Trump Escalates Attack on Fed Chief    08/24 09:03

   President Donald Trump launched a furious and highly personal Twitter attack 
Friday against the Federal Reserve and Chairman Jerome Powell, fuming that the 
Fed once more "did NOTHING!" and wondering who is "our bigger enemy" -- Powell 
or China's leader.

   WASHINGTON (AP) -- President Donald Trump launched a furious and highly 
personal Twitter attack Friday against the Federal Reserve and Chairman Jerome 
Powell, fuming that the Fed once more "did NOTHING!" and wondering who is "our 
bigger enemy" --- Powell or China's leader.

   The outburst came after Powell, speaking to central bankers in Jackson Hole, 
Wyoming, gave vague assurances that the Fed "will act as appropriate" to 
sustain the nation's economic expansion. While the phrasing was widely seen as 
meaning interest rate cuts, he offered no hint of whether or how many 
reductions might be coming the rest of the year.

   Powell had barely finished speaking before Trump escalated his criticism of 
the Fed, which he has repeatedly accused of keeping rates too high. For months, 
the president has ridiculed Powell, the man he picked to lead the Fed.

   "As usual, the Fed did NOTHING!" Trump tweeted, adding, "We have a very 
strong dollar and a very weak Fed." He went further by saying: "My only 
question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?" --- a 
reference to China's President Xi Jinping. Trump later corrected the name 
spelling.

   Asked by reporters late Friday if he wanted Powell to resign, Trump 
responded, "Let me put it this way: If he did I wouldn't stop him."

   Powell has said he has no intention of resigning before his four-year term 
is up.

   While the "enemy" remark appeared to elevate Trump's attacks on the Fed to a 
new level, Fed officials meeting in Jackson Hole sought to play down the 
comment.

   Fed Vice Chairman Richard Clarida said he had been too busy attending the 
conference to even look at Trump's tweets. He said the Fed planned to keep 
doing its job of pursuing low unemployment and stable prices in spite of 
Trump's criticism.

   "This is an institution created by the Congress more than 100 years ago," 
Clarida said in a CNBC interview. "We have a very clear assignment from the 
Congress. ... We are just focusing on doing our job."

   Many private economists have expressed growing alarm about Trump's criticism 
of the Fed as an intrusion on its independence and a threat to its credibility.

   David Jones, a leading historian of the Federal Reserve, said the "enemy" 
remark set an unfortunate precedent.

   "This challenges something that has been sacred in the history of the 
world's most successful central bank," said Jones, an economist and author of 
four books on the Fed. "The central banks that have been successful are those 
which are independent of political pressures and were free to make the 
appropriate monetary policy."

   Powell's speech came on a day of fast-moving events in the financial world 
and a sharp escalation in the trade dispute with China that threatens to tip a 
weakening global economy into recession.

   China announced a new round of tariffs on U.S. products earlier in the day, 
and Trump responded with higher duties on certain Chinese goods.

   He also declared on Twitter that he had "hereby ordered" American companies 
with operations in China "to immediately start looking for" other places in 
which to do business.

   "Our Country has lost, stupidly, Trillions of Dollars with China over many 
years," he said. "They have stolen our Intellectual Property at a rate of 
Hundreds of Billions of Dollars a year, & they want to continue. I won't let 
that happen!"

   Markets in the U.S., Asia and Europe tumbled, with the Dow Jones Industrial 
Average dropping 623 points.

   In his speech in Jackson Hole, Powell said Trump's trade wars have 
complicated the Fed's ability to set interest rates and have contributed to a 
global economic slowdown.

   Last month, the Fed cut rates for the first time in a decade, and financial 
markets appear to be expecting more such steps this year. Trump has argued for 
a full percentage-point reduction in the coming months --- a step most 
economists consider excessive.

   The president contends that lower rates in other countries have caused the 
dollar to rise in value and thereby hurt U.S. export sales. Earlier in the 
week, he told reporters, "If the Fed would do its job, you would see a burst of 
growth like you have never seen before."

   Powell has said that the White House criticism has had no effect on the 
Fed's deliberations over interest rate policy.

   Trump has insisted in the past that he could fire Powell if he wanted to, an 
assertion that most experts regard as dubious at best. No Fed chairman has ever 
been fired by a president, although in 1979, then-President Jimmy Carter wanted 
to make a change at the Fed --- so he offered Fed Chairman G. William Miller 
the job of Treasury secretary so he could nominate Paul Volcker as his new Fed 
chairman.

   The law creating the Fed says its officials and those of other independent 
agencies can be "removed for cause" by a president. While that issue has never 
arisen in regard to a Fed official, the courts ruled decades ago that "for 
cause" means more than a policy disagreement with a president.


(KR)