by Rod Williams, Aug. 10, 2024- There are a lot of reasons to fear a Donald Trump second term, the primary one being that Donald Trump is an authoritarian at heart who attempted a coup that failed but his next coup attempt may succeed.
Second on my list of reasons to fear a Trump second term is that I believe he will greenlight Russian aggression, destroy NATO, and abandon America's leadership role in the world.
I would say my third reason is that Trump is mentally and temperamentally unfit. He flies by the seat of his pants, relies on his instincts instead of data and informed analysis, and reacts to events emotionally rather than rationally and is not well-grounded in a set of principles to guide his actions. Along with that, he thinks he is the smartest guy in the room and sees no need to read or prepare or seek advice. I think this was always true of Donald Trump, but in his first term this characteristic was curtailed and mitigated by establishment and sane people who keep him within the guardrails. This was because Trumpism was new and the people he had to rely on were establishment and sane. In a second Trump term he will not have those kinds of people to steer him. He will be surrounded by loyal sycophants who are as crazy as he is.
There are other more specific things that I fear from a second Trump term. I fear he will end the Federal Reserve's autonomy and unleash runaway inflation. When Trump was President he appointed Jerome Powell as chairman of the Federal Reserve, a position to which President Biden has since reappointed him. While Trump served as president, Powell angered Trump by keeping interest rates higher than Trump wanted. Trump unsuccessfully tried to browbeat the Fed chair and Federal Reserve Board members into lowering interest rates and called them "boneheads” and at at one time asked in a social media post who was a bigger “enemy,” Mr. Powell or China’s president Xi Jinping (link). In 2019 Trump said the Fed should set interest rates at zero.
On Thursday Trump said presidents should be allowed to influence the Federal Reserve in setting interest rates. This is frightening. High interest rates are never popular. They are not popular but often necessary to curtail inflation. Where politicians can set interest rates or "print money," nations experience massive inflation. People almost always want cheap money. They see the answer to raising prices as having more cash in their pockets. They want to pay off accumulated debt with money that is worth less than when they borrowed it. Cheap money is a populist demand and a demagogue's response.
With government Debt to GDP in the United States reaching an all-time high of 126% and with interest on the debt exceeding the total defense budget and being almost as much as we spend on Medicare, runaway inflation is a real possibility. We need an independent Fed to cool the economy when it gets overheated. We do not want a Fed that reacts to popular opinion. Allowing presidents to have more say over interest rates would reverse a long-standing norm of central bank autonomy and could lead to a disaster.
According to the Wall Street Journal, Trump didn’t explain in detail what kind of role he envisions for himself in setting interest rates, arguing only that he should have a say in setting them. But, he said he is more qualified to make decisions than many Fed officials about monetary policy because of his business experience. “I made a lot of money,” he said. “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.”
A group allied with Trump has produced a document outlining options for curtailing the Fed’s independence. To read more about Trump's call for curtailing central bank's independence and what the Trump allied group has called for, and what others are saying about Trump's proposal follow this link, this one, and this.
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