm them. While I am constantly amazed by this reality, his supporters care more about enacting laws that oppose homosexuality, abortion and integration than their pay checks.
12
The basic problem with the situation that we are in is that The Donald does not understand anything about policy -- not economic policy, monetary policy, defense policy, foreign policy, well you get the idea. He does not know and cares less about policies and plans.
Most of the time, The Donald's actions make perfect sense if you keep in mind that he wants to do two things -- get reelected in 2020 and make a buck for him or his family if possible.
The Donald's right-wing and evangelical supporters love Israel (where Bibi is prime minister). We have pretty much outsourced our foreign policy in the Middle East to Bibi who hates Iran. So that explains our current "crisis" in the Persian Gulf.
The same with monetary policy at the Fed. The Donald thinks that low interest rates will increase economic activity and jobs and help his reelection. Again, a play for reelection. (I don't know anything about The Donald's business -- low interest rates could well help him personally.) Any other issues such as politicizing the FED, etc. are irrelevant in his mind.
If you follow The Donald you realize that much of what he professes to think is superficial, very much out of date, or completely wrong. The Donald says that our trade with China has lots of problems -- which is completely true. The problem is that he doesn't know enough about trade, economics, and foreign policy to get our allies together to actually deal with these trade problems.
14
"The common principle is simple: Monetary policy should be whatever serves Donald Trump’s interests. Nothing else matters."
Excellent observation. In economics, as in war, Trump is author of his own problems which he then races to self correct by browbeating the people he ostensibly chose for their expertise. (I'll ignore the other factor, the "look the part" appearance gauge.).
I should feel sorry for Powell, but I don't. He knows better than to let the president bully him, and it would be great if he'd stand up to him, even at the cost of a demotion.
Because the economy is far more about all Americans over and above just Donald Trump. He's going to do well no matter what, but we won't.
Should Powell give in to pressure on the extent and timing of rate cuts (or increases), his decison will benefit one person but not necessarily the economy as a whole.
And if the economy tanks, well, we have far more to lose while Trump just skips off to the bank--Deutche Bank or otherwise. Those of us who depend on Social Security and/or our stock portfolios, will be the first--and last--to suffer.
244
@Christine: excellent points...although it will benefit more than one person - at least two directly. Trump and Powell himself. And then, every fat cat loaded with stock portfolios.
19
@ChristineMcM Good comment. I like and respect Janet Yellen a great deal and she should have been reappointed for another term as Chair at the FED. But in some ways I am glad that she was not reappointed. Whoever was appointed would need to deal with the overgrown toddler; she is too nice and smart to be subjected to that.
28
@ChristineMcM When the country is at war, as ours is right now with China, Russia, Iran, and so many others, when it is under attack, some citizens chose to close ranks and circle the wagons around the Leadership so the war can be won. Others (the so called 5th column) choose to aid the enemy by ceaseless criticism. The President (who the Democrat Party refuses even to honor by capitalization of His title) deserves our undying support right now, while he is waging the righteous war. His personal shortcomings are many, but His glory persists.
Its a self fulfilling loop. Trump causes things to tank due to the tantrum du jour (Tariffs or Trade wars...or hopefully not real wars) , and The Fed cuts rates to keep things out of free fall. Of course since Trump has been calling for a rate cut (regardless of whether he caused the underlying condition), he proclaims that he has won. Its never Trump's fault. We should all know that by now.
222
It's an awful thing to watch our country willingly destroy itself. If Trump gets a 2nd term, which seems likely, and the GOP in Congress continue to see themselves as a rubber stamp for his whims and passions, then we will be autocratic in all but name by 2024.
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@Svante Aarhenius It doesn't seem likely that Trump will get a second term. But if he does, it won't be because of the economy and tax cuts - from which his base did not benefit - but because he manages to cheat successfully again, with the help of the GOP and Russia.
87
@Svante Aarhenius My comment is not just for you, but for many commentators in this space. Unfortunately, and I hope I am wrong, I feel that there is a better than even chance that Trump will be reelected. So, perhaps the Democrats' real focus should be on keeping the House, and finding a way to get the majority in the Senate.
4
The coming recession, and it is coming, will be triggered by global consumer fear which will cause a huge pullback in spending. And, rising prices from the tariffs which will also reduce consumption and supply chain disruptions which will cause layoffs and reduced investments. (I mean real investments that produce goods and services, not trading stocks).
Recessions can feed off of themselves, like a self fulfilling prophecy. Fear is often how the downward spiral gets started. And no one in the world causes more fear than Donald J. Trump. He is the King of instability and disruption. And soon, may add war to his resume.
So basically, to me, it looks like we are going to have a recession no matter what the Fed does. Trump will have no problem blaming Powell and everyone else.
514
@Bruce Rozenblit
If it takes a recession to be rid of Trump it will probably be worth the cost.
67
@Bruce Rozenblit Economically speaking, there are two states -- expansion and recession -- and neither state persists for a very long time. The record duration for either state may be as short as ten years. That means we are either in a recession and soon will be in an expansion. Or, it means that we are in an expansion and soon will be in a recession. So, I agree with you. We have been in an expansion for about ten years and we are headed into a recession.
The issue is not whether we are in an expansion or a recession. Although that is important and significantly affects our lives. The real issue is whether we have the wisdom to regulate our economy to meet the needs of ordinary Americans regardless of whether we are in an expansion or a recession.
51
@dairubo
That's exactly how I feel!
I wish the coming recession would hurry up and come before election day 2020 to ensure he is booted out of the White House.
The entire world will be grateful and band together (including China) to get the economy back on track.
That will mean the end of populism as well.
49
The only things that have truly returned to pre-crisis levels in America are the financial shenanigans the investment banking industry, the banking industry, and the credit card industry are allowed to pull on Americans. Regulations have been watered down again this time by Trump because he knows better than anyone what the wealthy want. What they want and what is best for the country are not even close to running on a parallel track.
Trump is still benefitting from the economy Obama left him and it was not in great shape for the majority of Americans. We're living on credit because our salaries have not kept pace with the actual cost of living. We're living on credit because we've lost our jobs and can't find new ones. We're in debt for education, for medical bills, for homes and cars, for life in general. The average family cannot survive if it misses more than one paycheck. What kind of economy is that? What kind of economy is it when experienced people cannot find jobs because employers don't want to pay for experience and these people are not ready to retire?
Those good economic numbers are an illusion and have been for decades. Trump can have as many tantrums as he wants but his policies (and that of the GOP) are not going to save us. Too little regulation got us into the Great Recession and too little is leading us into the next one. And too little has allowed the rich to prosper at the expense of the rest of us.
6/20/2019 7:41pm
674
@hen3ry
"These good economic numbers are an illusion."
Exactly so! Everything has been deregulated and sold off to the highest bidder, including jobs. The jobs scene has been sliced and diced to pieces - people are working gig jobs with no benefits, shifting hours (forget about trying to schedule daycare, babysitters, etc., with all the uncertainty), no health benefits, no benefits at all, and lousy wages. "We" (the non-one percent) are skating on very thin ice financially - one step away from disaster. That disaster's name is a recession.
143
@hen3ry thank you for saying exactly what I was thinking!
61
@Ellen Yes exactly. The idea that the US is or American workers are currently experiencing a strong employment and jobs situation strikes almost all working Americans as simply absurd. It's not that the employment numbers are faked or even wrong. Rather those numbers were designed for another time when "job" meant more or less permanent full time employment with a single employer including more or less standard benefits of health care, vacation and retirement pension. The idea of unemployment was the brief interval that happened between permanent full time jobs. Economists need to develop measures that reflect the reality of today's gig and part time and contractor working environment.
82
"But if that happens, Trump will have only himself to blame."
Of course, that has never happened. I don't believe Trump is capable of accepting responsibility for any negative result. It is beyond childish.
3
Trump has power over weak minded individuals and this 30-35% of the voting public is his strength. He will indeed pressure the Fed to do his bidding and ensure his re-election.
It is imperative he win in 2020 to escape justice for his 40 year crime spree which accelerated when he was illegitimately elected with the assistance of Russia, gerrymandering, voter suppression and much, much more.
The Fed is the key to maintaining the momentum in the inherently weak two tier economy - the haves and the have nothings. What kind of a great economy has a very large percentage of workers needing to work two jobs to make ends meet? 50% don't have $500 for an emergency.
