The Fed went off the rails years ago, but they still have a bit of sense and realize it is time to start raising rates.
Trump is a nut.
He is attacking the Fed demanding more cheap money to goose the markets. It will only get worse because the stock market is due for a correction. The Fed as inflated another stock bubble and everyone knows it.
The central bank has not been subject to public political pressure like this in its history. There has largely been a bipartisan consensus that the Fed should go nuts with the presses from time to time. Nixon pressured Burns hard to goose the aggregates, but this was hidden from public view.
This is 19th century politicking. People used to have monetary policy positions (for reasons you may not know but that is another topic).
The election of 1896 was interesting. Republicans were an inflationist party since the Civil War. The Democrats were hard money, but the crank inflationist Bryan took control (not unlike Trump) of the party. McKinley adopted a sound money policy under pressure from big money, and got some Bourbon Democrat votes.
Trump is going to come out like Andrew Jackson. The lightweight academics at the Fed are not ready to go up against that. Maybe a Jamie Dimon type will step up after he is done riding this wave.
Today, there is no sound money political movement to speak of. There will be no voice of reason to challenge Trump on his insanity. Rand Paul and a few others may die on their sword, but I don’t see anything stopping him. The opposition is a bunch of sanctimonious hysterics concerned about conspiracies and sideshows. This is the real deal folks. An economic crisis is coming sooner or later. How do you think the players will respond?
Resolved: The Fed will yield.