# The Fed will yield to Trump **URL:** \ **Category:** Great Debates\ **Created:** [October 11, 2018, 10:10pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825 "2018-10-11T22:10:25Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [October 12, 2018, 7:49pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/41 "2018-10-12T19:49:25Z")
> [@DinoR](#): > > The Board of Governors will blow him off and keep on doing whatever they want to do. They don’t work for him. He can’t fire them. It is unclear if he can fire them. > [@](#): > > … each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, **unless sooner removed for cause by the President.** > > SOURCE: [Section 10. Board of Governors of the Federal Reserve System](https://www.federalreserve.gov/aboutthefed/section10.htm?utm_campaign=JM-305&utm_medium=ED&utm_source=for) (bolding mine) I can not find anything on who gets to say what is sufficient “cause” to remove them but I am sure Trump can gin something up if he feels like it. Since it is vague I expect the administration will say Trump can fire whoever he wants. With Kavanaugh and Roberts on the supreme court and believing in a unitary executive it is unlikely they’d try to stop Trump if he starts firing governors. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [October 12, 2018, 7:59pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/42 "2018-10-12T19:59:57Z")
Wrong thread… ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [October 12, 2018, 9:08pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/43 "2018-10-12T21:08:41Z")
> [@Try2B\_Comprehensive](#): > > I disagree. Hasn’t the Fed basically announced rate increases through 2019? If they don’t follow through, well there ya go. The Fed doesn’t announce future rate decisions. They hint. They suggest. They equivocate. They make you read between the lines. Because they’re walking a narrow path. They want the markets to know where things are going so there aren’t surprises, but they don’t actually want to be locked into anything, because they want to be able to make adjustments as current events require. I agree that so far the claim about what the Fed will do is far too vague to be falsifiable. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [October 12, 2018, 9:18pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/44 "2018-10-12T21:18:02Z")
I thought – rather naively – that the title of this thread was some kind of breaking news announcement about unprecedented executive-branch interference in Federal Reserve monetary policy. Glad to see that it was pure fantasy. > [@senoy](#): > > First off, Trump is smart. This is the first time I ever stopped reading a post after the very first sentence. Really. Never happened before. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [October 12, 2018, 9:29pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/45 "2018-10-12T21:29:16Z")
> [@iamthewalrus\_3](#): > > The Fed doesn’t announce future rate decisions. They hint. They suggest. They equivocate. They make you read between the lines. > > Because they’re walking a narrow path. They want the markets to know where things are going so there aren’t surprises, but they don’t actually want to be locked into anything, because they want to be able to make adjustments as current events require. It’s called [forward guidance](http://lexicon.ft.com/Term?term=forward-guidance) and yeah…they signal to the markets what their intentions are so the markets are not surprised thus causing unwanted jitters in the market when the news drops. They aren’t coy about it. It is not reading between the lines. It is a policy they follow. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [October 12, 2018, 9:32pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/46 "2018-10-12T21:32:05Z")
Matthew Yglassias: But while I think Trump is probably correct about the Fed, his actions as president seem to call into question whether he thinks he is correct about the Fed. There are, right now, three vacancies on the Federal Reserve Board of Governors and three Trump nominees making their way through the confirmation process. One of them, Michelle Bowman, is a Kansas bank regulator with no known views on monetary policy. The second, Nellie Liang, is a well-qualified, longtime staff economist at the Fed whose views are almost certainly in line with the existing Fed consensus. And the third, Marvin Goodfriend, is a longtime inflation hawk who thinks the Fed has been raising rates too slowly rather than too quickly. So if Trump actually wants to see a more growth-oriented monetary policy, he should probably cool it with the name-calling, withdraw Goodfriend, and instead put forward someone who agrees with him. The problem is that when you have a president who doesn’t really understand any area of public policy or care to take the time to learn about it, it’s difficult for him to be effective, even when his instincts make some sense. [Trump: the Fed has “gone crazy” and is “going loco” - Vox](https://www.vox.com/policy-and-politics/2018/10/11/17963476/donald-trump-fed-loco-crazy) Oh yeah, the OP. Presidents have disagreed with the Fed before. But they keep their mouths shut, because they think that jabbering would be counter-productive: they felt that the Fed would feel obliged to increase rates to demonstrate to the bond markets their independence from politics. In this instance, I’d say that all of this will be forgotten in December, and the Fed will raise rates according to schedule. Caveat: Fed policy is data dependent: if the data changes, so does their policy. I’d expect another rate increase in March 2019 or June 2019. Or both. Once inflation adjusted rates hit about 1/2 of a percentage point, I’m not sure what happens. I’ll rely on [Tim Duy](https://blogs.uoregon.edu/timduyfedwatch/) for insight. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [October 12, 2018, 9:46pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/47 "2018-10-12T21:46:42Z")
