President Donald Trump's move to criticize the Federal Reserve is almost without precedent in a nation that places a high priority on the independence of monetary policy.
Almost all of Trump's predecessors steered clear of Fed critiques in the interest of making sure that interest rates were set to whatever was best for the economy and not to boost anyone's political fortunes.
The Trump administration, of course, has been anything but typical, and the Trump comments, if anything, were consistent with a president who cares little for convention and is willing to speak his mind on virtually anything.
“Somebody would say, ‘Oh, maybe you shouldn’t say that as president,'" Trump said in an interview with CNBC. "I couldn’t care less what they say, because my views haven’t changed.”
The closest analog with Trump's apparent efforts to influence interest rates — he prefers the Fed keep them low — was how former President Richard Nixon arm-twisted Arthur Burns to maintain loose monetary policy as Nixon sought re-election in 1972.
"I don’t want to go out of town fast,” Nixon told Burns in one conversation, according to tapes of conversations between the two. Concerns about too much liquidity in the economy were "just bulls---," the president added.
That didn't work out particularly well: As the 1970s economy continued to grow, inflation took root thanks to low rates and remained stubbornly in place until the early 1980s, when then-Fed Chair Paul Volcker had to tighten policy sharply. That in turn pushed the economy into recession but also helped slay the inflation problem and paved the way for the most powerful growth the economy had seen in the post-World War II era.
