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A thread on the proposed meeting between President Trump and Chair Powell /1
Presidents and Fed Chairs have met all the time. Sometimes even in ways that suggest an insufficient distance between the President and monetary policy (eg, Nixon and Burns), or between the Fed and other economic policy (eg Greenspan and Clinton) /2
But the optics of the current proposal are horrendous. The upside is minimal. The downside very steep. /3
The good intentions that motivate a meeting might be to reach a peace for our time in this skirmish, but that puts the Fed even more squarely into a narrative that this is a skirmish at all. /4
What the Fed wants to project is that there is no partisan, electoral content to their decision making, that the President and other exogenous political considerations are irrelevant to its efforts to guide monetary policy. /5
This is a useful (essential?) fiction. Of course the Fed is mindful of its political context. Impossible for the Fed to function without political support, and Powell is one of the most effective politicians to sit in the big chair. /6
But coming to this table and seeking some kind of accord or compromise or peaceful resolution will only invite mischief, not harmony. The risks are primarily two: /7
First, that’s Trump will immediately tweet a mischaracterization of the meeting and crow about his ability to alter monetary policy /8
Second, that some future market or economic or policy move will cause Trump to violate a peace and claim all kinds of nasty things about bad faith, etc. /9
This is no time for another Fed-Treasury Accord. It’s time for President Trump to realize that no one wins—not the Fed, not the country, not Donald Trump—when he forces monetary policy into a public narrative that is only about him. /10
That’s the only resolution to this mess. Whether the President and his advisers are capable of reaching it remains to be seen. /end
