When President Trump demanded earlier this month that the Fed should cut interest rates to undo some of the damage it has done to the economy with its pernicious rate hikes, we pointed out the obvious dissonance between advocating for rate cuts while insisting that the economy is the strongest it has ever been.
TRUMP SAYS FED SHOULD DROP RATES, STOP QUANTITATIVE TIGHTENING— zerohedge (@zerohedge) April 5, 2019
Because economy is so strong
But the incongruity disappears when one considers that the central bank's "dual mandate" simply masks its true purpose: To levitate asset prices and ensure that wealthy Americans get richer, while (at least for now) averting an all-out pension fund crisis.
Though the central bank's "third mandate" is rarely, if ever, directly acknowledged, President Trump violated this convention in a tweet on Sunday, when he declared that the central bank, had it "done its job properly" would have sent the Dow another 5,000 to 10,000 points higher, and that GDP growth would have been "well over 4%".
If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4% instead of 3%...with almost no inflation. Quantitative tightening was a killer, should have done the exact opposite!— Donald J. Trump (@realDonaldTrump) April 14, 2019
In essence, this is the president admitting that the Fed's only job is to push stocks higher, damn the deteriorating fundamentals that make leave valuations increasingly divorced from reality.
According to Donald, the Fed's job is now OFFICIALLY blowing even bigger stock market bubbles! https://t.co/mSUma4wuqO— Mark B. Spiegel (@markbspiegel) April 14, 2019
Of course, as many have pointed out, Trump's conversion to Fed interventionism is a relatively recent development.
The Fed should not do QE3. Neither the economy nor the dollar can withstand another round of artificial liquidity.— Donald J. Trump (@realDonaldTrump) April 11, 2012
While this tweet will almost certainly elicit howls from economists warning about the damage Trump is doing to the Fed' precious 'credibility' (or whatever is left of it), we think it's refreshing to finally hear the most powerful man in the free world speak openly about its most powerful central bank.