It's not hyperbole to say that President Donald Trump is jeopardizing a cornerstone of the world economy.
In both social media posts and offhand remarks to reporters, the president has suggested that the White House should have more control over the Federal Reserve, the 111-year-old central bank that helps keep the U.S. economy stable — and therefore the rest of the world's, too.
Trump's view fits naturally with his theory that the White House should have more control over everything from elections to IRS audits to the federal judiciary. But in this case, it would undermine trust in the United States as a safe haven for investors around the world, almost certainly leading to spiraling inflation in the short term and higher interest rates in the long run.
Even Trump's mere consideration of asserting more influence at the Fed may already be hurting the economy. The dollar is weakening, gold is surging to record highs and the yield on the 10-year Treasury note is rising — all signs that investors are getting nervous about the fundamentals of the American economy.
Economists already figured out the problem with Trump's view nearly a century ago: The White House should not have control over the central bank. Instead, like Odysseus lashing himself to the mast of his ship to avoid the call of the sirens, the president should leave the decisions about interest rates to the Federal Reserve, based on the central bank's reading of the economy.
Read Ryan Teague Beckwith's full column here.
