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Trump vs. the Fed: A Costly Mistake
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... U.S. economy had largely recovered. Unemployment was at historic lows, growth was steady, and inflation remained tame. It was the perfect window for the Federal Reserve to gradually normalize interest rates, rein in speculative bubbles, and strengthen the long-term value of the U.S. dollar.

Fed Chairman Jerome Powell knew this. He began a careful process of rate increases, signaling the return to a more balanced monetary policy. But the effort didn’t last.

Enter President Donald Trump.

Rather than support the Fed’s return to fiscal discipline, Trump launched a public campaign against Powell and his interest rate hikes. He repeatedly called the Fed “crazy,” accused Powell of being the biggest threat to the economy, and made it abundantly clear that he wanted rates kept near zero — not for sound economic reasons, but to juice the stock market and create the illusion of unshakable prosperity heading into the 2020 election cycle.

By late 2018, Trump’s attacks grew more aggressive. He reportedly considered firing Powell — a move with no precedent in American history. Under this growing political pressure, the Fed reversed course. By mid-2019, rate hikes had stopped, and the Fed began cutting rates again — despite a strong economy.

That failure to stay the course had long-term consequences.

When COVID struck in 2020, the Fed had no room left to maneuver. With rates already near zero, it had to double down — flooding the economy with trillions in emergency liquidity, while Congress layered on additional stimulus. While some of that response was necessary, it was laid on top of an already overheated economy running on easy money.

By the time inflation exploded in 2021 and 2022, it was too late for a gradual fix. The Fed had to slam on the brakes, raising interest rates at the fastest pace in over four decades. The result: economic whiplash. Soaring mortgage costs. Market instability. Struggling small businesses. All in the name of taming an inflation crisis that could have been prevented.

The truth is, this didn’t have to happen.

If the Fed had been allowed to do its job in 2018 — free from political interference — we could have strengthened the dollar, cooled speculative excess, and built the buffer needed for the next crisis. Instead, the Fed was bullied into retreat, and the rest of us are now left paying the price.

Sound monetary policy requires independence, courage, and long-term thinking. In 2018, we had the chance. And we blew it.

President Donald Trump, Keep your hands off our Fed!