Trump Accuses Yellen of Trying to Improve the Economy Through Monetary Policy

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Things could get fiscal.Photo: Mark Wilson/Getty Images; Win McNamee/Getty Images

On Monday, Donald Trump said that Janet Yellen is keeping interest rates low so that the stock market won’t crash — and that she should be “ashamed of herself” for doing so.

“She’s obviously political and doing what Obama wants her to do,” Trump said of the Federal Reserve chair on CNBC, before explaining that the central bank would not raise interest rates because it didn’t want the economy to implode on this president’s watch.

“They want to keep the market up so Obama goes out and lets the new guy … raise interest rates — or her raise interest rates — and watch what happens to the stock market,” Trump said.

There are a few strange things about this analysis. Vox’s Matt Yglesias highlights the most obvious:

… [T]he way low interest rates are allegedly helping Obama is by improving economic conditions. But improving economic conditions is what the Fed is supposed to do. Why would they be ashamed?

Now, Trump could ostensibly counter that, while raising interest rates would hurt the economy in the short term, the threat of inflation poses a more severe risk in the long run. But that argument is undermined by how severe Trump suggests the short-term effects will be — and by the fact that inflation is still well below the Federal Reserve’s target level.

Granted, Trump also expressed concern about the way low rates disadvantage savers. But it’s difficult to see that concern outweighing Trump’s predicted market collapse. Plus, it’s hard to justify rate increases amid low inflation, since they tend to weaken America’s trade position while making our debts more onerous.

Or so says a certain Republican presidential candidate, anyway.

“I happen to be a low-interest rate person unless inflation rears its ugly head, which can happen at some point,” Trump told The Wall Street Journal in May. The mogul went on to tell the paper that high rates make American exports less competitive, while also increasing our country’s borrowing costs.

But now Trump believes that such views are so obviously wrong, only a corrupt Federal Reserve chair looking to rig the economy for Obama would harbor them. (In May, Trump said he had “great respect” for Janet Yellen).

Still, while Trump’s position may not make sense logically, or in the context of his previous statements, it is of a piece with his broader embrace of Republican orthodoxy. While most GOP nominees refrain from alleging that America’s central bank is controlled by a Democratic conspiracy, conservatives do tend to fear hypothetical inflation more than actual unemployment, and therefore are constantly demanding rate increases.

Thus, Trump’s latest reflections on the Federal Reserve managed to be both more bizarre and less interesting than his remarks from last spring.