There’s a straight line between the criminal investigation of Federal Reserve Board Chairman Jerome Powell and increasingly shrill threats to seize Greenland.
It’s Donald Trump’s willingness to shake the foundations of the economy — regardless of the consequences.
Economic damage is already being done in both conflicts and for no better reason than to slake this president’s insatiable appetite for power.
Ostensibly, Powell is being investigated by U.S. Attorney Jeanine Pirro for renovation cost overruns at Federal Reserve headquarters. From a White House that spends our money like a drunken sailor on shore leave, Pirro’s subpoenas for suspected overspending cannot be taken seriously.
As much as $1 billion in taxpayer money will go to upgrade the palatial jet Qatar “gifted” Trump. DHS shelled out $172 million for two luxury jets for DHS Secretary Kristi Noem; it had only budgeted for one. Stationery and signs for the “Department of War” designation alone could cost taxpayers up to $125 million.
The immediate bipartisan global pushback to this bogus prosecution has as much to do with keeping the Fed free to make unpopular monetary decisions as it does with defending Powell.
Trickle-down politics
The Fed may be the single most influential financial institution in the world. In overseeing U.S. monetary policy, its decisions trickle down through society and impact everything from car loans to job growth to international investment in the dollar. Because its goal is the long-term health of the American economy, its decisions can be politically unpopular. It is built to withstand the passing political whims of presidents.
Trump would dismantle that. He is set on juicing the economy by forcing the Fed to lower interest rates to a foolhardy one percent. But the job of the Federal Reserve‘s seven-member Board of Governors is not to pump the economy to any president’s liking. Structured to be largely insulated from politics, the Fed’s broad responsibilities include price stability and maximum employment.
One of its tools is setting interest rates. High rates could increase job losses. Low rates could trigger inflation.
There’s room to disagree on whether the Fed gets rates right, but there is no argument that lower rates are a sugar rush that can lower unemployment and jump-start buying. Dramatic rate cuts, though, come with a hangover: More buying leads to higher prices, and higher prices lead to inflation.
A race to the bottom?
The big winners in any race to the interest rate bottom would be Republicans now suffering political fallout from Trump’s unpopular policies. Happier consumers might give them a better shot at re-election in the midterm elections. Keeping control of Congress after this November gives Trump a better shot at avoiding oversight. After that, any economic fallout won’t be the problem of a lame duck president on his way out the door. It will be ours.
Financial fallout from Greenland has begun. A “Sell America” sentiment is roiling the markets. America needs to sell Treasury bonds to finance the federal government. Europe holds $8 trillion in U.S. bonds and equities, making it America’s single largest lender. It doesn’t have to be.
Given Greenland, “It is not clear why Europeans would be as willing to play this part,” a Deutsche Bank analyst wrote. And while the European Union is preparing to impose $109 billion in tariffs, Trump is lurching from threats of 200% tarifffs on French wine unless France joins his $1 billion-per-seat Board of Peace, to 25% tariffs on European goods.
A recent study leaves no doubt as to who would foot the bill: American consumers are paying for 96% of Trump’s tariffs because foreign companies are raising prices to offset their costs.
Our economy can weather storms, but it is not impervious to unrestrained recklessness. It’s why Treasury Secretary Scott Bessent advised European leaders at the Davos economic summit to “sit back, take a deep breath.”
That is sound financial advice — and Trump should take it.
The Sun Sentinel Editorial Board consists of Opinion Editor Steve Bousquet, Deputy Opinion Editor Dan Sweeney, editorial writers Pat Beall and Martin Dyckman, and Executive Editor Gretchen Day-Bryant. To contact us, email at letters@sun-sentinel.com.