Like Congress, the Fed will wilt despite Krugman and 60% of the electorate. Trump is King and if you don't believe it watch the wimps in Congress roll over when Trump pulls the Fed trigger.
2
The Fed serves bankers and is staffed and operated by pro-banker bankers. Fed policy will follow banker requirements. Watch bank profits, bad debt, and growth. Never mind Trump, Fabian Socialists, Laffer, Marx, etc.
1
Trump going to push this country into another Great Depression with his unsound, counterproductive economic grandstanding.
1
Trump is incapable of blaming himself for anything large or small. He has the intellectual curiosity of a toad (sorry toads) I just see no hope in him being able to understand macro economics even at the most basic level. He has ridden the wave of the Obama economy and now it’s his, his trade policies are about to bite him and all he can do is lash out at the federal reserve. Can’t see this ending well for any of us except the 1% who always win.
2
Jay Powell is Trump's tool. Like it or not he is a member of Trump's re-election team and campaign.
2
I think this is spot on,
"And there is correspondingly a case for partially reversing recent Fed rate hikes, and cutting rates now as insurance against a possible future slump — getting ahead of the curve. Donald Trump is the worst possible person to be making this argument, but that doesn’t mean that the argument is wrong."
After watching Mr. Trump's kick off rally in Orlando on Tuesday, it seems to me that he is establishing a way to blames someone other than himself if the economy does not perform well between now and the November 2020 election.
Remember that his claim to fame in his Trillion dollar tax cut has not paid for itself as claimed. the result has been a sharp fall off in revenues and a rapidly expanding deficit.
The script is being created for why he should be re-elected for a 2nd term including the Medal of Freedom award to Arthur Laffer who was the architect of the cut and maybe is still active as the economic strategist for Mr. Trump. Larry Kudlow has also chimed in that he is a fan of the Laffer curve.
Of course, the reelection narrative is as phony as the famed Laffer Curve Napkin now on display in the Smithsonian Museum of American History. https://www.nytimes.com/2017/10/13/us/politics/arthur-laffer-napkin-tax-curve.html
Meanwhile, the real crisis of what is happening on the challenge of the slowing global economy and its lack of readiness to make progress on reducing global warming gas emission is being ignored. This is not good.
2
"Now, this might mean that if the Fed does eventually cut rates, whatever boost this gives the economy (which would be limited in any case, since rates are already quite low) will come too late to help Trump in the 2020 election. But if that’s what happens, Trump will have only himself to blame."
Can you imagine how HAPPY Trump would be if this would happen?
He would claim that the continuation of the Obama economy under his watch (having done nothing serious to alter its course), was of course the effect of HIS presidency, whereas after two years of a House controlled by the Democrats, things are getting worse again.
So he'd obviously use it as an argument to reelect him, as "only he" would be able to bring back a "great economy" etc., whereas giving the Senate and White House to the Democrats too would once again create an "Obama economy" (which in Fox News' fake world means a very bad economy - no matter that Obama turned Bush's -8% GDP and 700,000 jobs lost a month into a decade-low growing economy and lowering unemployment rate, as the non partisan CBO analyses back in 2009 predicted ...).
And why didn't the Obama economy evolve faster than it did? Because the incompetent, corrupt GOP blocked all measures that would have objectively accelerated the recovery.
What a scam.
2
Stocks hit a record high on Thursday, a day after the Federal Reserve opened the door to interest rate cuts in the coming months. Fed should try to do what's right for the economy period end of story. Waiting for clear evidence of a serious slowdown before acting is flat out stupid...they may be too late. I think what really terrifies Krugman is the Fed acts in such a way that the economy is boosted and it does help Trump in the 2020 election. Right???
1
@Bill Brown but the stock market is not the economy and the economy is not the stock market. How many jobs were created on Thursday when the stock market went up, and how many workers got a salary increase that day because of it? None. Stocks went up because investors felt companies would make bigger profits. That's it.
3
Repeat after me: The market is not the economy.
1
@Mike M The stock market is an important component of the economy. If stocks go up companies have the capital to hire more people and give more raises. Businesses are likely to make capital investments when they feel that these investments will lead to rising market values, such as during rising or bull markets. The reverse is true if stocks go down/ I.E. Tru Car lost 33% of it's value in the past three weeks. ALL of the key managers have been fired or forced to resign. They laid off 25% of their workforce. Would that have happened if their stock had gone up and beaten expectations? Of course not. Your analysis isn't accurate long term.
1
The fact that Mr. Krugman writes about the Trumpification of the federal reserve shows how far Trump has gone in attacking those institutions that are there to protect America and its population.
There isn't a single institute I can think of he didn't attack. Whether it is the judiciary, the intelligent services, the monetary services, congress, America's standing in the world and with allies, or the press.
America has turned into a banana republic with the Trump family and cronies getting richer and richer off of it.
It will take decades to repair the damage done by this man and his (GOP) sycophants.
2
“imagine what the Obama economy would look like if he had $400 Billion to spend on infrastructure.”
Get it wrong Paul is at it again. He has forgotten too quickly about the billion given to Obama that was fretted away on investments like Solara, total and complete loser, as well as the basic problem of there being no “shovel ready” projects, likely in part because of the all the regulations and rules the Democrats love so much. Truly laughable, President Obama, whatever his other talents, had no clue on how and why business grows and jobs are created.
1
Messing with the Fed is a very, very, very bad idea.
5
Professor;
You can't see the forest for the trees: Donald Trump is insane and is about to start a war with Iran.
The President is flat out crazy and your talking about economic policy?
1
It's not just the Federal Reserve that's had its credibility blown by Trump. Thanks to his self-absorbed worldview, which sits between survival of the vilest and self-deification, all the foundations of America's influence and engagement with the world have been subverted.
The Times reports that hours after Trump ordered a strike on Iran he changed his mind and called it off. A little boy might get away with crying wolf once or twice, but an American president who does that is playing with wildfire.
I recall a retired general describing the anguish the last officer in a nuclear launch sequence will face once the codes have unlocked the trigger and is set to fire: is this a snap decision by an unhinged Trump or a fully-informed and vetted action after all options have been exhausted? Profound dilemma doesn't begin to describe the horror of those charged with implementing doomsday on command of Captain Queeg.
Trump's Federal Reserve play is sophomoric. He demands cheaper money to juice the economy. As Krugman points out, it's a win-win for Trump. If the Fed drops interest rates it looks like a Trump win. If they don't and the economy slides, it's not Trump's fault because the Fed deified him.
Crying wolf and the sky is falling is how Trump suckered 40 million voters. It's how he hopes to win in 2020, with migrant-rapists in the basement and terrorists in the broom closet.
Someone should tell him how the tale of the little boy who cried wolf ends.
13
@Yuri Asian
"Because the Fed defied him" would be a bigger problem than simply defying him, which is what I meant.
The Fed has always been political and it is disingenuous to say otherwise. They are banksters serving banksters.
1
As usual, Trump's policies, his campaign and everything about his presidency is about Make Trump Rich again, or, Keep Trump Rich.
So it goes with Don the Con, fast-talking salesman who never saw an opponent he didn't love to trash. Trash talking seems to be the only talent our sorry excuse of a president has.
2
Poor Paul Krugman – what with al his honors and accolades – Trump consistently beats him when it comes to driving policies that drive America's economy, brings home off-shore corporate billions, repatriates real jobs, inspires the record high in the employment of minorities, and yes, seems to know best when to reduce the rate. Fortunately for Krugman,the Nobel committee does not rescind its prizes. but perhaps he might consider handing his over to the President -- for safekeeping at least.
"It's 17 months 'til the election. We got a Trillion dollar-plus annual deficit, half or our allies hate our guts, we're wearin' shades and it's dark."
Trump."Hit it."
2
Ayn Rand (of all people!) gave us the scenario where one character asks the hero (John Galt) that wouldn't he call a doctor if his leg was broken? Galt answers, not if he was the one that broke it!
But that's Donald Trump: He keeps breaking things, blames his "enemies" domestic and foreign, then rides in on his white horse to save the day....except he doesn't even do that. But his agit-prop team from Pence to Hannity tells everyone he DID fix the "problem" and it was caused by someone else, never him.
Trump hasn't actually achieved ANYTHING constructive--but who expected him to?
