Victor Davis Hanson on Powell, Trump, and the Fed's Interest Rate Decisions

Powell's Stance on Interest Rates

• 🎯 Jerome Powell is criticized for keeping interest rates high, which hurts millions of Americans trying to buy homes.
• 💡 The argument from the Trump side is that the economy does not show signs of inflation, and lower interest rates could stimulate spending and avoid a recession.
• ⚠️ Powell's decision-making is questioned, especially his inaction in March and April when economic forecasts were dire, contrasting with his current stance when inflation is not a clear threat.

The Powell-Trump Dynamic

• ⚡ The ongoing conflict between Jerome Powell and Donald Trump is suggested as a significant factor influencing Powell's decisions.
• 🗣️ Trump has personally criticized Powell, calling him "Too Late Powell," and Powell is perceived as acting emotionally or angrily in response.
• 🏛️ Powell may be motivated to maintain the independence of the Fed from presidential pressure, especially after being threatened with firing.

Economic Arguments and Consequences

• 📈 Trump's economic strategy involves cutting expenses and increasing revenue (e.g., through tariffs) to reduce the deficit without touching social security or defense.
• 💰 Lowering interest rates, as Trump advocates, could save billions daily on interest payments, contributing to deficit reduction efforts.
• 📉 The high interest rates are seen as hindering Trump's initiatives and potentially strangling the economy.

Lessons from Political Appointments

• ⚖️ Powell's actions are compared to Merrick Garland's appointment as Attorney General, suggesting that bitterness and political animus can affect judgment.
• 🧐 The hope is that Powell will learn from such examples, shrug off criticism, and demonstrate consistency in his decisions, remaining impervious to White House influence.
• ✅ Powell's duty is to be independent and consistent, reacting to economic data rather than political pressure or personal grievances.