Jay Powell, the Federal Reserve Chairman, has banned any public appearances by any member of the Fed, Cockburn hears. Appearances at conferences have been canceled, all scheduled interviews have been abandoned and any comments on or off the record are outlawed.
This unprecedented action is a reflection of two pressures. First, there are growing economic indicators that suggest the US is heading into a recession with the Dow plunging 800 points on Wednesday. Second, relations with the White House have reached a new low. President Trump has pinned the success of his presidency upon a strong economy and his qualifications as a businessman who understands the economy. If a recession takes hold, Trump believes his reputation will be destroyed and his chances of reelection dimmed.
This week President Trump lashed out at Powell and the Fed claiming they are responsible for the slide in the stock market. Senior White House officials say that Trump has engaged in regular and increasingly vitriolic tirades against Powell who the president believes should be taking action on interest rates to stimulate the economy.
‘Other countries say THANK YOU to clueless Jay Powell and the Federal Reserve,’ Trump wrote on Twitter Wednesday. ‘Germany, and many others, are playing the game! CRAZY INVERTED YIELD CURVE! We should easily be reaping big Rewards & Gains, but the Fed is holding us back. We will Win!’
For his part, Powell believes that the Fed, which cut interest rates by a quarter point at the end of last month, has very little left in its armory and that even a cut in interest rates would do nothing to combat growing international economic pressures. Powell has become increasingly concerned at Trump’s criticisms, which he believes shows he has little understanding of the economy or the Fed’s role.
This rocky relationship between the independent Fed and a president who believes that he should personally control all aspects of government is without precedent. Powell is determined to do or allow to be said nothing that could further fuel the struggle between an independent Fed and a controlling president.
Update 3:45 p.m. ET: According to Cockburn’s source, Powell’s orders apply solely to the Fed Main Board, as they have the vote and the power. Regional Fed Boards are largely independent, for those of you wondering why Jim Bullard of the St Louis Fed was just on Fox Business.
Tune in now: St. Louis Fed President Jim Bullard’s interview on Fox Business Network pic.twitter.com/CrBHcIkcUh
— St. Louis Fed (@stlouisfed) August 15, 2019
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