3
It was political when Jimmy Carter leaned on the Fed too. What’s new Professor?
1
The Trump-GOP government spent $234 billion more than it collected in the month of February 2019.
It was the single largest - or HUGEST, for those who speak Trumpese - one-month federal deficit ever in United States history...because Donald Trump and his Greed Over People champions collapsed taxes for the rich in this country while continuing to spend like Republican drunken sailors.
Mix in some destructive trade tariffs, alienate every ally, spend your days golfing, Tweeting and campaigning - and blame the Federal Reserve and everyone else when your strychnine economic salad starts taking effect.
The King of Debt, Bankruptcy and Casino Failures is doing what he does best: using other people's and crowing about it until the inevitable Trump Titanic achieves its manifest destiny and slips below the surface of the water.
Trump and Republicans haven't got a clue about economics, governance or doing the right thing.
But theft, larceny, greed, deception and legerdemain....they all have advanced PhD's in those fields.
Thanks for the $22 trillion national debt, Trumpistan and Republistan.
So much winning for the King of Bankruptcy.
Donald Trump stiffs an entire nation....and the Mad Hatters cheer as the Titanic lists to one side.
The Art of Bankruptcy....a Donald Trump works his magic again.
Now would be a good time for America to remove this horrible 'businessman' from the stage and isolate him in a controlled setting where he can't wreck the country and the world.
146
Please, wait till Fox News gives Trump an idea of quantitative easing by saturating a plurality of the white working-class voters with Libra. Then he’ll leave FED alone.
And as we know Trump takes responsibility for nothing when things go bad.
2
Mr. Krugman continues pondering to his base here, which would probably tear him to pieces should he said anything remotely nice about the President. Krugman has been consistently wrong on so many issues for the past 3 decades, that his jabs against the very successful President cannot be taken seriously by the American people, who continue to support Mr. Trump due to His vast improvements of the economy, the immigration policies, and the overall level of self-respect of Our nation.
The tax cuts we were told that GDP would clime to 4% because companies would invest heavily. Companies did not invest, all they did was buy back their stock so as to improve price but did nothing to improve value of the company. The prez. also stated at the time that " some people are talking 5%". The prez has yet to reach what Obama reached in the quarter of 2/14 of 5.2%. Our economy was climbing from more than 10% unemployment to 4.8% in January 2017. Unemployment has gone down 1.2% in three years. Even though we have record unemployment our deficit has increased because of the tax cuts. You would normally expect with record employment we would have record tax revenue increase that has not happened. The thing that scares me the most and no one talks about is the pension system that is woefully under funded. Guess who pay for pensions if a company goes under. Any normal person would fund obligations before they buy more of their own stock. Not our companies they know that we the people will back them up so why worry. Heck American company left America to go to China for 3% profit, that's correct they destroyed the middle class for 3% profit. They sold their sole and now want us to go to war with China on trade because China put a gun to their head and made them divulge secrets. I love Capitalism, so maybe we should wake up and show companies how it can work for us. We the people need to stay home for one week end and not buy anything. Show companies what Capitalism can do.
7
"Monetary policy should be whatever serves Donald Trump’s interests. Nothing else matters."
Sad to say, but you can substitute almost anything for "monetary policy" and you have Donald Trump's thinking in a nutshell.
6
The world has a surplus of American dollars, a consequence of the great rececession.The great recession printed a few trillion more to prevent a depression. Those trillions went to save wall street and the banks. The folks who caused the great recession. Keynsian economics saved the day. However Keynes never believed in a financial free lunch. As the economy got back on its feet, the money had to be paid back. Instead those who were best able to pay it back, those saved and who benefited the most by QE of the last decade were given a tax cut. There is no free lunch. All that money is now sloshing around in ostentatious real estate in the super weathy's favorite stocks, real estate and art. Inflation is rampant in those areas where the super rich like to play and buy. As for infrastructure and the deferred maintenance for American Cities, towns and villages, America's Healthcare and education, there is still a great recession. A 1 % tax cut is not going to pave the way. Unfortunately the Creative Destruction that Capitalists believe in failed the financial industry during the great recession.
1
The McConnell era in a nutshell. Ignore what is truly best for the country and do what is best for your party/you at the moment. Mitch begat Trump and an entirely new way to “govern”. Until we have two parties with policy differences that go beyond “we don’t want whatever they do” we are in more trouble than we can imagine.
9
@Jdr1210 Isn't iot how ALL politicians think tho? What was so great about the Obama years? he instituted the drone strikes in the third world. Minors' border detentions. He baled the criminal banks out. All under pretenses of the "Great First AA President". Hypocrisy rules on both sides.
@Yulia Berkovitz
Ask 23 million Americans about healthcare, see worsening tensions in Iran, check the other 190 nations remaining signed on to the Paris accords.....
I am watching Google and other monetary power houses explore ways to become less dependent on government impulses. Can you imagine a world where the dollar is not king?
5
@Robert Black
Having the dollar as a global, stable currency has had a lot of positive consequences, both for the entire world economy and the US.
To imagine that as soon as Americans elect a corrupt president, somehow the entire global monetary system, as controlled by democratically elected politicians, would be better off when controlled by a handful of the world's wealthiest CEOs and multinationals, is ABSURD.
Monetary policy has a lot of political consequences, so you cannot possibly outsource this to - already extremely powerful and not democratically elected at all - big private sector companies.
The only way to stop what Trump and the GOP are doing to this country, is to vote them out and replace them with serious politicians again.
Giving away monetary policy entirely, as ordinary citizens, isn't the solution, and can only make things worse!
As some others point out also, the FED should make sure it will have some percentage points to cut when the new recession comes. The FED sank Carter's reelection. Time for it to sink Trump's.
9
Trump and family owe money all over the world. Low rates will help him personally. That's the lens through all his decision are made.
20
@kie Paying debts has never seemed a Trump priority in the past.
2
Krugman conflates his own dislike of Trump, politics and a Fed which has to date demonstrated an even hand and independence from Trump. Jay Powell is virtually the only appointee of Trumps who when asked if we would resign simply answered, “no”. As Krugman knows the Fed’s dual mandate is control of inflation and full employment - not economic growth. While Wall Street and Trump both want the stock market to be considered a part of their mandate, they have been acting thoughtfully and independently focused on their mandate and data. A basic challenge is that Trump through his terrible trade and foreign policy actions makes the Fed’s job reactive, Finally, the Fed must also contend with a $1T deficit during a time of economic prosperity leading to real issues of a ballooning deficit during bad times that will inevitably arrive.
5
@Chris
With all respect, you don't seem to get it.
Trump has the legal power to fire and replace Powell at any given moment.
That's why in order to guarantee the Fed's independence, presidents HAVE to refrain from commenting on their policies and decisions - let alone threatening to fire its chairman, as Trump is explicitly and publicly doing today.
So Krugman is right, this is bad, very bad - not only for America's economy, but also for the global economy and as a consequence, as the past has shown, world peace.
8
@Chris
I think you would be wise to read a history of the Fed/how it works. trump is doing some very stupid stuff here. If he wreaks the Fed, we sink.
1
@Ana Luisa - “the law is clear that I have a four year term and I intend to serve it” - Jay Powell - June 18th
1
What I missed in the article was when Trump was complaining before the election, quantitative easing was infusing hundred of billions into the economy. Trump was complaining about quantitative tightening, taking hundred of billions out of the economy. That affects the economy, and interest rates.
2
@Jay
It was fake news. Trump clearly never understood anything about his topic.
The tax cut giving cooperation and the wealthy the biggest benefit by increasing the deficit in the order of 1.5-2T dollars at a time of a booming economy was a huge mistake. This money should have been invested in infrastructure where it is urgently needed with a chance to increase productivity and efficient in the future. Now we are talking a cut in interest rates sending the stock market higher. What measures are going to be left in case we are going into the next recession? Mind you that the rest of the world is evaluating to dump the dollar as leading currency and when not if this happens God help us. The next recession will be the worst this country has ever experienced.
9
GDP grew 43 percent over the first 39 quarters of the 1991-2001 expansion (which was the previous record holder). In the first 39 quarters of this expansion, through March 2019, GDP grew by only 22 percent.
