US President Donald Trump does not like the Federal Reserve Bank. Or, at least, he does not like how the Fed has raised interest rates this year. If his Twitter feed has anything to say about it, actually, Trump blames the Fed for all the problems with the US stock market that has resulted in stocks collectively diving to their worst December in more than 75 years.
In fact, on the heels of one of the worst Christmas Eve market performances in history, Trump took to Twitter to voice his disdain. Through the blogosphere he took direct attacks on the central bank with “The only problem our economy has is the Fed. The Fed is like a powerful golfer who can’t score because he has no touch—he can’t putt!”
While the rest of us trying to figure out exactly what that insult is supposed to mean, it does not take any effort at all to recognize that Trump has tethered his success as the US president to the health of the stock market. Whether that is because he truly believes this to be the cornerstone of a strong economy or because he needs his investments to turn a profit (since he refuses to take a salary as Commander-In-Chief) is yet to be discussed.
Now, Trump does have a point: the Fed has raised interest rates four times this year. And these interest rate increases are also costing the Trump Organization millions of dollars in interest payments on the variable-rate loans it has.
Of course, on the other hand, these increases have brought Federal interest rates back to normal levels, so its not like these increases have put unfair or unregulated strain on the economy. After all, a dramatic decline in interest rates (not just in the US, but globally) was a direct response to the global threat of economic depression that came after the banking crisis. Remarkably low interest rates came at a time when quantitative easing was necessary. And that simply means that interest rates approaching “normal” levels means that the economy is recovering and stabilizing, at least in the US.
Economists also rebut Trump’s rebukes of the Fed, saying that, for one, the Fed’s decisions came out of mixed results from four of his economic policies for 2018: multinational trade wars, deficit-fueled tax cuts, spending increases, and reduced immigration. Secondly, though, Wall Street analysts argue that it is Trump’s very unpredictability that is causing market uncertainty that is dragging share price down.