There are times when you read what someone else has to say, and you wonder whether you’re on the same planet as that person. Or even in the same galaxy.
That was my reaction when I read the transcript posted by the Wall Street Journal of its meeting Tuesday with Donald Trump in the Oval Office.
I’m talking about the part involving the Federal Reserve, which made me wonder whether Trump and I live in the same economic universe. My conclusion is that we don’t.
Let me show you why, taking only three of the many strange things that Trump had to say about the Fed.
We know, of course, that Trump has been using the Fed as a whipping boy to explain the recent decline in the stock market, which is down considerably from its highs a few weeks ago.
If all Trump did in the interview was repeat his now-routine Fed bashing — he takes credit for any economic successes but blames the Fed for any problems — I wouldn’t be writing this column.
But he went way beyond that, as you will see if you read the transcript.
One of the things that struck me as utterly bizarre was Trump’s talking about how Barack Obama got a much better deal from the Fed than he’s gotten. “I’m very unhappy with the Fed,” Trump said, “because Obama had zero interest rates and I have almost normalized . . . interest rates.” He returned to the complaint that “Obama had an unfair advantage” several times.
Hello? Obama — disclosure: I wasn’t exactly a fan — took office in 2009 amid a financial panic. Stock markets in the United States were plummeting, unemployment was rising rapidly, and the economy was weakening before your eyes. Trump, by contrast, took office with stock markets high, unemployment low and the economy on a roll.
I think that anyone in his or her right mind, economically speaking, would prefer what Trump inherited, with what are now 2.25 percent short-term rates, to what Obama inherited, with short-term rates of approximately zero.
Then there’s what Trump had to say about how the Fed has supposedly stopped him from beginning to pay off our national debt.
“I would like to have interest rates low, and I’d like to pay off debt,” Trump said. “But you can’t pay off debt when [Fed Chairman Jerome H. Powell] keeps raising interest rates. . . . I’d like to let all of that interest that he’s raising pay off debt, and we could do that. We’d pay off a lot of debt.”
Huh? In fact, as any dispassionate person would tell you, our debt and our budget deficit are both rising rapidly not because the Fed is boosting short-term rates, which are the only rates the Fed controls. The debt and deficit are rising in good part because the huge corporate tax cuts in the 2017 tax bill that Trump and the Republicans pushed through have reduced federal income tax revenue by hundreds of billions of dollars.
Then there’s my favorite part, which is a follow-up of sorts to Trump’s previous claims that he knows more about economic matters than the Fed does.
“I’m just telling you that I’ve done very well with instinct,” he said in his Journal interview. “My instinct is that [Powell] is raising [rates] too much.”
But let me ask you this. If Trump has such great economic instincts, how come companies under his control that bought and built New Jersey casinos, in what people told him was a saturated, overpriced market, filed five Chapter 11 bankruptcies? Not to mention a sixth bankruptcy involving the Plaza Hotel in New York City, which he bought with borrowed money during a market frenzy?
In fact, Trump’s economic successes really began when he became a reality TV star on “The Apprentice.” That gave him national exposure, as opposed to the local exposure he’d had in New York, where he wasn’t all that big a deal.
Back in the day, the fact that Trump lived in an alternate financial universe didn’t much matter to anyone other than Trump. Now, it matters to all of us. Which is why I’ve taken you through this exercise. And why I thank the Journal for making the transcript available to subscribers.