At its current pace, the current expansion would have to run six more years to equal the aggregate growth of the 1991-2001 expansion, and nine more years to match the 54 percent aggregate GDP growth recorded over the 1961-69 expansion.
Wages continue to be flat since the 1970s. Not much to brag about
4
@Enri wage growth has been flat since the 1970s
2
@Enri Wages along with productivity have doubled since the 70s. Median wages have been flat while the highest wages have increased tenfold as top tax rates were cut from over 80% to under 20% in 1980.
2
@Frank
While productivity has kept growing since the 1970s wages have remained stagnant (in relation to profits and productivity). Look at the real wage not at the nominal one (even that is not growing relative to productivity)
This is dangerous business I think. The Fed should not be in cahoots with any political administration, at all, ever, let alone this one.
18
I don't believe for a minute that Trump understands monetary policy or economics in general. He always looks at "what is in it fror Trump" not what is best for the country. Like he would say ..SAD.
18
Like the Supreme Court, I thought the Fed was independent of the administration. So, why is it that Powell seems susceptible to Trump pressure?
7
@Alfred Yul
The Fed is actually a federal agency. Its board governors are appointed by the President, after Senate approval. They serve 14-year long terms. The Chairman is picked in the same way, but can only be chosen among the board governors.
A president has the legal right to prematurely end a chairman's term if he believes that there's "cause" to do so.
The Fed was created precisely to limit both private sector and political influence on monetary policy, at the beginning of the 20th century. That's why it's extremely rare that a chairman appointed by a president gets called back by the same president (as doing so literally politicizes it, and as such undermines its efficacy).
The Supreme Court, on the other hand, is part of one of the three "branches of government" (the legislative branch (Congress), the executive branch (the White House and president) and the judiciary branch (courts, judges, Supreme Court).
In a democracy, those three branches are constitutionally independent.
That means that it's the people, not the president, who send lawmakers to Congress (and those lawmakers are not first picked by the president himself before they can be voted for by the people). It also means that the president cannot dictate Congress which laws to write and pass (but he can negotiate, of course), whereas he has the right to decide how to concretely implement those laws.
And it means that courts rule without any possible interference by the president or Congress.
1
@Ana Luisa,, in our real world you have to reconsider your position and theory.
2
Since the economy is doing fairly well (although the distribution of its bounty remains problematically unequal and unfair), now would be the time to slow it down and pay back some of the money we borrowed when it was in trouble. Otherwise we blow bubbles that will eventually pop.
This is my simplistic comprehension of Keynes.
1
A rate cut of 0.25 to 0.5 percent would do little to perk up the economy - if it needs perking up. Its effect will be to encourage more borrowing by companies to pass on as dividends just as the effect of corporate tax cuts was stock buybacks.
To really perk up the economy we need to massively invest in infrastructure. Sorry, not going to happen.
10
This editorial reads like the script from the battle of wits scene in The Princess Bride.
The Fed has done a masterful job of using monetary tools as a substitute for politically gridlocked fiscal policy. Since 2007-8 the Chairperson has performed their duties without regard to sniping from the peanut gallery. In this, the President doesn't matter (whether named Bush, O ama, or Trump).
4
What would ever motivate Trump to push the Fed to raise interest rates? He wants the economy constantly hot, with unemployment as low as possible and the stock market as high as possible.
He would also allow war with Iran to help his buddies in Saudi Arabia, Russia and Israel.
Trump is only concerned about his short-term goals: to perpetuate his acquisition of money and power, to garner constant attention from the media and to cement his "legacy" by working to destroy everything that Barack Obama accomplished.
Trump will do whatever it takes to win re-election next year, and he will accept a lifetime presidency if he could figure out how to get it for himself. Long-term goals and national and global stability do nothing to help Trump to these ends.
The only solution is to vote Trump and his Republican enablers out in 2020. That needs to be *our* unifying goal.
44
Again ,this is a so conservative ideology of the economy. The interest rate of the Fed. Krugman pretends to be a rebellious force but he pushes open already unlocked doors. The FEd was meant by Hamilton to be a trust fund for investment not a speculative tool. It is contrary to its original purpose .
@JPH
Wasn't the Fed created in 1913?
@JPH
There was no FED during Hamilton's lifetime.
@dairubo Please read history.
Yes Hamilton is the original creator and theoretician of the federal bank.
Fast forward to the present. The employment picture is much stronger now than it was then. There are hints of an economic slowdown, partly because of the uncertainty created by Trump’s trade war, but they’re considerably fainter than those of 2015-16. And Trump himself keeps boasting about the economy’s strength.
http://www.siyasat.pk/waqt-news-live.php
Mr. Krugman,
I'm retired and If interest rates were higher, I would be spending it into the economy right now. Why wouldn't that boost the economy?
5
@Blanche White
You and millions of other retirees are in the same boat. With safe returns of 2-2.5% on retirement assets (we oldsters do not invest in risky assets to avoid becoming a drain on our families), $1.0 million only generates $20,000 in annual income. Imagine that - being an American millionaire and not being able to generate enough safe income to go out to a good restaurant.
1
@Blanche White
It would inhibit spending by those others than you.
It is scary how Trump has bullied and cowed Jerome Powell. The Fed has several challenges in normalizing things. First of all, it has an enormous balance sheet of over $5.5 trillion of mainly bad mortgage securities bought during the TARP days to save the banks (homeowners were still foreclosed on in droves) and $1.5 trillion of excess Treasury bonds purchased to pump excess cash into our then failing economy.
The Fed needs to clean this up, and was trying to back in Q4 2018, until Trump threatened Powell in his Trump-trantrums (Trump-trums). Also, to restore logical value to money, interest rates need to gradual rise up to historical levels. Otherwise, bonds and cash deposits don't return enough, and people chase risky stocks (FAANGs, hot ideas and High Yield Dividends) to try to achieve targeted returns with albeit much higher risk.
The Federal Reserve needs to reassert its independence and make the necessary moves to protect the long term health of the US economy, Greenspan was correct in that trying to protect stock markets and expansions for political purposes was wrong. Powell needs to get his courage up. Trump must be silenced. Congress must remind him that he cannot remove J Powell.
20
@Warren
Good post. Thanks for reminding us of those derivative type mortgage securities the Fed bought up while letting homeowners drop off the cliff.
... and Greenspan propped up the credit markets for waaay too long leaving savers in the dust.
Uumm? Seems like there is a trend here. Could it be the Fed has a master already? Is it Trump or Wall Street?
13
@Warren
Ah yes, the toxic assets (later euphemised to merely 'troubled' assets) we all bought so the criminal bankers, those stalwart capitalists who despise socialism, could be rescued on the public $$.
Guess they didn't go away, did they?
3
How can such a spontaneous reflexive man ever have the thoughtful ability to contemplate and intelligently determine a good coarse of action?
6
No problem. He has some excellent Accountants, from his many failed/bankrupt “ Businesses “. Put them in Charge, what could possibly go wrong ???
Sad.
17
@Charles
Only someone who doesn't believe is paying for things would say that (i.e. Republicans).
Who paid for the Reagan Tax Cut, the Bush Tax Cut, the Trump Tax Cut, the Wars in Iraq and Afghanistan?
Not you or anyone alive today.
You just borrowed the money from the Saudis and the Chinese.
We are on our way to the poor house with Trump putting the pedal to the metal.
10
@Carl
Trump's solution is to go bankrupt and leave his creditors and partners holding the bag. Considering the degree of concern the financial elite has shown for the rest of us and the long-term stability of the system that enriches them, they would deserve it -- if the rest of us could manage to break their power and quarantine their misery so we did not go down with them.
1
Trump only cares about the stock market. What about Main Street? Infrastructure would’ve been great and created jobs that pay a living wage.
33
@Jensen Parr
The nation is still waiting to see the “one trillion into the infrastructure.” May be Trump should start with clean water supply in Flint, MI...... wait, weren’t most of the affected people black? Why would Trump start there?
1
@Jensen Parr, that's for the Saudis to profit from through privatization once Saudi Aramco goes public.
