Maxine Waters calls for removing “despicable” President Trump.
Sunday on MSNBC’s “AM Joy,” Rep. Maxine Waters (D-CA) reacted to reports President Trump asked his advisers if he can fire Federal Reserve Chairman Jerome Powell, who has been raising interest rates faster, and higher than the president feels is necessary.
Not one to hold back, Trump has been tweeting his frustration with Powell, who has raised interest rates four times this year, and has intimated that another hike may take place before the end of the year.
Last week, Trump fired off a tweet saying it is “incredible” that the Fed “is even considering another interest rate hike.” And in another tweet on Tuesday, he encouraged the Fed to read a Wall Street Journal editorial “before they make another mistake” on interest rates. “Fell the market, don’t just go by meaningless numbers,” Trump wrote. “Good luck!”
It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!
— Donald J. Trump (@realDonaldTrump) December 17, 2018
I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!
— Donald J. Trump (@realDonaldTrump) December 18, 2018
The Federal Open Market Committee, the Fed’s monetary policy making body, has a meeting this week and is expected to raise interest rates on Wednesday for the fourth time this year.
Trump is not happy about it.
The president has been critical of the Fed and Chair Jerome Powell, his pick for the post, for quite some time in both interviews and on Twitter. In a sit-down with the Washington Post in November, Trump said he’s “not even a little bit happy” with Powell and criticized the Fed for not bending to his will.
“I’m doing deals, and I’m not being accommodated by the Fed,” he said. “I’m not happy with the Fed. They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody’s brain can ever tell me.”
Why is Trump so worried about the Fed? The Fed is responsible for influencing the availability and cost of credit in the American economy, and it does that by setting the “federal funds rate” — the interest rate banks charge each other for overnight loans. Banks, in turn, increase the interest rates they charge their customers. Trump is concerned that when the Fed raises interest rates, that will hurt the stock market he’s tethered his presidency to and pump the brakes on the economic growth he’s promised, Vox reports.
During the financial crisis, the Fed slashed interest rates to zero and kept them there for years in an effort to help stimulate the economy. It raised interest rates for the first time since 2006 in December 2015 and has been slowly hiking them by a quarter of a percentage point ever since. Right now, the federal funds rate is 2 to 2.25 percent, and it’s likely to increase by another quarter of a point this week.
There’s plenty of room for debate as to whether the Fed is on the right track here. The infamous saying about the Fed is that its job is to “take away the punch bowl just as the party gets going” — in other words, cool down the economy before it heats up too much — and not all economists are on board with whether we’re there yet.
Beyond the debate of what the Fed should or shouldn’t do, the underlying issue is that the president is, traditionally, supposed to stay out of the Fed’s way and let it act independently, or at least give it the appearance of such. It’s not unheard of for presidents to try to push the Fed to act one way or another — Lyndon Johnson and Harry Truman publicly clashed with the central bank — but over the past few decades, most of the cajoling, if there has been any, has taken place behind closed doors.
Trump’s public criticism of the Fed puts more focus on the central bank and opens it up to accusations of politicization. The pressure could push the Fed to raise rates just to prove it’s acting independently. Or, if it doesn’t raise rates, it will face accusations that it is kowtowing to Trump. That happened in some circles in November, when Powell said in a speech that interest rates were “just below” neutral and some suggested the remarks were an effort to acquiesce to criticism from the White House.
In response to President Trump asking his advisers if he can fire Jerome Powell, Maxine Waters slammed the president.advertisement - story continues below
“We must understand that the Fed does not work for the president of the United States. The Fed creates monetary policy based on what’s good for the economy and, of course, I may disagree from time to time with their decisions but we must not interfere. They must be independent. Right now Powell is saying that they’re dealing with inflation, but they don’t work for the president.
The president can’t fire them. All that the president can do when he opens his mouth is rattle the markets. As a matter of fact, the volatility that you see in the markets is caused by the kinds of statements that this president will make causing more uncertainty.”advertisement - story continues below
“I’m not surprised that the president is doing this because I’m not surprised at anything that the president may do or say. I have warned America from the beginning that this president is not worthy, he cannot be trusted, he’s a liar, He’s despicable. Any time he steps in, opens his mouth, tries to interfere with one of our agencies I’m not shocked but the American people continue to be shocked.
The Republicans are intimidated and not standing by their responsibility for oversight to and dealing with this president. So, yes, no, Powell does not work for him. The attorney general should not work for him, but he thinks that they all should be working for him and not for the American people. We need to get rid of this president.”