Mike Pence: The "Economy is Roaring" So Let's Cut Rates

-edited

Vice President Mike Pence and Economic Director Lawrence Kudlow escalate Trump's feud with the Fed.

On Friday, President Trump Escalated his Feud with the Fed over interest rates.

Vice President Mike Pence and White House National Economic Council Director Lawrence Kudlow—echoing President Trump’s comments Tuesday—called on the Fed to lower interest rates, saying the economy’s engine could handle more fuel.

“The economy is roaring,” Mr. Pence said Friday in a CNBC interview, not long after the Labor Department reported the jobless rate had fallen to 3.6% in April, the lowest level in 50 years. “This is exactly the time not only to not raise interest rates, but we ought to consider cutting them.”

It isn’t unprecedented for politicians to lean on the Fed to cut interest rates and give the economy the kind of jolt that voters reward at the polls. President Nixon pressured Fed Chairman Arthur Burns to keep rates low right before the 1972 election.

But it is rare for the White House to take on the Fed so openly, analysts said. “It not only breaks the norms, it shatters them,” said Laurence Meyer, a former Fed governor. “It’s just amazing.”

Just Amazing

The amazing thing is not that Trump is doing anything unusual. The unusual is the norm.

Rather, the amazing thing is the logic the administration used.

If you can't hike rates when the "economy is booming" then you can never hike rates because you don't hike rates when the economy is doing poorly.

Economy Booming?

We can debate whether the economy is booming. Despite Friday's jobs report, it's pretty clear the economy is slowing.

But that' not the argument Pence presented. Pence wants to cut rates despite his claim that the economy is booming. That's the amazing thing.

Mike "Mish" Shedlock

Comments (39)
No. 1-20
Blurtman
Blurtman

More cowbell!

Blacklisted
Blacklisted

Once again, the Fed is not driven by the US economy, but by international pressure to keep rates low to avoid the debt bomb from going off. Foreign holdings of dollar-based debts is massive, and an increasing dollar and rates is and will implode budgets. The consequences of low rates is to savers, pensions, social security, etc. - problems for another day.

ksdude
ksdude

Seems our system is in the nursing home. Trying to squeeze a few more years out of grandma at any cost.

Bam_Man
Bam_Man

Fiat end-game well underway, and clear for all to see.

thimk
thimk

it's an election cycle insurance policy, to rely on the fed for economic robustness is a failure of good policy administration.