Trump and the Koch Brothers Are Working in Concert They disagree about trade, tariffs and immigration, but don’t be fooled. Neither side can get what it really wants without help from the other. https://www.nytimes.com/2018/09/06/opinion/trump-koch-brothers-alliance.html
President Trump and the Koch brothers have made it clear that they don’t like each other. Politically speaking, they are in fundamental disagreement over trade, tariffs and immigration. Nonetheless, there is a functional Trump-Koch alliance, and the Republican Party has capitalized handsomely on it. Trump’s racially freighted, anti-immigrant rhetoric has been essential to persuading white voters to agree to Republicans’ long-sought tax and regulatory policies. These policies are inimical or irrelevant to the interests of low- and moderate-income Americans. They have been promulgated by the Trump administration, but many of them have been meticulously prepared and packaged by the Kochs’ massive political network.
17
As you wrote, Trump's Tax cuts gave us a modest boost, but business largely bought back stocks. Going further, most of the tax relief benefited the wealthy individuals and businesses. Then there was, as I contend, the 134 Billion dollars in proceeds from the Tariff taxes on mostly consumers that go to the treasury to offset the increased 150 Billion dollar deficit increase. So there must be a degree of frustration over the modest growth that was expected to be robust and the consumption taxes on consumers from the tariffs we pay were made common knowledge. Trump worked with the Republicans in Congress to make this happen starting over two years ago with Speaker Paul Ryan's "Duties" idea that was quickly argued against as an import tax on consumers. They didn't care about the public scorn. They just renamed the "Duties" a year later with a deceptively changed name of "Tariffs".
And you mention "staying ahead of the curve" and how can an emotionally hyperactive President Trump expect his reflexive impulsive actions to determine logical thoughtful and well planned economic policy based on data?
My confidence is in the Fed with his board of intellectuals expressing learned deliberations based on educated calculation and forward looking strategies that account for the long term in years, not weeks. How can business and investment possibly change as fast as Trump's emotional reflexes?
Everyone is political, but educated people are more immune to impulsive bad decisions.
2
I once worked at a very small company full of people who loved to pretend it was a big dysfunctional company.
One person habitually assembled what I and a coworker described as a "circle of blame" before every significant activity (usually a software release or implementation). If something went wrong (or not exactly as this coworker wanted it to, or it did go how they wanted and it turned out badly) there were always at least a couple people in this circle who could expect to be blamed. This often took the form of a one-sided phone call expressing the perceived shortcomings, a few minutes of peace, then a phone call from the CEO repeating much of that phone call. It did not take long before I consisted planned out how to minimize the number of interactions I had with this person.
I feel oddly prepared to work in the Trump administration, but this also means I know not to pick up the phone if they call.
4
Since this is Trump, and the NYT, obviously everything he does is evil. Might point out, however, that pretty much every President (and every party that doesn't have the Presidency) has wanted the Fed to behave in ways that benefit them.
I like some things Trump has done, dislike others, but in this instance he has done nothing wrong - in fact, has done little that other Presidents (on both sides of the aisle) have done.
Krugman did some seriously solid work as an economist (speaking as something with a degree in economics), but as a political commentator? He is so predictable (at this point) as to be rather boring.
2
@JRC
Curious what you like about Trump's policies.
About Krugman being predictable, the whole point of the article is to give credence to Trump's economic theory regarding the rate, but to also include how Trump's bluster undermines the Fed and his own goals. Not to mention ousting Yellen which most observers see as being another shot in the foot.
14
The other presidents had private meetings with the fed but Trump tweets that he wants to fire Powell. Big difference!!
1
History tells us Nixon tried the same tactics (in multiple arenas) and his meddling caused rates to spike once the party ended and there were no more chairs left.
People need to realize we live in a connected society and we depend on each other for so much. My neighbor fails eventually i may as well.
6
The Trumped up tax cut stimulus has all but run it’s course. The party is almost over and it’s time for republicans to determine if the revenue raised by cutting the tax bills of the very wealthy will cover the cost of renting the venue and paying the band. Maybe they can ask Medal of Freedom winner Laffer (well named) for his considered opinion. When a democrat is elected in 2020, how long will republicans take to rediscover their misplaced fiscal discipline?
21
@JRB ~
"When a democrat is elected in 2020, how long will republicans take to rediscover their misplaced fiscal discipline?"
A nano second.
5
@JRB
I don't think scientists have any way to measure such a short duration.
3
Trump has a simple guiding principle based on whatever will help him and help Putin is good.
Presumably Trump has somebody doing insider trading on every tweet he makes that moves the market, while every market moving tweet he makes creates chaos that benefits Putin.
9
Powell has already lost all credibility by doing everything Trump wants him to do following Trump’s attacks on him.
5
I very much enjoyed and profited from Paul Krugman's economics text we used at the Graduate School of Business at the University of Chicago, back in the 1990s. I wish I could say the same for his media opinions, which are generally de-linked from the discipline and logic of economic science. This opinion on the Federal Reserve is similarly configured. The inherent justifications of central banking notwithstanding (rather debatable), they are almost by definition political, and the current administration is merely one in a long line of consistent central banking proponents, and opportunists. But Mr. Krugman is intimately aware of this: the US Federal Reserve has tailored its policy explicitly over the past 18 years, in service to the underwriting of Mr. Krugman's ideological raison d'être: the GWOT, now in its 18th year, with a new escalation of war under its aegis, carefully within pre-operational, pretextual planning and management. Central banking exists to underwrite central government adventurism (some call it empire) and Mr. Krugman has been among the most reliable of Middle East Transformation ideologues. A new war with Iran is being "ginned up" and it's going to cost trillions (on top of trillions already spent). Someone has to pay for it. That's where you come in, dear reader and taxpayer, as the guarantor of more government debt, and the Fed setting interest rates to mask its ultimate budget impact (now at $23 trillion and counting). Regards.
4
"Monetary policy should be whatever serves Donald Trump’s interests. Nothing else matters."
Ditto for foreign policy, border policy, labor policy, health, education, welfare...
13
I wish trump would have left Janet Yellen in place as Fed Chair. Even if he used her as a punching bag as he’s been doing, at least I’d have confidence in the fundamentals of Fed decision making. Sorry to say but Powell doesn’t have the wisdom, knowledge or experience to deal with a real crisis requiring Fed intervention, although he’s done a fair job so far repelling trump’s pressure.
11
Bottom line: We all agree the Trump economy is much stronger than the Obama economy.
1
@Charles
You might believe that, but thinking people are aware--and it's also quite obvious--that trump's run of economic success is pure luck. He was gifted a strong economy and, despite his best efforts to hobble it, it has persisted.
72
@Charles
Maybe, but I don't much care. Economic numbers may be good, but he's selling out future down the river by rolling back regulations that keep our air clean, our water clean and that would fight climate change. Who cares whether the GDP is 2.5 or 3.6? People are still working too hard for too little, and drinking water with lead in it.
419
@Charles I think you mean the stock market and that is not the same thing. Also, so what? There are other more important things.....
15
Trump is engineering the biggest insider trading crime ever. It's hard for me to imagine that he's not tipping off his family, his "foundation", and his close cronies about what his next tweet, i.e., market manipulation play, is going to be, with them then directing their brokers accordingly.
I hope those lower-level unsung heroes at the SEC are keeping good records for the eventual case they can make against Citizen Trump.
74
@E. You are absolutely correct, but the SEC, like the "Justice" department and EPA, is likely corrupted into selective non-enforcement disfunction.
4
The Reserve Bank of Australia is dropping its rate further, because household debt is at high levels. Treasury is doing zero in stimulus and believes a regressive tax cut will cure like magic.
It could be argued that Trump's tax cut created inflation in assets, so Yellen-Powell were correct - but it's a pity the Fed doesn't raise margin loan requirements instead. That reduces the wild bubbles somewhat, without the harsh Fed rates.
Small business and household debt are the main figures to watch, along with flat-lining wages. Small business refuses to understand the fallacy of composition: if you all sack and lower wages, all your firms will collapse. If the NAIRU was always an ugly inducement to keeping the jobless rates high, in Australia it's now meaningless.
And Australia doesn't have Trump's crazed tariff war: a tax on low income Americans that may expand the slump (and even the value of Trump Inc's debts!)
If Trump was really smart, well read and with a high IQ perhaps you would want him to be in charge of everything. But Trump seems closer to simpleton than genius and makes decisions based on instinct or gut or the last Fox rep spoken to. America deserves better.
15
By failing to declare and divest his personal assets into a blind trust you can't tell where Trump Mar-a-Lago ends and Trump White House begins.
