![\"Donald](\"https:\/\/i0.wp.com\/www.dougsbriefcase.com\/blog\/wp-content\/uploads\/2015\/11\/credit-cnbc.jpg\")
<\/a>Don\u00adald Trump this week said that Fed\u00ader\u00adal Reserve Board Chair\u00adman Janet Yellen won\u2019t raise rates because Pres\u00adi\u00addent Oba\u00adma told her not to. Why he\u2019s (sort of) right. [Cred\u00adit: CNBC<\/span>]<\/p><\/div>The media just can\u2019t keep up with The Donald.\n Cor\u00adpo\u00adrate news-gath\u00ader\u00ading out\u00adlets do their best to repeat and ampli\u00adfy his every off\u00adbeat utter\u00adance. His accu\u00adsa\u00adtion that Mar\u00adco Rubio is a \u201cdis\u00adas\u00adter with his cred\u00adit cards<\/a>\u201d has rip\u00adpled through the press and forced Rubio to respond<\/a>. Dit\u00adto for Trump\u2019s mock\u00adery of Jeb\u2019s ener\u00adgy<\/a>,<\/span> Carson\u2019s reli\u00adgion<\/a>,<\/span> Carly\u2019s face<\/a>,<\/span> Kasich\u2019s poll num\u00adbers<\/a>,<\/span> Hillary\u2019s mar\u00adi\u00adtal rela\u00adtions<\/a> (\u201cIf Hillary Clin\u00adton can\u2019t sat\u00adis\u00adfy her hus\u00adband what makes her think she can sat\u00adis\u00adfy Amer\u00adi\u00adca?\u201d), Bernie\u2019s men\u00adtal health<\/a> and the men\u00adstru\u00adal cycles<\/a> of debate moderators.<\/p>\n But as they were buzzing about his sched\u00aduled appear\u00adance on Sat\u00adur\u00adday Night Live<\/a>,<\/span> the media large\u00adly over\u00adlooked what was per\u00adhaps Trump\u2019s most hereti\u00adcal accu\u00adsa\u00adtion of all.<\/p>\n \u201c<\/span>In my opin\u00adion [Fed\u00ader\u00adal Reserve Chair\u00adman] Janet Yellen is high\u00adly polit\u00adi\u00adcal,\u201d Trump said<\/a> dur\u00ading a press con\u00adfer\u00adence to pro\u00admote his new book<\/a>,<\/span> \u201cand she\u2019s not rais\u00ading rates for a very spe\u00adcif\u00adic rea\u00adson: because Oba\u00adma told her not to.\u201d<\/p>\n Leave aside for the moment that there is absolute\u00adly no evi\u00addence that the Pres\u00adi\u00addent has \u201ctold\u201d Yellen not to raise rates. Indeed, she sug\u00adgest\u00aded<\/a> at a Con\u00adgres\u00adsion\u00adal hear\u00ading<\/a> this week that the Fed might raise them next month, some\u00adthing that seems more pos\u00adsi\u00adble in light of the Octo\u00adber jobs report<\/a>. Facts rarely con\u00adstrain The Donald.<\/p>\n Trump\u2019s het\u00adero\u00addoxy is his asser\u00adtion that Yellen is \u201chigh\u00adly polit\u00adi\u00adcal,\u201d a state\u00adment that tears at the core mythol\u00ado\u00adgy of the Fed as a post-mod\u00adern priest\u00adhood that dis\u00adpas\u00adsion\u00adate\u00adly exam\u00adines the entrails of eco\u00adnom\u00adic data, entire\u00adly unsul\u00adlied by politics.<\/p>\n The Fed\u00ader\u00adal Open Mar\u00adket Com\u00admit\u00adtee sets mon\u00ade\u00adtary pol\u00adi\u00adcy in pur\u00adsuit of its mis\u00adsion<\/a> \u201cto help pro\u00admote nation\u00adal eco\u00adnom\u00adic goals.\u201d Its ten mem\u00adbers<\/a> com\u00adprise aca\u00add\u00ade\u00admics and bankers, includ\u00ading two for\u00admer exec\u00adu\u00adtives from Cit\u00adi\u00adgroup and one each from the Car\u00adlyle Group and Gold\u00adman Sachs. Four of them pre\u00advi\u00adous\u00adly held polit\u00adi\u00adcal posi\u00adtions in the exec\u00adu\u00adtive branch. All of them are polit\u00adi\u00adcal appointees.