Imagine if President Barack Obama — or God forbid, Bernie Sanders — decided to have the Justice Department open a criminal investigation into the chairman of the Federal Reserve.
What if a Democratic president unilaterally jacked up tariffs and kicked off a trade war with our long-time allies — while getting pantsed in a trade war with the Chinese communist party? What’s worse, imagine if they demanded select privately held companies be part-owned by the U.S. government.
Screams of righteous outrage would echo from the steel and glass caverns of Wall Street. This would fulfill decades of stern warnings rooted in Milton Friedman shibboleths about free trade, free people, and fiscal responsibility.
But all this gets ditched when Donald Trump does it. Instead, titans of American industry abandon long-held free market beliefs and line up to perform ornate acts of supplication to the president. Apparently, if you have an unhinged would-be autocrat in charge of the national economy and so much business is wrapped up in government spending, the right thing to do is kiss his ass in the public square and say it smells like roses, later claiming that you did it all for the shareholders. It is better for the balance sheet to be in the mad king’s good graces.
The counter-example is all too rare — a leader with integrity refusing to blink when faced with bullying threats from the president and his henchmen. Witness Fed Chair Jay Powell — fresh off his worst weekend ever as a Deadhead dealing with Bob Weir’s death as well as a Trumped-up grand jury subpoena — stating the facts simply to camera: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”
Trump’s assault on the independence of the Federal Reserve is just the latest insult to the ideals of free markets. The fact that Wall Street leaders who hyperventilated on even modest moves toward a stronger social safety net like Obamacare would find ways to rationalize their support of Trump’s betrayal of their alleged deepest philosophical beliefs about the economy makes you wonder if they were ever motivated by more than partisan team-ism.
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After all, the last president to deliver a surplus, Bill Clinton, was called an amoral communist by the far-right. Barack Obama was slurred as a Marxist Manchurian candidate for trying to do radical things like increase health care coverage through individual mandates. In Obama’s case, it was literally a Heritage Foundation proposal first advanced by Mitt Romney as governor of Massachusetts. This got twisted into a Tea Party crusade against the government takeover of health care, complete with death panels. These right-wing jihads were often underwritten by billionaires who claimed that the sanctity of free markets was their primary motivation.
Evidently, this is no longer the case.
A friend who works in the hedge fund industry once told me that the stock market could be best understood as a barometer of old rich white men’s feelings. Seen through this lens, Trump can do very little that would negatively impact the markets — as his actions and the reactions of the market to date would indicate. After all, stocks rose the Monday after Trump’s assault on the independence of the Fed.
As a counterpoint, I’d trot out the late Berkshire Hathaway chair Charlie Munger’s wisdom that in the short run, the stock market is a voting machine; in the long run, it’s a weighing machine. By this logic, Trump’s efforts to turn the U.S. economy into a low-tax, high-tariff regime with a side-hustle government-run shakedown operation — in which foreign policy is conducted for business and the U.S. government owns a stake in those businesses — will end badly for everyone involved.
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That’s because in the long run, the weighing machine will matter — just as in the long run, deficits and debts do matter, even if we should all now understand that Republicans only give a damn about deficits and debt when a Democrat is president.
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The ultimate danger Trump is teeing up is a lack of trust in the United States and corresponding increased effort toward replacing the U.S. dollar as the world reserve currency, which would spark an overnight economic apocalypse here at home.
But for now, the music keeps playing and Wall Street keeps dancing while the impartial rule of law in America burns. We are well into the danger zone that self-styled constitutional conservatives warned about for decades in screeds about crony capitalism — but because the actions are coming from a Republican president who rules by fear and greed, most of them are silent. This silence is complicity. Democracy depends on the character of its citizens and leaders. When the crash comes, it will once again be Main Street who gets hurt more than Wall Street, and Republicans will try to pull the patented Trump arsonist-as-a-firefighter routine and hope that Americans will be too angry, divided and distracted to remember who lit the fire and ignored its spread in the first place.