Trump made a solemn sworn oath to preserve, protect and defend whatever profitable Trump Organization advantage that he is hiding from the American people in his personal, family and business income tax returns and business accounting financial records arising from his occupation of the Oval Office of the White House.
Except for all of the Trump collusion with the Russians there was no collusion.
Except for all of the Trump obstruction of justice regarding investigation into Russian colllusion there was no obstruction of justice.
15
The Fed interest rate cuts only apply to the member banks, it allows them to borrow from the Fed at a lower rate, which causes an increase in the money supply, which is inflation. I also losers the rate for savers, and other investments like retirement funds.
supposedly it gives the banks more money to loan at a lower rate, but it also allows them to buy back more expensive debt which is good for the stockholders, but bad for savers. It is manipulation of the money supply, and I doubt Don the Dishonest understands it, all he knows is the rates were reduced before to juice the economy. It also may lower home financing rates, but not necessarily.
Using the fed for political purposes is a path to financial disaster. It does encourage borrowing if lenders see the returns on equity as being high enough, but at present the rates are not quite enough to keep up with inflation.
The Fed board knows how to manage the rates, its mission is to keep the money supply and employment stable, not to please ignorant politicians.
1
The boom will last until re-election. The Fed won't bail out Clintonians.
Here are just a few excerpts of the Libertarian Party platform that David Koch ran on in 1980:
“Abolish the Environmental Protection Agency”
“Abolish Medicare and Medicaid.”
“Abolish the Social Security system”
“Abolish welfare, relief projects, aid to children and ‘aid to the poor”
“Abolish government regulated schools and compulsory education”
“Abolish compulsory insurance/tax-supported health and abortion services” “Abolish the regulation of the medical insurance industry.”
“Abolish all taxation” “Abolish minimum wage laws”
“Abolish the Postal Service”
“Abolish the Federal Aviation Administration”
“Abolish the Consumer Product Safety Commission”
“Abolish the Federal Election Commission”
“Abolish the Food and Drug Administration”
“Abolish the Department of Energy”
“Abolish the Department of Transportation”
“Abolish the Occupational Safety and Health Act”
“Abolish all public roads and national highways”
“Abolish requiring safety belts, air bags, or crash helmets”
“Privatization inland waterways and control of all water"
“Abolish all lending laws”
“Abolish all branches of the service except the Army”
The American Legislative Exchange Council another Koch Industries subsidiary.
The ALEC writes legislation and gives it to a republican representative. Without even transferring the legislation to Official Representative Paper, the republican brings it to the floor to be voted on. Corporations are writing legislation via republicans.
80
@Pray for Help So few Americans know about the Libertarian Party and the underlying structure as propounded by the Kochs. Doesn't the above sound very familiar since Trump won? This is an "every person for him/herself" attitude and only the rich are good is part of it. Many of the GOP in Congress have taken Koch money and agreed (in private) to support these principles. That they have done so is craven and the Keep America Great folks do not understand that these ideas are the very things that hurt them most. Of the bunch, the worst is to deny the public good, free education taught by highly sophisticated teachers working in new buildings with good equipment and adequate supplies. Hide the truth from the public is the #2 issue, and FOX is not on this list, although it should be. Murdoch and Ailes knew what they were doing and it worked and continues to work.
How do you tell a Trump-ite any of this? Not possible.
21
@Pray for Help
Everything that our government does is meant to benefit the rich at this point.
“Money is speech”, indeed.
But it shouldn’t be.
11
@Pray for Help
My definition of a Libertarian: Someone who wakes up one morning and decides it's his "right" to drive on the other side of the road, who then sues you when he runs his car into yours.
4
The Fed has been accused of manipulating the economy since at least the Johnson Administration. The Fed should do what they feel is best for the economy, without regard for what others might think. As an author put it: “Reputation is what others think about you. Honor is what you know about yourself.”
According to Thomas Picketie's well thought out economic view, mature economies are doing very well with a 2 percent rate of GDP growth. Anything above 3 percent is unsustainable over any length of time and creates bubbles such as the housing bubble and Great Recession of 2007 and 8 which President Obama needed to remedy by maintaining that 2 percent growth rate. The Great Recession was also fueled by an unpaid for war and a tax cut.
The policies of the GOP and Trump are one and the same retain power by giving the appearance of a strong economy and sadly this ultimate illusion and lie fed to their base is bought hook line and sinker. At one time the Republican Party stood for solid economic policies perhaps under Eisenhower but Eisenhower was never a typical republicans. Mitch McConnell and Trump and their fake economics hold that dubious honor.
14
The Fed is SUPPOSED to have a dual mandate: (1) Keep inflation under control, and (2) Maximize employment. That's it.
Recently, the Fed has said it will do what it takes to "keep the expansion going." This is not part of its mandate. The Fed also seems very concerned about keeping the stock market on a one-way, upward path. That is likewise not part of its mandate.
The stock market fondly coined the term "Bernanke put" which meant simply that you could buy stocks all you want with confidence that the market would go up, simply because Bernanke would flood the system with money to make it so.
After that came the "Yellen put." And now we have the "Powell put." With unemployment low and inflation virtually non-existent, the Fed can afford to prop up the stock market whenever it appears wobbly. Unless inflation becomes a problem, we can look forward to ever-lower interest rates and ever-higher stock markets.
Party on! Until the crash.
5
@Unconventional: good point. Being in the banking and real estate biz the past 45 years, my question is: how low is the bottom, a negative number? Are we going to pay people to borrow money, maybe? I see a terrible ending here. The RE market is more of a mess than anyone’s publicizing at this point, from what I can see.
3
The NY Federal Reserve Bank just came out with survey results suggesting a really rather dramatic slowdown in growth or may even a recession in the cards. The greatest decline in the history of the survey!!!
Suggesting that any reduction in short rates by the Fed would not necessarily be politically motivated, which pretty much undermines
Paul's central thesis in this article.
So the savings rates went from "beneath contempt" to "meh" and now it’s back from a badly low level to worse, again!
I want to see those numbers: not the Econ ones, but the numbers on the pre-presidential 1040’s. For me this has nothing to do with reality, it’s all about the flying Wallenda smoke and mirror show.
6
@Joan In California
Why do you malign the Wallendas? They were the real thing; no net and no smoke or mirrors.
1
@Joan In California
My sentiments exactly.
2
Re : Imagine what the Obama economy would have looked like if Congress had let him spend $400 billion a year on, say, infrastructure.
Fact Check
In 2009 Congress passed the $ 800 Million stimulus bill advertised by President Obama to be for infrastructure overhaul ("shovel ready projects")
That was misleading, as the stimulus bill encompassed encompassed other item, including a $ 200 Million tax cut
In the end, however, only $98.3 billion of the $800 billion stimulus was dedicated to transportation and infrastructure.
Of that $98.3 billion, only about $27.5 billion was actually spent on transportation infrastructure projects
That is ONE QUARTER
Infrastructure development in the US is NOT limited by money but by legal challenges to built more highways, bridges, airport. NIMBY - the more liberal and left of center the bigger the opposition
Indeed, in the liberal town I reside, the town council intentionally rebuilt the one way bridge that needed repairs again as a one way bridge as a "traffic calming measure"
1
@Lars -- You're making the mistake of defining infrastructure as transportation infrastructure. It's way way more than that. But tell me, what is the problem with rebuilding a one way bridge into a one way bridge?
6
Chairman Powell has been signalling since his Jan 4th reversal-capitulation that he is on board with whatever the markets and President Trump want. He sounds more like his dual mandate is 1) re-elect Trump 2020, and 2) keep his job.
To be fair, Chairman Powell is in an impossible situation. There is an enormous pension fund crisis on the horizon. The funds need higher rates to survive, cutting rates is going to cause many funds to implode.
Second, there's a sovereign debt crisis brewing. There are $trillions of foreign $USD denominated debt borrowed in dollars during ZIRP. A strengthening USD resulting from higher rates will cause many of these to default. There is pressure on Powell not to raise rates to avoid these defaults.
US corporations also borrowed $Trillions during ZIRP and those loans are coming due.
Finally, the US 10 year note yield has fallen from 3.23% last November to just over 2% today. That, plus a 3-month-10 year yield inversion is suggesting monetary policy is too tight and a recession may be approaching. If Powell capitulated to anyone it may be the bond market and not Trump.