<\/p>\n Their upcom\u00ading actions \u2014 or inac\u00adtions \u2014 are espe\u00adcial\u00adly momen\u00adtous now, com\u00ading as they do after near\u00adly sev\u00aden years of hold\u00ading inter\u00adest rates near zero and load\u00ading their bal\u00adance sheet<\/a> with $2.5 tril\u00adlion in Trea\u00adsury debt (mak\u00ading the Fed the Trea\u00adsury Department\u2019s sec\u00adond largest cred\u00adi\u00adtor, after Social Secu\u00adri\u00adty<\/a>) and $1.7 tril\u00adlion in mort\u00adgage-backed secu\u00adri\u00adties. The Fed\u00ader\u00adal Reserve has nev\u00ader before imple\u00adment\u00aded such poli\u00adcies, so there is no his\u00adtor\u00adi\u00adcal expe\u00adri\u00adence to inform pre\u00addic\u00adtions of what will hap\u00adpen when the Fed begins to unwind them..<\/p>\n The Fed\u2019s Chair\u00adman doesn\u2019t hes\u00adi\u00adtate to claim<\/a> that its actions helped \u201csta\u00adbi\u00adlize the finan\u00adcial sys\u00adtem dur\u00ading the cri\u00adsis\u201d of 2008 and that they have since \u201csup\u00adport\u00aded the eco\u00adnom\u00adic recov\u00adery,\u201d though that recov\u00adery has been ane\u00admic and spas\u00admod\u00adic. The Fed\u2019s poli\u00adcies, she argues, have made a difference.<\/p>\n If imple\u00admen\u00adta\u00adtion of these poli\u00adcies has been so pow\u00ader\u00adful an elixir, their rever\u00adsal pre\u00adsum\u00adably also will have pro\u00adfound effects that will ric\u00ado\u00adchet through the glob\u00adal econ\u00ado\u00admy. Yellen\u2019s year-long flir\u00adta\u00adtion with rais\u00ading inter\u00adest rates already has affect\u00aded glob\u00adal mar\u00adkets, engen\u00adder\u00ading spec\u00adu\u00adla\u00adtive trades that have helped strength\u00aden<\/a> the dol\u00adlar, dri\u00adve down com\u00admod\u00adi\u00adty prices<\/a> and roil devel\u00adop\u00ading economies<\/a>.<\/p>\n There is no telling what will hap\u00adpen when the Fed actu\u00adal\u00adly begins to raise rates. Yellen knows that risk and uncer\u00adtain\u00adty attend such a change in pol\u00adi\u00adcy. And she is acute\u00adly aware of the poten\u00adtial polit\u00adi\u00adcal implications.<\/p>\n If the stock mar\u00adket went side\u00adways in an elec\u00adtion year or the econ\u00ado\u00admy soured, Demo\u00adc\u00adra\u00adt\u00adic can\u00addi\u00addates would like\u00adly suf\u00adfer at the polls. Yellen does\u00adn\u2019t want that to hap\u00adpen, and cer\u00adtain\u00adly does\u00adn\u2019t want to be remem\u00adbered for help\u00ading put a Repub\u00adli\u00adcan in the White House. That con\u00adcern \u2014 and not mind-numb\u00ading vol\u00adumes of eco\u00adnom\u00adic indi\u00adca\u00adtors alone \u2014 affects her decisions.<\/p>\n The Fed\u2019s apol\u00ado\u00adgists would have us believe that Yellen and her col\u00adleagues are not influ\u00adenced by their polit\u00adi\u00adcal alle\u00adgiances. They believe that pol\u00adi\u00adtics won\u2019t affect the Fed\u2019s deci\u00adsions because its mem\u00adbers are quar\u00adan\u00adtined from the influ\u00adence of voters.<\/p>\n This naivete is a char\u00adac\u00adter\u00adis\u00adtic of the gov\u00adern\u00ading class\u2019s para\u00addox\u00adi\u00adcal views about democ\u00adra\u00adcy. On the one hand, it cham\u00adpi\u00adons uni\u00adver\u00adsal suf\u00adfrage and demo\u00adc\u00adra\u00adt\u00adic insti\u00adtu\u00adtions, while on the oth\u00ader con\u00adfer\u00adring enor\u00admous pow\u00ader on peo\u00adple whose jobs don\u2019t require win\u00adning any\u00adone\u2019s vote. Hav\u00ading insu\u00adlat\u00aded cer\u00adtain gov\u00adern\u00adment enti\u00adties from the elec\u00adtorate, they assume that they have also inoc\u00adu\u00adlat\u00aded them against polit\u00adi\u00adcal motivations.