No, Powell Is Not ‘Keeping Interest Rates High’
There really is no reasoning with Trump fanboys when it comes to the reality of his policies. They will spin anything and everything to portray Trump‘s blatant anti-freedom and anti-market policies as secret crypto-libertarianism. It’s all 1000-D chess, you see.
The latest bogus narrative of this sort comes from one of my readers who is convinced that Trump is right in denouncing those central bankers who inflate too little. The reader objects to my Wednesday column which says that Trump has now surpassed Powell when it comes to pushing bad monetary policy.
The reader informs me that easy-money policy is a good thing and he says the Fed should implement a “25-basis-point cuts as quickly as possible” and that we need the central bank to set interest rates because we can’t “trust banks to rationally set interest rates on their own.”
That’s not happening because, according to the reader, “the word on the street is that Jerome Powell is part of the deep state cabal and is keeping rates high just to screw Trump.”
This statement is nonsense in at least two ways. First of all, the Fed doesn’t “keep interest rates high.” If the Fed didn’t exist, there is about a 99.99% chance that interest rates would be higher than they are. Contrary to the idea that the Fed is “setting” interest rates at “too high” levels, one of the primary jobs of the Fed (nowadays) is to keep interest rates lower than they would be in a free market. The Fed is doing exactly this. Through its regular open market operations, the Fed intervenes in the market to keep the federal funds rate within the target window (which is 4.25% to 4.5%). If the Fed were simply to do nothing, it’s almost guaranteed that interest rates would rise. So, it’s highly misleading to ever say that the Fed “is keeping interest rates high.” Rather, if interest rates are rising, it is far more accurate to say “the Fed is forcing down interest rates less than usual.”
Secondly, the reader isn’t even right that Powell, et al, are taking a
Article from LewRockwell
LewRockwell.com is a libertarian website that publishes articles, essays, and blog posts advocating for minimal government, free markets, and individual liberty. The site was founded by Lew Rockwell, an American libertarian political commentator, activist, and former congressional staffer. The website often features content that is critical of mainstream politics, state intervention, and foreign policy, among other topics. It is a platform frequently used to disseminate Austrian economics, a school of economic thought that is popular among some libertarians.
