The Federal Reserve. Over many years, Presidents and politicians have.....

catch22

.....expressed desires to have some form of control and/or a large input into the operations of the Federal Reserve.
We all understand the impact of the Federal Reserve and its impact upon the economy, and our investments.
I'm not expressing an opinion; but providing the latest proclamation by a prominent politician.

The statement, August 8: “I feel the president should have at least [a] say in there,” Trump said during a news conference at his Mar-a-Lago residence in Florida. “Yeah, I feel that strongly. I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”

Story HERE.

yogibearbull

Congress staggered the terms of Fed Chait and US Presidents by 2 years.

A recent tradition is almost monthly meetings between the Fed Chair and the Treasury Secretary (representative of the Administration) to provide regular and orderly communications.

The Fed Chair also as semiannual testimonies before the House and Senate subcommittees.

IMO, no further formal communications are needed for the Administration and the Congress.

Anyone is still free to make a public comments or send letters to the Fed.

hank

ISTM the thought among investors that a candidate might win in November who advocates Presidential authority to set / influence the Fed overnight discount lending rate spiked the price of gold a month or so ago. The price / momentum have pulled back over the past 2 weeks as that possibility, though still very real, has somewhat diminished.

(Consider the long-term economic ramifications of such authority.)

Mark

Yeah, no thanks. I don't feel comfortable leaving those decisions up to any one individual with partisan interests. Especially so these days when said individual might only be in a position to make that decision based upon the amount of money raised by their campaign getting them elected in the first place.

Old_Joe

Yes, all those are the reasons that the Fed was deliberately insulated from the day-to-day political pressures.

kings53man

Two options/scenarios:
1 - Pending legislation in Senate & Congress to dissolve Federal Reserve Board.
2 - Replace current FED governors/members/Chair with conservative candidates - just like Supreme court judges.
...

Observant1

"I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than,
in many cases, people that would be on the Federal Reserve or the chairman."

The fact that Trump's companies filed for Chapter 11 bankruptcy protection six times was conveniently omitted.

Old_Joe

Well, come on, let's be fair here- maybe he developed that great instinct after all that bad stuff happened.

Sven

The fact that Trump's companies filed for Chapter 11 bankruptcy protection six times was conveniently omitted.

Exactly.

yogibearbull

Bankruptcy is in some companies' business model: Grow rapidly with lots of borrowed money, stiff the lenders by filing bankruptcy, emerge from bankruptcy in some sustainable form, rinse and repeat.

I think that Argentina has perfected that model among the countries.

This isn't a model for the US with dollar being a world reserve currency.

JD_co

Donnie would just cut rates to 0% immediately in the hopes that it would make him look like a stable genius..... and then he could finally wear a Kings crown. That's his supposed "instinct" at work.

After filing Chapter 11 so many times, he is an expert at scalping OPM. This is something he has perfected. "Art of the Con".

catch22

@yogibearbull
Agree fully. Argentina is the 'poster child' of global countries, of how broke everything can become and remain over a very long time frame.
So much corruption, by so many over the years, that it has become a non-biological DNA.
And the new president's radical, suggested reforms.....

BBC article, February, 2024

msf

Bank of America ( BAC ) CEO Brian Moynihan ... , pressed about Republican candidate Donald Trump's statement that presidents should have a say over Fed decisions, said people were free to give Federal Reserve Chair Jerome Powell advice and it was then his job to decide what to do.

"If you look around the world's economies and you see where central banks are independent and operate freely, they tend to fare better than the ones that don't," he said.

https://www.fidelity.com/news/article/top-news/202408111216RTRSNEWSCOMBINED_KBN39S0BW-OUSBS_1

While that's likely true, one must also consider the source. Bankers are not disinterested persons on this question. Any more authoritative sources?

For example, here is a piece written for the World Economic Forum. Though it focuses on emerging market countries and is also written by a banker (UBS AG), it provides a few specific cases in support of central bank independence.
https://www.weforum.org/agenda/2024/07/emerging-markets-central-bank-independence/

If central banks give in to politicized criticism or advice, it could result in short-term monetary policy decisions that may harm people’s finances and restrict entrepreneurship and job creation.

BaluBalu

It says something about Americans if Argentina is able to con them repeatedly.

BaluBalu

Americans seem not to have reached a sense of existential crisis yet. We are addicted to the high of taking things to the brink and surviving. This time is no different. Rinse and repeat and the country will age faster and lose its plasticity.

I am making contingent plans to live outside the country.