> [@WillFarnaby](#): > > Most of the Fed staff are academic economists I believe. They are not political figures or business leaders. They build economic models. The staff are academics, somewhat, sort of, and entirely for some. The Board of Governors of the Federal Reserve, not as much so. Fed chair: “Prior to his appointment to the Board, Mr. Powell was a visiting scholar at the Bipartisan Policy Center in Washington, D.C., where he focused on federal and state fiscal issues. From 1997 through 2005, Mr. Powell was a partner at The Carlyle Group.” > **[Jerome H. Powell, Chair](https://www.federalreserve.gov/aboutthefed/bios/board/powell.htm)** > > The Federal Reserve Board of Governors in Washington DC. Richard H. Clarida, Vice Chairman: "Prior to his appointment to the Board, Dr. Clarida served as the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University, where he taught from 1988 to 2018. From 1997 until 2001, Clarida served as chairman of the Department of Economics at Columbia University. In addition to his academic experience, Dr. Clarida served as the assistant secretary of the U.S. Treasury for Economic Policy from February 2002 until May 2003. In that position, he served as chief economic adviser to Treasury secretaries Paul H. O’Neill and John W. Snow. He was awarded the Treasury Medal in recognition of his service. Dr. Clarida also served on the Council of Economic Advisers under President Reagan. From 2006 to 2018, Dr. Clarida served as global strategic advisor with PIMCO and was promoted to managing director in 2015." Randal K. Quarles, Vice Chairman for Supervision: “Prior to his appointment to the Board, Mr. Quarles was founder and managing director of the Cynosure Group, a Utah-based investment firm. Before founding the Cynosure Group, Mr. Quarles was a partner at The Carlyle Group, a private equity firm based in Washington, DC.” Lael Brainard: "Prior to her appointment to the Board, Dr. Brainard served as Undersecretary of the U.S. Department of Treasury from 2010 to 2013 and Counselor to the Secretary of the Treasury in 2009. During this time, she was the U.S. Representative to the G-20 Finance Deputies and G-7 Deputies and was a member of the Financial Stability Board. She received the Alexander Hamilton Award for her service. From 2001 to 2008, Dr. Brainard was Vice President and the Founding Director of the Global Economy and Development Program and held the Bernard L. Schwartz Chair at the Brookings Institution, where she built a new research program to address global economic challenges. Dr. Brainard served as the Deputy National Economic Adviser and Deputy Assistant to President Clinton. She also served as President Clinton’s personal representative to the G-7/G-8. From 1990 to 1996, Dr. Brainard was Assistant and Associate Professor of Applied Economics at the Massachusetts Institute of Technology’s Sloan School of Management." ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [October 13, 2018, 1:17pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/48 "2018-10-13T13:17:21Z")
> [@](#): > > They will delay rate increases in the face of a stock market downturn. As **Ravenman** and **Measure for Measure** point out, the Fed will delay rate increases if the economy slumps. Yes, slumps in the economy and stock market are likely to be strongly correlated, but your getting the cause-effect relationship wrong shows confusion. Many Yahoo’ers and YouTubers think that U.S. government policies are rigged to favor the wealthy. I agree with them BUT they usually get the details quite wrong. The FedRes strives to keep the economy strong for all Americans. That big corporations and their shareholders benefit from a strong economy is a side effect. (For example there is an otherwise very intelligent American who lives near me and is happy to discuss the American banking kleptocracy. But he focuses attention on the 6% dividend paid on FedRes shares, a dividend on capital the banks must keep locked up. With U.S. banks raking in $60 Billion in profits _per quarter_, and getting a temporary Trillion-dollar bailout when they needed it, attention focuses on FedRes dividends totaling a few hundred million per quarter? 😕 Again, this is $60 Billion, Trillion, millions with a B, T and lower-case M respectively.) > [@WillFarnaby](#): > > Perhaps Krugman would be among the 38%. Oh never mind Trump is doing it. I also favored Obama taking measures to combat the evil-doers. What does that have to do with thread topic, which concerns the present day with evil-doers in power? 😕 ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [October 13, 2018, 2:19pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/49 "2018-10-13T14:19:16Z")
