If the Economy Tanks, It Will Be on Trump

If the Economy Tanks, It Will Be on Trump

Democratic political consultant James Carville once said that if he were reincarnated, he’d want to come back as the bond market because "you can intimidate everybody." Donald Trump is not intimidated by the bond market. On the contrary, its fear of him has caused yields to fall. What scares him is my profession. "The Economy is great," he tweeted last week. "The only thing adding to uncertainty is the Fake News!" If we in the news media industry had such power over the economy, we’d be directing it so our business would be booming, which it is not. But Trump’s instincts are never tethered to reality. He divides his days between finding ways to disrupt commerce and faulting the Federal Reserve for not cleaning up his mess. On Wednesday, he called the Fed governors "boneheads" and demanded that they "get our interest rates down to ZERO." Fed chairman Jerome Powell, while holding out the possibility of another rate cut, recently noted the obvious fact that "uncertainty around trade policy is causing some companies to hold back now on investment." He explained: "For businesses to particularly make longer-term investments in plants or equipment or software, they want some certainty that the demand will be there." A reduction in interest rates that are already low will not stimulate borrowing and building when businesses are paralyzed by the uncertainty that Trump’s trade policies are fueling. When CEOs have no idea what their government will do next, the prudent thing for them to […]

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