Background on Previous Administrations’ Economic Policies
Donald Trump appears to be uninterested in learning from the fiscal and monetary errors of past U.S. economies, as he neither understands nor cares about them.
What the current President of the United States desires is for the economy to grow, regardless of the cost, during his remaining time in office.
Although he may be aware of recent history, Trump seems willing to ignore it and repeat the same mistakes.
Key Economic Events Under Previous Presidents
- Bill Clinton (1999): The Democratic President managed to bring the budget deficit to zero in May 1999, but a year later, interest rates had risen to 6.5%.
- George W. Bush (2001): The Republican President faced the 9/11 attacks, which altered the economic fortune through fiscal spending and monetary policy that lowered interest rates to historically low levels.
- Alan Greenspan (2004-2006): As the Federal Reserve Chair, Greenspan rapidly lowered and then raised interest rates following the 9/11 impact, contributing to subsequent calamities like the subprime crisis.
- Barack Obama (2008-2009): Another Democratic President faced the financial crisis and focused fiscal policy on correcting Republican excesses, while monetary policy returned to complete laxity.
- COVID-19 Pandemic (2020-present): Both fiscal and monetary policies were employed to save the economy from the pandemic’s devastation. However, an inflationary bubble emerged without a full economic recovery, prompting the fiscal policy to act as a lifeline while the Federal Reserve embarked on a harsh campaign against high inflation.
Trump’s Influence on Current Federal Reserve Policies
Jerome Powell, the current Federal Reserve Chair appointed by Trump, has been tasked with lowering interest rates to near-zero since 2018 and then rapidly increasing them to combat the inflationary bubble.
Christopher Waller, a Trump-backed candidate to succeed Powell, is part of this generation of U.S. central bankers who recognize the complexity of winning the ongoing battle against high inflation.
This is one of the most challenging times for a central banker to balance the cost of money amid persistent high inflation and low job creation rates.
The Jackson Hole Symposium and Jerome Powell
This Friday, the much-anticipated speech at the Jackson Hole Symposium (organized by The Federal Reserve Bank of Kansas City) will be delivered by Jerome Powell. He must convince that he has a strategy for this high-risk landing.
The challenge lies in convincing Trump, who is as intransigent as he is powerful, to allow the correct application of monetary policy without imposing his will at any cost.
More than defending Powell, there’s a risk that those with extensive knowledge of recent monetary history may not be able to apply their expertise due to the imperial attitude of the White House.
