By Denny Gulino
WASHINGTON (MaceNews) – It was hard to find anything market moving in the day’s semiannual appearance on Capitol Hill of Federal Reserve Chair Jay Powell where House members had few questions about monetary policy– unless you’re Donald Trump.
“When Jerome Powell started his testimony today, the Dow was up 125, & heading higher,” the president tweeted. “As he spoke it drifted steadily downward, as usual, and is now at -15.”
He went on, “Germany & other countries get paid to borrow money. We are more prime, but Fed Rate is too high, Dollar tough on exports.”
Stocks quickly rebounded back into positive territory, for whatever reason.
Aside from his continual disregard for the G-20 pledge not to use currencies for a trade advantage, Trump’s non-stop heckling of Powell to help manufacturing exports by cheapening the dollar has represented a persistent but contradictory set of themes, both represented by tweets Tuesday.
On the one hand. Trump proclaims, as he did in the morning before Powell began speaking, “BEST USA ECONOMY IN HISTORY,” a claim refuted by history which nevertheless suggests the Fed has been doing something right for a long time.
Four hours later his tweet recounted above, says the Fed – despite its three rate cuts last year – is setting them too high, in effect scapegoating the central bank despite the historically low unemployment rate.
Monday night, in an interview on the Fox Business Network, Trump did the same thing, accusing the Fed of raising rates “too fast” and lowering them “too slow.”
“With all of that, we’re still doing the best by far in the world,” Trump said. “But we could have been up substantially higher had he not done that,” he said of Powell and what he considers insufficient rate cuts.
One member of the House Financial Services Committee, a Democrat, asked Powell during the hearing why the market went down, and did not get much of an answer. He asked again, this time citing the Trump tweet. Powell said the Fed’s goal remains helping the American people, presumably by giving them the best economy possible.
Powell has said many times in the past that he does not respond to comments from elected officials.
Elsewhere as he answered questions, Powell told one member of Congress the U.S. has purposely chosen not to revert to negative interest rates, using more conventional tools to accommodate growth instead.
On the possible economic impact of the corona virus, Powell said, “I think it’s just too early to say.”
He went on, “We have to resist the temptation to speculate on this and so we’ll be watching that carefully again and the question will be asking is will these be persistent effects that could lead to a material reassessment,” – which in the past he has said is a necessary condition for another rate cut – or “whether or not this is a temporary disruption.”
He elaborated a little more than usual on the prospect of a “digital dollar” but said still that the Fed is studying cryptocurrencies, sees some merit in the “ledger” aspect of blockchain technology and is mainly focused on sustaining the conditions that help make the ordinary dollar the world’s supreme currency.
On jobs, Powell said technology has been replacing humans for a long time and it always takes some time to adjust to such “disruptions.”
Powell twice declared that he “strongly” believes the level of bank capital is “about right,” as evidenced by bank stress tests, and has no intention of raising the level of capital.
At one point Rep. Katie Porter, a Democrat, law professor and attorney representing California’s south-central Orange County, asked if he is unduly influenced by Jared and Ivanka Trump or Trump adviser Kellyanne Conway or Amazon’s Jeff Bezos, finally getting to her point she illustrated with a picture of Powell at a black-tie afterparty put on by Bezos at his $23 million mansion.
Powell said he did not talk to anyone Porter mentioned as he escorted his son and daughter-in-law to a post-Alfalfa Club shindig and as to being unduly influenced by anyone, answered, “I would certainly hope not.”
The Alfalfa Club is an exclusive group of 200 invited members who meet once a year behind doors closed to the press. Several past presidents – but not Trump – have been keynote speakers.
The congresswoman later tweeted a video of herself asking the question, saying, “The Chair of the Federal Reserve is the top official responsible for our country’s economic well-being. Partying with the ultra-wealthy creates the appearance that those billionaires have an unfair opportunity to weigh in on economic policy decisions.”
A Republican had followed up her questions by observing that members of Congress also go to parties.