1
I cannot imagine a worse situation for a government employee who truly wants to serve the country than working in the Trump administration. He is like the boss who everyone knows is incompetent but, out of loyalty to the company, tries to do the best possible job. The only problem is that the definition of 'best possible job' is dependent on the mercurial whims and moods of the boss, not what might be in the best interest of the company.
But good companies - those with decision makers savvy enough to know how to look as if they are appeasing the boss while actually countering his incompetence - manage to survive.
We need those kinds of decision makers in government right now, but, unfortunately, I fear that too many are too used to dealing with mostly rational people and are at their wits end in trying to figure out which courses of action they should take. I'd say it's like walking on egg shells, but it's more like walking barefoot on an endless fire pit.
5
@John D
I have worked with many employees that thought the boss was a jerk and they knew better. They were NEVER right. They just created dissention and chaos.
The only reason to cut rates at this time is to prop up an overvalued stock market.
Unemployment is good, inflation, if anything, is too low.
When factoring in even modest inflation, the Fed has been giving big business and wealthy individuals essentially free money for over a decade now.
I would suggest that giving ("lending") essentially free money to wealthy businesses and individuals is a huge driver of inequality since only the top 5 or 10 percent can 'qualify' for these loans.
I recently read that about 16% of listed companies are zombies, kept alive by constantly refinancing their debt with no reasonable hope of ever paying it back.
Meanwhile how about a column on Savings? Remember how we used to be encouraged to be responsible and save money? Perhaps we should discuss the ramifications of the very idea idea of 'Savings' at .025 interest rates for savers.
Perhaps the Professor could also enlighten us about what Central Bankers should do when the next crisis hits and interests rates are already zero?
Trump is undoubtedly a menace on many levels but the Fed has been giving free money to the rich for years before Trump took office.
The stock market is not the economy. Zombie corporations are not the economy. The economy is people. People with no savings and living from paycheck to paycheck. People that the Fed has few levers, and even less interest, to help.
20
Many of us in small businesses borrowed money to stay in business during the recession. Low interest rates helped, along with lay-offs, benefit cuts, and forgoing owner salaries.
When the Fed started raising rates quite a few of us had not completely recovered and were still paying off that debt. Every time the Fed met I braced for another rate hike that meant this ‘recovery’ was going to take us a bit longer. I was greatly relieved when the Feds did nothing this week, whether it was Trump’s barking at them, or not.
Politics aside, it seems especially cruel that the same banks that weren’t punished, fined or stoned for any wrongdoing and were bailed out, are the ones that small businesses are paying back.
Politically, add a higher, unfair tax bill to that and then politically create another recession...I don’t think we learned the whole lesson about the last recession but the lesson may get clearer once the next recession hits.
7
@Sheela Todd -- Who learns lessons? There is very little in politics that has to do with lessons. The future is just the past repeating itself.
1
Spot on analysis. The economic trajectory is beholden to Trump's image. We are lost inside that old song by the Beatles "I Me Me My." Incredible how the economic system is now at the dysfunction of the narcisism disorder in the oval office. I hope it ruins his 2020 bid. If it does, we'll be digging out from another GOP economic disaster.
18
I keep telling people that the most important man in their lives in Jerome Powell. Not their family, friends, co-workers, bosses, political leaders, not their community, or anyone else. The USA has developed a command and control economy, just like the Soviet Union. And will suffer the same fate.
7
One thing we Americans now have in common is the fear of saying or doing something that incurs the wrath of our president. We lack the courage to face his snide insults and scathing tweets. The Federal Reserve Board of Governors must also feel this fear. When will they be forced to capitulate to he who "eats soul in small bites?"
I, for one, am cowering. When I attend a Democratic caucus in Iowa in a few months, I will be very cautious about speaking out. I learned about fear of our government from observing citizen persecution by the House Un-American Activities Committee.
By the way, any comments on the "economist," Arthur Laffer, receiving the Presidential Medal of Freedom?
8
@PayingAttention. Sure: snicker-inducing. But predictable. No worse than the lionization of Arthur Greenspan.
1
@PayingAttention
Apathy is capitulation. Our Country was founded to allow us to be vocal without fear of governmental retribution. To shy away from confrontation is to allow oppression.
To escape this current president a concerted effort is necessary. A large voter turnout will guarantee the guy in the White House will haunt us no more.
There are many ways to "speak out". Encouraging and facilitating voter registration and voting provides a community service. In addition, it provides support for more progressive thought.
The best community service you can perform is voting. Results get results.
Laffer makes me laugh. His "curve" is a straight line to the pockets of the rich.
5
@PayingAttention God this sounds terrible to be so afraid of speaking your mind. I did read that farmers in the Midwest make sure to say they still support Trump because the banks there will not give them loans if they hear that they no longer believe in the GOP and trump. But what scares you about the Democrats? I know that most of the Democrats in congress are corrupt, owned by big donors and even Paul Krugman will not discuss how the wealthy buy off politicians to protect their own interests. Surely this affects the economy one would think. And the Democratic party is controlled by the corporate and corrupt Democrats and they only want so called moderate candidates for president so the statue quo, same old same old can continue and their bribe checks will keep a coming, And that is why they despise Bernie because he will never give them jobs if he wins, but you cannot even speak your mind at a caucus? Find some real progressives who want money out of politics. Cenk, founder of TYT is a regular guest speaker now on Cuomo's news show, is that CNN? I can't remember and he is as progressive as they get and fights back against the corruption and lies in government and does it with passion and clear facts and does not let anyone steam roll him. He is not afraid.
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I found the article about the speculative purchase by investor outfits of "starter homes" in places like Atlanta and OKC rather chilling. It just sounded far too familiar to me to a tune I never wanted to hear again.
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I’ve been feeling we’re back in 2006 for quite a while now...I work behind the scenes in real estate and banking. Yes, we in the business knew that crash was coming in early 2006.
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Just a week or so after the 2008 GOP convention, the ramifications of nearly 8 years of GOP policy swooped down on John McCain and the GOP. While giving a campaign speech, and indicating the "fundamentals of the economy are sound"; the DJIA dropped well over 700 points starting a series of market declines. In a few short weeks, Barack Obama was elected president, because between early September and early November the economy was officially in a cession.
Fast forward 11 years, Trump, like Bush, cut taxes to make the economy look better than it was. Unlike Bush, though, Trump added tariffs, which are now making their way through various world economies. Australia is already in a recession; as is parts of Europe. And, the Chines economy si slowing down.
Trump already put into place the seeds of recession. The Fed may have to act to keep the country from going into recession and deflation.
If politics are involved with the Fed, it is because Trump policies, and actions, have disrupted the normal course of the economy (domestic and foreign).
The end result, the Fed may already be too late to stave off a recession. Chances are very good, Trump will be giving a speech, in about 16 months, while the DJIA drops hundreds of pints in split screen.
The last recession was caused by deregulation and repeal of Glass -Steagall; this will be caused by a person who is completely ignorant of economics, and how interconnect world economies work.
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@Nick Metrowsky
"this will be caused by a person who is completely ignorant of economics, and how interconnect world economies work."
And the despicable deplorables who put him in office, and all his contemptible enablers in Congress, Republican or Democrat, and on the Supreme Court and in the administration, not one of whom honored their oath of office.
3
Trumps's unhappiness at higher interest rates at the Fed is purely all about him and his real estate interests; the lower the interest rates the lower they are for him and his borrowing--and he is on the hook for a lot of borrowing.
Even as POTUS, he can't see beyond that. Interest rates should be at the level that allows him to pay back less on loans, and that's it, the sole consideration. The rest of the economy is only of interest to him as a narrative to contrast with Obama and to claim he deserves re-election (because on some level he's aware what prosecutions await him if he loses).
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Just wondering, is there *anybody* in Washington who is actually concerned with the interests of the Republic?
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@Rufus
In addition to "anybody" in Washington, I wonder if any investors in Wall Street are concerned with the interests of the Republic.
When there's a sniff of making money, the stock market goes up - even if it's not good for the Republic.
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@Rufus
One Republican House member seems to be, as well as a fair assortment of Democrats, most markedly, Elizabeth Warren.