<\/p>\n This elit\u00adist impulse is most clear\u00adly evi\u00addent in the exec\u00adu\u00adtive branch. The notion is that vest\u00ading pow\u00ader in 2.7 mil\u00adlion<\/a> civ\u00adil ser\u00advants, whose tenure is unaf\u00adfect\u00aded by Pres\u00adi\u00addents, elec\u00adtions and job per\u00adfor\u00admance, has pro\u00adduced high-mind\u00aded gov\u00adern\u00adment uncon\u00adt\u00ada\u00adm\u00adi\u00adnat\u00aded by pol\u00adi\u00adtics. Any\u00adone who has worked in a gov\u00adern\u00adment bureau\u00adcra\u00adcy knows that many of the most high\u00adly moti\u00advat\u00aded civ\u00adil ser\u00advants have polit\u00adi\u00adcal agen\u00addas, which they rou\u00adtine\u00adly impose with\u00adin the spheres of their power.<\/p>\n The Supreme Court is a sec\u00adond exam\u00adple. The Founders envi\u00adsioned the judi\u00adcia\u00adry as \u201cthe least dan\u00adger\u00adous branch<\/a>,<\/span>\u201d since it could nei\u00adther make laws nor enforce them. Instead it has become a vehi\u00adcle for impos\u00ading the polit\u00adi\u00adcal and cul\u00adtur\u00adal sen\u00adsi\u00adbil\u00adi\u00adties of a clois\u00adtered and homoge\u00adnous elite on Amer\u00adi\u00adcan soci\u00adety, con\u00adtra\u00adven\u00ading<\/a> acts of Con\u00adgress, plebiscites, state con\u00adsti\u00adtu\u00adtions and leg\u00adis\u00adla\u00adtures in the process.<\/p>\n The Fed\u2019s pre\u00adsumed apo\u00adlit\u00adi\u00adcal nature is a third exam\u00adple. Its gov\u00ader\u00adnors stud\u00adied in the same uni\u00adver\u00adsi\u00adties and spent the bulk of their careers either teach\u00ading at those schools or seek\u00ading their for\u00adtunes in the indus\u00adtry they now reg\u00adu\u00adlate. Their insu\u00adlar\u00adi\u00adty is con\u00adsid\u00adered a virtue, allow\u00ading them to imple\u00adment eco\u00adnom\u00adic the\u00ado\u00adries they inter\u00adnal\u00adized at uni\u00adver\u00adsi\u00adty, far removed from the real-life expe\u00adri\u00adences of the hun\u00addreds of mil\u00adlions of peo\u00adple whose lives their deci\u00adsions affect.<\/p>\n The Fed and its acolytes believe in their bones that eco\u00adnom\u00adic pow\u00ader should be entrust\u00aded to peo\u00adple like them, whose aca\u00add\u00ade\u00adm\u00adic cre\u00adden\u00adtials, tem\u00adpera\u00adment and exper\u00adtise require that they be kept at a safe dis\u00adtance from democracy\u2019s taint.<\/p>\n That may be true. Maybe we\u2019re bet\u00adter off con\u00adfer\u00adring respon\u00adsi\u00adbil\u00adi\u00adty for many of the most impor\u00adtant eco\u00adnom\u00adic, social and cul\u00adtur\u00adal deci\u00adsions to peo\u00adple we don\u2019t elect. But we shouldn\u2019t imag\u00adine that shield\u00ading our judges, bureau\u00adcrats and Fed\u00ader\u00adal Reserve Board mem\u00adbers from the polit\u00adi\u00adcal process removes pol\u00adi\u00adtics from their decision-making.<\/p>\n Trump\u2019s alle\u00adga\u00adtion that the Pres\u00adi\u00addent told Yellen not to raise rates is pure fab\u00adri\u00adca\u00adtion. His con\u00adtention that polit\u00adi\u00adcal cal\u00adcu\u00adla\u00adtions fig\u00adure into the Fed\u2019s deci\u00adsions is exact\u00adly right.<\/p>\n","protected":false},"excerpt":{"rendered":" The media just can\u2019t keep up with The Don\u00adald. Cor\u00adpo\u00adrate news-gath\u00ad\u00ader\u00ading out\u00adlets do their best to repeat and ampli\u00adfy his every off\u00adbeat utter\u00adance. His accu\u00adsa\u00adtion that Mar\u00adco Rubio is a \u201cdis\u00adas\u00adter with his cred\u00adit cards\u201d has rip\u00adpled through the press \u2026 Con\u00adtin\u00adue read\u00ading