By Mark West | United States
Since October the stock markets have been on a ride of ridiculous levels of volatility enough to make those closing in on retirement squeamish. Volatility showcased its’ unpredictable nature as the Dow Jones Industrial plunged more than 600 points on Christmas Eve only to rebound with a more than 1000 point surge to close out the holiday week.
During this insanely cataclysmic trading week, President Donald Trump was cozy with his cell phone and his television as the tumultuous market events unfolded. You see, the government has been shut down since the Saturday before Christmas so President Trump has some extra time on his hands, especially during the holiday season, to enjoy his favorite activity…tweeting.
In the midst of President Trump’s Christmas Eve tweet storm, I found a jewel. He tweeted something that some people hope signals not necessarily a change in policy but a modification for how our economic and financial systems operate as a whole. I’m giving you advance warning, wading through our President’s Christmas Eve tweets can be a treacherous journey that isn’t beneficial for the timid at heart.
So, what did President Trump tweet that could be at least encouraging, at most inspirational, to certain segments of our political society?
The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!
— Donald J. Trump (@realDonaldTrump) December 24, 2018
Our President narrows all of our economic issues down to only one problem: The Fed. For those who aren’t sure what this Fed is that Trump is referencing, it is the Federal Reserve Bank, which is not a government bank, but rather a private bank that sets our federal monetary policy. It was invented out of thin air by Congress in 1913, although many of its concepts were already working in the economy in an unofficial capacity.
The Fed functions in a sort of private-public collaboration that is designed to prevent recessions and curb inflationary pressures that hurt the economy. Basically, the Fed can affect our economy and is practically unaccountable to Congress, or the President, for the decisions it makes. The Fed’s driving concept is that a politically independent Fed will lead to solutions that aren’t politically motivated and thus better for the nation in its entirety.
President Trump’s tweet threatens and undermines the state of independence the Fed has enjoyed since it’s inception. I think this, and President Trump’s Syria move, expose what may be a secret relationship which could generate a lot of excitement in the liberty movement. Taking on the Fed would be a move right out of Senator Ran Paul’s playbook, just like a less-interventionist foreign policy.
Maybe Senator Paul has been working behind the scenes to shift President Trump toward more libertarian solutions to the variety of issues our nation faces. Paul has been working on Trump about auditing the Fed since the bill began working through Congress in the Spring.
If President Trump’s tweet signals his desire to bring the Fed under Congressional oversight and accountability, then it is definitely a threat to the autonomy under which the bank has operated.
A turning point in how our elected leaders deal with the Fed could lead to more unstable and volatile markets in the days to come since those markets are naturally uncertainty-averse. However, the long-term benefits of restoring control of our monetary policies to a more accountable and constitutional process could secure our economic stability for generations to come.
Yet, we have to leave the possibility open that President Trump’s tweet was just a momentary ventilation of his frustration with Fed chair Jerome Powell’s rate hikes and their impact on the markets. If so, this means that nothing will change structurally in that relationship and that President Trump will rely on the bully pulpit he has as President that includes his Twitter account to influence the future monetary decisions of the Fed.
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