President Trump published more than 25 tweets in the month of August attacking the Fed and its chair, Jerome Powell. But according to New York Times business journalist Binyamin Appelbaum, the president’s ‘over emphasis’ on Powell and the Fed may be misguided.
“Trump is so fixated on Jerome Powell and the Fed and what they’re going to do, when really the problems in our economy are much broader. It’s the uncertainty about trade, it’s the absence of intelligent fiscal policy, the absence of investment in infrastructure, in research, and in growth. Our lens is focused on the wrong place ... We need to start talking less about monetary policy and more about all of the other things the government can and should be doing” Appelbaum told Yahoo Finance’s The Final Round.
Since World War II, Appelbaum says politicians have come to emphasize economic growth above almost everything else. In his new book, “The Economists’ Hour: False Prophets, Free Markets and the Fracture of Society,” Appelbaum discusses the U.S. economy and how economists have gained influence and power over the years.
“Maybe Milton Friedman’s most important legacy was convincing policy makers that the central bank is really the only arm over government that can regulate economic growth — they have the power and that we need to rely on them. I think that needs a reconsideration.” Appelbaum said. In his book, he notes that markets are constructed by people, for purposes chosen by people — and that people can change the rules.
“We’ve learned from history that when politicians make the Fed an arm of short term policy goals, they’re constantly trying to stimulate growth — that doesn’t work out well for the economy,” he said.
Sara Dramer is an associate producer at Yahoo Finance. Follow her on Twitter @saradramer