By Mac Slavo
The maneuver will only delay the inevitable, but perhaps that is exactly what the powers that be want.
If Donald Trump is right, the Fed is only holding off on rates in order to spare President Obama the stain of another financial crisis during his time in the Oval Office, stalling only to dump a recession-slash-depression on the next president.
Trump has made this idea a center of his recent talking points. According to HNGN:
Republican presidential contender Donald Trump has once again accused the Federal Reserve of keeping interest rates low at the behest of President Barack Obama, who Trump says wants to avoid an economic depression during his administration.
Yellen is “keeping the economy going, barely,” Trump told The Hill. “The reason they’re keeping the interest rate down is Obama doesn’t want to have a recession-slash-depression during his administration.”
“They are not raising them because Obama has asked them not to raise them,” Trump told Reuters. “He wants to get out of office, because we’re in a bubble, and when those rates are raised, a lot of bad things are going to happen.”
He added: “Janet Yellen is highly political and she’s not raising rates for a very specific reason: because Obama told her not to because he wants to be out playing golf in a year from now and he wants to be doing other things and he doesn’t want to see a big bubble burst during his administration.”
The comments have – in true Trump style – stirred controversy, with even Janet Yellen responding (indirectly) to the politics of controversy:
US Federal Reserve chief Janet Yellen has one very good reason for raising US interest rates next month: politics.
Although central bankers are supposed to be above base political considerations, few would blame Yellen for wanting to shield herself and the US central bank from attack as the 2016 US presidential race picks up pace.
To avoid such allegations, Yellen appears to be carefully grooming investors to expect an interest rate rise when the Federal Open Markets Committee meets on December 15-16. At a congressional hearing overnight, she noted that a December rate rise was a “live possibility”.
Is Trump now loud enough to steer the actions of the Fed, which has otherwise proved immovable?
Despite overwhelming evidence that the Federal Reserve has bolstered the biggest banks on Wall Street with its policies, the privately-held central bank has long denied that its moves are political in any way. The president nominates its head, but the agency, set up in 1913, has no checks and balances on its actions, though it does have its share of public controversy.
In pointing out the “independence” of the Fed from any government oversight whatsoever, former Federal Reserve Chairman Alan Greenspan went so far as to say that its relationship with the president doesn’t matter. It is, quite simply, not a democratic or constitutional institution at all – and that is admitted:
“The Federal Reserve is an independent agency. And that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place… what the relationships are [between a Fed chairman and a president] don’t frankly matter.”
It is little wonder the controversial bank would be on the defensive. Questions raised by Ron Paul and others have put the oligarchical instrument of power into a bind with public scrutiny.
Trump underscored the economic damage that has taken place across the ravaged middle class and the effect that low interest rates have had on small businesses, savers, pensioners and investors:
“You know who gets hurt the most? People who practice the American dream and did what should have been the right way – the people that went through 40 years of their life and saved a hundred dollars every week [in the bank],” Trump said.
“They worked all their lives to save and now what happens is they’re being forced into an inflated stock market and at some point they’ll get wiped out,” he added. (source)
Obviously, the Fed knows that the monetary policy it controls is hurting ordinary Americans and whatever is left of so-called Main Street. Perhaps that much is a given.
Maybe Trump will continue to focus on the Federal Reserve in his highly theatrical upstart campaign. Will he ask about where the gold in Fort Knox went too? Trump always has money on the mind, and that could prove very interesting.
What happens next may be difficult to call, but it will make for good political theater, as far as economic bloodsport goes. Financially, everything is on the line. Most people have skin in the game already.
The statements, views, and opinions expressed in this article are solely those of the author and do not necessarily represent those of EMerging Equity.