The Fed According to the NYT

the deep state is marshaling against trump. again

On top of everything it looks like President Trump has a problem with the bureaucrats at the Federal Reserve Board.

You can tell from The New York Times that the wise men are worried that the next Fed chairman will be subject to political influence:

Investors, economists and former U.S. policymakers warn that Mr. Trump has already undermined the next chair by incessantly attacking the central bank and its current leadership…

So, you don’t think that the two rate cuts in late 2024 had anything to do with political influence, wise men?

The problem is that the Fed’s Number One job is to help the government sell its debt. So in 2020 at the start of the COVID unpleasantness it raised M2 from $15.5 trillion to $18.3 trillion — that’s 18 percent — in three months. It has done its debt job without a hiccup for over a century. Why else do you think we could win two world wars?

Hey, never mind that the value of the dollar has gone from $20 per ounce to over $2,000 per ounce!

But the central bank has another job. To defend the credit system as “lender of last resort” as Walter Bagehot described in Lombard Street published after a big credit meltdown in 1873. At that job the Fed has failed big time at least twice.

The first time was during and after the market crash of 1929 when 659 banks failed by the end of the year. Then it was 1,300 failures in 1930, 2293 failures in 1931, 1450 in 1932, and 4,000 in 1933 before FDR shut down the Gold Standard.

Then in 2008 Little Ben Bernanke didn’t act as “lender of last resort” in the credit crisis caused by mortgage subsidies in the 2000s and so we got the Great Recession.

Right now there seems to be a problem in the real estate market after the inflation of the late COVID unpleasantness and its artificially low interest rates boosted housing prices. But not any more. Prices are up and buyers aren’t buyin\g.

Apparently the 400 Fed economists are all Keynesians and so don’t have a clue about economics and the price system.

Meanwhile Trump’s tariffs has caused a one month surplus so that the Federal government actually took in more than it spent.

Should the Fed lower interest rates a little next month?

Honestly, I don’t know. But I do know that if there’s a recession, Trump will get the blame, not the Federal Reserve System.