> [@RickJay](#): > > I agree that Trump is, in a limited way, dangerously cunning, but I think you’re misattributing the direction of his cunning. Big important things like getting rid of the Fed, a thing he honestly does not fully comprehend, aren’t his thing. He doesn’t have to go that far; he can just bully the Fed with his microphone. I think one thing that Trump has already demonstrated is the ability to use that microphone with great effect. > [@RickJay](#): > > He’ll happily rail against it to score points with Trumpists the same way he rails against Barack Obama but does not actually plan to have his arrested, or blather about countries he really doesn’t want to go to war with. Trump is, for all his power, remarkably petty; he is in fact so petty that it costs him money. He hads put a lot of effort into scamming the taxpayer by forcing government employees to stay at his properties, for instance, though that’s probably not in the top ten profitable ways he could scam the taxpayer. Where Trump is truly dangerous is in subverting democratic norms. In this regard, though, he’s just another Republican; they’re all like that. Far more damage is being done at the state level by Republicans who are now pretty much openly taking the vote away from racialized Americans. Trump contributes to that, but in a sort of stochastic, general way. > > Actually getting large, specific things done\*\* is something he usually fails at. \*\* He has failed to get the wall built despite the fact that would probably be the most influential win he could possibly get. He failed to get the Norks to denuke. He failed to get Congress to kill ACA in a big sweep. He and his Trumpists have had success largely where they can peck away at things by driving the bar down to the ground, but that’s not really an option with the Fed, certainly not in the timeframe in which he’ll be President. He doesn’t have to be effective or competent at governing to be effective at intimidating and silencing his critics. I think this is where people tend to make the wrong assessment about Trump’s capabilities. They assume that because he tends to not understand how his own government works that he can’t ultimately figure out how to weaponize it. He and the Republicans are quietly changing the government so that it is increasingly capable of doing just that. ---
**Author:** ![k9bfriender](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/k9bfriender/32/3283_2.png) [@k9bfriender](https://boards.straightdope.com/u/k9bfriender)\ **Post date:** [October 13, 2018, 4:20pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/50 "2018-10-13T16:20:12Z")
> [@asahi](#): > > He doesn’t have to go that far; he can just bully the Fed with his microphone. I think one thing that Trump has already demonstrated is the ability to use that microphone with great effect. > > He doesn’t have to be effective or competent at governing to be effective at intimidating and silencing his critics. I think this is where people tend to make the wrong assessment about Trump’s capabilities. They assume that because he tends to not understand how his own government works that he can’t ultimately figure out how to weaponize it. He and the Republicans are quietly changing the government so that it is increasingly capable of doing just that. It’s the way that all dictators keep power. You go after anyone who shows any disloyalty violently, to keep anyone else from getting out of line, then you prevent anyone from trusting anyone else enough to challenge you. He’s done a great job of it. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [October 13, 2018, 4:57pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/51 "2018-10-13T16:57:21Z")
Trump is going to do anything to the Federal Reserve Board. Because he’s already done it. This had nothing to do with actual financial policy. This was show business. Trump’s economic policies are causing problems. Trump needed somebody else to put the blame on. Somebody told him this country has a Federal Reserve Board. So Trump started yelling that all of our current problems are caused by the Fed. And not by him. And as far as Trump is concerned, he has now solved the problem. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [October 13, 2018, 11:21pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/52 "2018-10-13T23:21:23Z")
Pretty much what Little Nemo said. It’s pretty weird to have a President who complains about the Federal Reserve’s tight money policy and simultaneously appoints a hawk to the board, but we live in weird times. Interestingly, Presidents tend to screw up their Fed policy. Obama dragged his feet with his Fed appointments: looser Fed policy would have made a more successful Presidency due to a stronger economy. Greenspan screwed up financial regulation under GWBush. Greenspan performed better under Clinton. We have a 2% inflation target. If recession hits, inflation goes down and the US enters another liquidity trap. Then we’re back to QE. We need a higher inflation target to increase the efficacy of monetary policy. This is a difficult discussion to have during the best of times but it’s basically impossible during a reality show Presidency. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [October 14, 2018, 1:44am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/53 "2018-10-14T01:44:49Z")
