President Donald Trump renewed his verbal assault against the Federal Reserve on Monday, comparing the central bank to a blundering golfer after the stock market tanked yet again.
“The only problem our economy has is the Fed,” Trump tweeted. “The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!”
The Federal Reserve is meant to be independent from the White House but Trump has trampled those barriers in his frustration at what he sees as the bank’s harmful interest rate policies.
He has previously called the Fed, which angered him by hiking rates last week, “crazy” and a greater economic threat to the United States than China.
Reports that Trump was even sounding out cabinet members on whether he had authority to fire Fed Chairman Jerome Powell forced Treasury Secretary Steven Mnuchin to spend much of the weekend in damage control mode.
A lifelong real estate developer, Trump has touted the booming US economy as one of his presidency’s main achievements.
But the stock market is in steep retreat as investor’s nerves grow over the fallout from Trump’s erratic style and his trade war with China.
The Dow Jones index closed Monday down more than 650 points, bad news for swaths of ordinary Americans whose savings and retirement plans are tied up on Wall Street.
CNBC reported the losses were the worst ever for Wall Street on Christmas Eve, a holiday-shortened session ahead of Tuesday when markets will be closed.
With Trump and Congress locked in a standoff over his inability to get approval for a $5 billion US-Mexico border wall project, analysts fear that 2019 will bring an ever greater risk of political instability and dysfunction, feeding further market runs.
Spooked by 2008
Trump, who has repeatedly taken credit for the market when it rises, is blaming the Federal Reserve for the increasingly dark picture.
He is furious at interest rate hikes, which he argues will hold back the economy, and on Monday he accused the Fed of having no “feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.”
Even when the Trump administration has tried to calm the markets, that may be backfiring.
Mnuchin called the CEOs of the country’s six largest banks on Sunday to seek reassurance that their liquidity levels are healthy.
However, worries about a dangerous run on the banks — like in the financial collapse and subsequent deep recession of 2008 — have not been widely raised previously. So the unusual move by the government left the bankers worried and puzzled, according to US media reports.
“It just raises more alarm bells for people ‘that maybe there is something bigger going on’ if it’s necessary to have phone calls with the six biggest bank CEOs,” said Manulife AM senior portfolio manager Nate Thooft.
According to Mnuchin’s office, the CEOs confirmed: “that they have ample liquidity available for lending to the consumer, business markets, and all other market operations.”
“We continue to see strong economic growth in the U.S. economy with robust activity from consumers and business,” Mnuchin said in the statement.