The most important development of the present woebegone interlude is Donald Trump’s harsh, unhinged and unrelenting attacks on the Fed.
Like no other politician since December 1913 when the Federal Reserve System was mid-wifed into existence by the great financial statesman, Congressman Carter Glass, Trump has exposed its awful secret.
Namely, that what Glass intended to be a modest, economically passive “bankers’ bank”, which would provide back-up liquidity to the banking system against good commercial collateral at a penalty spread above the free market rate of interest, has morphed into an all powerful monetary politburo.
As a rogue agency endowed with open-ended state powers, its regime of monetary central planning inherently causes failure on the main street economy and unspeakable windfalls to Wall Street and the wealthy elites who own most of the financial assets. The so-called Humphrey-Hawkins growth and inflation mandates are the cover story for this perverse regime, but in today’s fully integrated $85 trillion global economy these purportedly sacrosanct mandates amount to an unattainable, threadbare farce.
So the Donald’s everlasting service to whatever future prosperity may yet be attainable is calling out in advance—and loudly and explicitly so—that the next financial crisis and resulting recessionary dislocation will be the sole responsibility of the Federal Reserve. And that’s something totally new under the sun compared to the servile fawning exhibited by Obama, Clinton and the Bushes who came before.
Sound money scribblers and even the “End the Fed” candidacy of Congressman Ron Paul couldn’t break the spell—notwithstanding the truth of their case. They were and are marginalized by the mainstream financial press owing to the requisites of “access journalism” and the willful blindness of the corporate owners at the Wall Street Journal, Bloomberg, CNBC, Reuters and the rest.
But the Donald has a 60-million Twitter account, an audacious take-no-prisoners style of political modus operandi and a yawning empty space under the Orange Combover when it comes to even the rudiments of monetary policy.