We would also hope that higher interest rates, higher bond yields, would at some point tip the so-called fiscal (chicken) hawks that their tax cuts for billionaires are signaling to borrowers and US debt holders that republitards in congress have given the US a reputation as a bunch of teenage mooches – borrowing money without any intention of repaying it. We’re heading toward trillion dollar deficits - at a time when more and more people are retiring and using SS and medicare to fund their retirement. ---
**Author:** ![Mr.Nylock](https://avatars.discourse-cdn.com/v4/letter/m/77aa72/32.png) [@Mr.Nylock](https://boards.straightdope.com/u/Mr.Nylock)\ **Post date:** [October 14, 2018, 2:58am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/54 "2018-10-14T02:58:59Z")
> [@wolfpup](#): > > I thought – rather naively – that the title of this thread was some kind of breaking news announcement about unprecedented executive-branch interference in Federal Reserve monetary policy. Glad to see that it was pure fantasy. > > This is the first time I ever stopped reading a post after the very first sentence. Really. Never happened before. This is also part of Trump’s “genius” for lack of a better term. He arouses such passions in his opponents that they won’t even attempt to engage in serious dialog with those who have opposing views; thus ensuring a division beneficial to him is maintained. ---
**Author:** ![GIGObuster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gigobuster/32/421_2.png) [@GIGObuster](https://boards.straightdope.com/u/GIGObuster)\ **Post date:** [October 14, 2018, 3:42am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/55 "2018-10-14T03:42:28Z")
After seeing the title of the thread: ♪ When Cheeto American gets FOX news mislead All those to oppose Mango Muss-olini must yield If he’s lead to divide some parents and kids Then the reds with some whites will the blues confront When Cheeto American checks FOX News mislead! ♫ ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [October 14, 2018, 3:43am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/56 "2018-10-14T03:43:11Z")
Trump is responsible for many things, but not for the first sentence of the OP. > [@WillFarnaby](#): > > 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. The fed started increasing short term rates in Dec 2015, almost 3 years ago. Chart: [Federal Funds Effective Rate (FEDFUNDS) | FRED | St. Louis Fed](https://fred.stlouisfed.org/series/fedfunds) ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 14, 2018, 10:33am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/57 "2018-10-14T10:33:38Z")
> [@CarnalK](#): > > How many rate increases would you expect if they weren’t yielding to Trump? From [what I’ve read](https://www.bbc.com/news/business-45657009): > > So what exactly is going to happen instead of that? Are you kidding me? If I could make forecasts like that I’d be making serious money off of it. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 14, 2018, 10:36am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/58 "2018-10-14T10:36:09Z")
> [@Measure\_for\_Measure](#): > > Trump is responsible for many things, but not for the first sentence of the OP. The fed started increasing short term rates in Dec 2015, almost 3 years ago. Chart: [Federal Funds Effective Rate (FEDFUNDS) | FRED | St. Louis Fed](https://fred.stlouisfed.org/series/fedfunds) Yes that sentence is unclear. The Fed went off the rails under Greenspan and Bernanke. They went nuts with the ideologically driven money printing. They now realize it is time to raise rates. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [October 14, 2018, 10:42am UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/59 "2018-10-14T10:42:43Z")
> [@Measure\_for\_Measure](#): > > Pretty much what Little Nemo said. It’s pretty weird to have a President who complains about the Federal Reserve’s tight money policy and simultaneously appoints a hawk to the board, but we live in weird times. > > Interestingly, Presidents tend to screw up their Fed policy. Obama dragged his feet with his Fed appointments: looser Fed policy would have made a more successful Presidency due to a stronger economy. Greenspan screwed up financial regulation under GWBush. Greenspan performed better under Clinton. > We have a 2% inflation target. If recession hits, inflation goes down and the US enters another liquidity trap. Then we’re back to QE. We need a higher inflation target to increase the efficacy of monetary policy. This is a difficult discussion to have during the best of times but it’s basically impossible during a reality show Presidency. “President” and “Presiency” are not capitalized. Greenspan “performed” better when he blew up the tech bubble and bailed out LTCM than when he blew up the housing bubble and set Bernanke up to bailout the banks? That isn’t much of a statement. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [October 14, 2018, 7:14pm UTC](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825/60 "2018-10-14T19:14:59Z")
> [@asahi](#): > > He doesn’t have to go that far; he can just bully the Fed with his microphone. I think one thing that Trump has already demonstrated is the ability to use that microphone with great effect. … On people for whom public pressure matters, yeah. The Fed doesn’t give a shit what the public thinks. [Previous page](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825.md?page=2) [Next page](https://boards.straightdope.com/t/the-fed-will-yield-to-trump/822825.md?page=4)