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@Rufus
The interest of ordinary citizens and the Republic are quaint concepts that have been out of fashion in the GOP since Reagan (See McConnell, Mitch, War with Iraq, treatment Obama and reaction to ACA, Evangelical hypocrisy and climate change, gun laws....etc., etc., etc.).
Now that they've solidified control of the SCOTUS, many federal courts and agencies (The Fed, Education, EPA etc.) and have a near lock on the Senate due to the way it operates and is staffed, people are finally realizing that there is nothing the average person can do. We live in a country where the most corrupt prosper, the rich get a lot fo help and the middle class and poor fight over the scraps left by the overlords.
Get used to it because it's not changing unless the GOP is utterly and completely vanquished-- which isn't happening because the democrats seem utterly fixated on implementing a circular firing squad.
3
The Fed not lowering the interest rate would hinder Trump from further damaging the economy.
6
“... whatever boost this gives the economy ... will come too late to help Trump in the 2020 election. But if that’s what happens, Trump will have only himself to blame.”
But he won’t, because he believes he’s infallible.
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@OlyWater He'll just blame Powell and the Fed. But we might be in a war with Iran by then, so all this may be moot.
We are no longer getting much bang for our buck with either fed policy or treasury borrowing (eg deficit spending), nor private sector corporate borrowing. The marginal effect may even be turning negative. When marginal effects turn negative adding fuel does damage. Are we there yet? Don’t look down.
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I don't think there is anyone left in the Trump administration that I would trust, no one who would instantly be described as having integrity. There are mid and lower level government workers including law enforcement and the military and security who are quietly working behind the scenes to defend the country, including to defend it from Trump.
Everything else is chaos -- people manipulating for better positions, power, to please the monarch, to protect themselves, to personally enrich themselves.
So no, my trust in the Fed just as my trust in the Supreme Court has narrowed and eroded. If Trump insisted on something, I suspect some would try to make it happen.
One of his rants in Orlando was 'Make America Wealthy Again'. Not that many people cheered. That may have been one lie too far. MAWA is a little like Wah Wah baby crying.
27
I must be a naive pollyanna. The right wing conspiracy theorists I used to speak with in my younger days told me “the Rothchilds and the Rockefellers control the world economy”. I took some comfort in that because I grew up in West Virginia, where a Rockefeller was Governor, then senator, and he must certainly have my best interests in mind. But now you tell me that Trump pushes all of the buttons controlling the world economy, like another memory of my childhood that caught my attention: “when E.F. Hutton talks, people listen”. Back in the old days I don’t remember hearing too much about the Fed clashing with the President. Oh how I yearn for those carefree, halcyon days, when the Rothchilds and Rockefellers controlled the world economy, we listened to EF Hutton, and the President left the Fed alone.
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At this time in 2003 (similar time in the last time a Republican president ran for reelection), the common phrase was "jobless recovery": Interest rates were lower than now, Wall Street was doing well and Bush's tax cut cheered the rich, but the poor and middle class weren't doing so well. Sound familiar?
During the 2004 election campaign, Alan Greenspan's Fed raised interest rates from 1% to 1.25% in June, then to 1.5% in August, then to 1.75% in September. Bush narrowly won the election and the Fed continued to raise interest rates, leading to the subprime mortgage meltdown that caused the Great Recession.
Let's hope history doesn't repeat.
5
I thought the Fed didn't have enough "ammo" to fight the next recession unless they raised rates close to their historical norms. Cutting rates to help Trump win in 2020--wouldn't that leave us defenseless when the recession rolls around?
Oh, wait...Only Trump matters.
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@JB
I was thinking the same thing while reading the column. That was a big concern a week or two ago. Mr. Krugman should have taken that into account when writing this column. Failing to do so weakens his argument.
12
No one, even Paul Krugman, should worry that growth and inflation will be dangerously higher on the eve of the election. It’s still an employers market. I’ve looked for jobs in higher education and government recently, and they’re taking several months to make a hire. It’s as if they’re selecting a pope. If it were truly a booming economy, employers wouldn’t be taking their time hiring. I’m willing to bet that the unemployment rate could go down another full percentage point before we saw inflation becoming an issue. I don’t agree with Trump on anything, but he’s right about interest rates. The elites, preoccupied with aggregate data, have little clue about what’s happening on the ground.
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@AlNewman
The problem is that current policy really is doing nothing to address the problems you see. The tax cut goosed the deficit in the manner least likely to increase aggregate demand - rich people really don't spend additional income and companies spent their extra money on stock buy-backs (more money to rich people) instead of capital investment.
And lower interest rates won't really help much, if at all. Even with the recent increases, rates are still close to multi-generational lows. Cutting them won't do much unless you are an over-leveraged real estate developer. And if there isn't demand, there is no reason to borrow more money to expand production.
The next recession is going to hit us like the dinosaur-killer asteroid, and there won't be any policy tools available to combat it. The policy tools will have been squandered to appease Trump and Republican religious positions on taxes. Buddy, can you spare a dime?
6
The Fed's labor market and inflation indicators are fake. Check out Shadowstats.
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@alnewman
Neither higher education nor government reflect the actual, economy-driven job market. People with valued skills are being snapped up as quickly as possible by companies that are struggling to meet demands.
In an ideal world what would Professor Krugman have the Fed do? How and why does he come to that conclusion? We had best know what should be done rather than predicting the Fed will act politically. We are all powerless over the Fed in any event and predicting possible sub optimal Fed policy doesn't lead anywhere.
3
Since it appears that the entire Democratic field is running for Class President, and not the leader of the free world, your worries about Trump and 2020 are unwarranted
4
Of course, I agree with you that Janet Yellen was not acting politically by keeping interests rates near zero.
Wait? Really?
C'mon.
The last Fed Chairman that was not acting politically and sponsoring huge bubbles was Paul Volcker.
Every single Fed appointee since then has been a puppet of whatever administration.
Especially the widely regarded Allan Greenspan who led us down the primrose path to Global Collapse.
10
@Michael: Janet Yellen was dealing with the aftermath of the Global Financial Collapse. Financial collapses take much longer than market collapses (which occurred as well) to recover from. The economy did work its way back up to a much better footing, much of it due to the actions of the Fed during the Obama Administration.
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For Trump, no part of the government should operate beyond his political agenda. His talking points are what counts.
11
"What this means for monetary policy, I think, is ... [The Fed] should insist that its policy is “data-dependent" and wait for clear evidence of a serious slowdown before acting".
I think there is plenty of data that already points to high risk of a serious slowdown, it's just not found in traditional economic metrics. Economically, as in so many other areas, we are in uncharted waters ...
How much damage can an unconstrained, emotionally unstable President, a slave to his ego, cause to the global economy?
How do economists model risk with an utterly corrupt malignant narcissist in the oval office?
How has Trump's attacks on traditional allies,attacks against the EU, attacks against European central banks, and his propensity to break agreement impact major economies ability to coordinate responses to a downturn? An unforseen event? A war of choice?
Perhaps "clear evidence" of incompetent leadership should be enough to convince the Fed to "get ahead of the curve". If they wait too long, the inevitable Trumpian mess will not be addressed before 2020 and ...
Never mind. No need to rush into anything.
24
OF COURSE the President wants a cut, because even after spending a trillion+ dollars to pad the masters of the universe's bank accounts, the market is cooling.
It is easy to see why, because there was really no trickle down from above (less than a trickle), and on top of that, there is the crushing new republican taxes (tariffs) that are using up all of the oxygen in the entire global economy. What is the numbers back and forth on all of that now, a trillion as well?
The President's poll numbers are cratering, and now there is the usual wag the dog threat of war before election time. We shall see if the MIC gets their cut and creates make work jobs. (hope not)
There is always that two trillion dollar infrastructure plan.
Oh wait !
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@FunkyIrishman
Saw a Huff post headline that he is now firing his pollsters. If his numbers are cratering, must be more "fake news," like anything else true in this adminstration. And Hope Hicks won't even answer a closed House session question about where her office was located? Time to lock her up for contempt of Congress.
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@FunkyIrishman
While I do not wish to resort to vulgarity, it is clear that there is a trickle down from the tax gifts to the wealthy and the corporations, it is comfortably warm at first, but has a decidedly yellowish tinge.
6
@FunkyIrishman except that he wants to privatize that as well. It's like Trump and the GOP want to turn America into a country club for the rich while refusing to grant the rest of us anything more than guest privileges.
4