Some Very Unoriginal Comments on the Fed and Conservatives

I don't have anything very original to add on the subject of the Fed, but let me echo others.

Throughout the Obama Presidency, right wingers, Trump included, denounced Federal Reserve for its monetary expansion, which they claimed was solely intended to boost Obama's fortunes, and urged tightening.  Despite a depressed economy, they were certain that the Fed must tighten immediately or there would be out of control inflation.  They held up as their role model Paul Volcker, who tightened in 1981 to break an inflationary spiral (as high as 14%).  The applauded him for inducing a severe recession, bankrupting farmers, and sparking an economic crisis in Latin America.  That was the kind of Federal Reserve we needed!  Or else they applauded the 1920 Fed that slammed on the brakes when prices began to rise after price controls were lifted and induced a steeper decline and worse deflation (though shorter lived) than in any single year 1929-1932.  Why wouldn't the Fed today do that?  They seemed to take an outright prurient delight in the pain the Fed was inflicting and asked why the Fed was too chicken to do it now.

During his campaign for President, Trump argued that if the stock market was rising, it was a bubble, and that we were experiencing a false prosperity, buoyed up by artificially low interest rates and headed for disaster.  His campaign was characterized by near-apocalyptic warnings about the disaster that lay ahead when the whole house of cards came crashing down.

Of course, the minute Trump was elected, things changed altogether.  You know that bubble in the stock market?  It immediately filled in and all future gains became real.  And the false prosperity from artificially low interest rates?  When as soon as he was elected it became real.  He was even cynical enough to comment that he considered official unemployment figures fake so long as Obama was President and real for him.

And I was notably cynical about what to expect from Republicans on the subject of interest rates and tight money:

Once Trump is inaugurated, Republicans will regard tight money as a universal and timeless imperative that must be continued in good times and bad, in all economic circumstances. To propose any deviation from this moral imperative would show a lack of principle. No amount of human suffering can ever justify deviation from this universal and timeless imperative and, indeed, the more pain the Fed inflicts with tight money the better, since it will mean a richer reward down the road. So money must always be kept tight, without exceptions -- unless a Republican is in the White House and tightening might hurt his political fortunes, in which case we must be reasonable.

And sure enough, the economy is showing possible signs of softening, the stock market has fallen, and Republicans in general and Trump in particular are calling on the Fed to lower rates.  And an excellent case can be made that they are right.  It's just hard to have any interpretation but a cynical one in light of what they have said in the past.

Trump, I should add, is understandable.  He has no concept of the public good aside from his personal fortunes anyhow.  And looking at developments in the Russia investigation, he must be wondering if he will be indicted as soon as he leaves the White House.  So re-election has gained an imperative for him that it lacks for other incumbents.  (And what about when his second term expires?  I doubt very much that he thinks that far ahead).

But what excuse do the others have?