Does anyone still believe that the Federal Reserve operates independently?

• The Federal Reserve lowered interest rates by half a percent on Tuesday.
• But President Trump immediately tweeted that it was not enough. The Fed announced the rate cut after an aggressive push from the President.
• Although the Fed is independent of politics in theory, it hardly looks like that. This is because this has not been the case for decades.

The Federal Reserve aggressively lowered interest rates on Tuesday. The fifty basis points (or half a percentage point) The Fed rate cut is a worrisome development for two reasons:

This was the first drop in unplanned emergency rates since 2008, and it is also the largest one-time drop since. The new benchmark interest rate is 1% to 1.25%.

That means the Federal Reserve takes on the coronavirus pandemic and other systemic threats to the economy as seriously as it took the Great Recession.

While the number of jobs and the GDP have remained stable, Congress has spent money as there is a recession long before the coronavirus epidemic.

And the Federal Reserve allowed Washingtons a budget madness fueled by debt by on the march with Congress and the US Treasury after the 2008 financial crisis.

Trump Browbeats The Federal Reserve

After the emergency rate cut on Tuesday, President Donald Trump said he would like to see our Fed lead, instead of being led. He continued to beat the Federal Reserve for even lower interest rates:

The Fed rate is too high It puts us at a competitive disadvantage, particularly when it comes to exporting our product to other countries. Other countries love it. I don't like it at all.

These comments came after a mid-night tweet calling for a rate cut announced by the Fed a few hours later, and a follow-up tweet saying the rate cut did not go far enough:

Trump called on the Fed to align interest rates with those of other central banks:

It is far from the first time that Donald Trump has publicly harassed the Federal Reserve to lower interest rates. And then got the results he wanted after searching and bashing the Fed on Twitter. The Fed cut rates by a quarter percent last September a few days after Trump ridiculed Jerome Powell on Twitter:

Two weeks before that, Donald Trump torn into Powell, literally asking who is our biggest enemy on Twitter, Jerome Powell or Chinese President Xi Jinping.

In a clue that lowering the interest rate was not in the interest of sound monetary policy, but politically motivated, the most divided Federal Open Market Committee vote (73) in almost two decades. (Most of the FOMC votes are unanimous.)

President Trump is openly concerned about the effect of monetary policy on the so-called U.S. trade deficit with other countries. But the dual mandate of the Federal Reserve of Congress is to keep prices stable and unemployment low.

The independence of the Fed is a comfortable illusion

Donald Trump certainly has Tuesday November 3, 2020 in sight as he begins Federal Reserve policy. In fact, it's no secret that the presidents of the United States are breaking the presidents of the Fed to synchronize monetary policy with the American elections to help them win a second term.

This is why George HW Bush accused former Fed Chairman Alan Greenspan of his defeat in the 1992 elections. He says he was re-elected if interest had been lowered so more spectacular. Bush went so far as to say about Greenspan in a 1998 TV interview:

I renewed him and he disappointed me.

In 1965, President Lyndon B. Johnson considered dismissing the then Fed chairman, William McChesney Martin, for failing to run. After learning that it could be illegal, he called Martin on his Texas ranch to yell at him. Martin alleged the president pushed him against a wall while shouting:

The boys die in Vietnam, and Bill Martin doesn't care.

In 1979, President Jimmy Carter removed a president of the Fed, G William Miller. After accepting the forced resignation of his secretary of the Treasury, Carter transferred Miller to the Treasury department and appointed Paul Volcker to head the Federal Reserve. Upheaval Angered Many Carters.

Richard Nixon lobbied Fed President Arthur Burns to manipulate monetary policy in the run-up to the 1972 elections. We have the tapes of the conversations at the Nixon White House. While Donald Trump is part of a tradition of presidents beating Fed presidents, economists believe independence of central banks is important for a strong economy.

Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.