For all President Trump’s variations from economic fact as I think I know it, the man is a master of political reality.  Indeed, he may well understand economics better than most in the market.  He clearly knew that the macroeconomic tide was turning just as his trade war fired up.  What’s an astute politician to do?  Find a fall guy distrusted by Republicans, Democrats, independents, populists, and progressives – enter the Fed.

The President’s choice of a dupe is sagacious.  No matter what happens, he can promise the 401(k) gains he touted last night in New Hampshire, and then blame the Fed each time the stock market goes down.  It’s the proverbial – and successful – chicken-in-every-pot strategy with the Trumpian addition of a fox to blame if the pot’s empty next November.

In my memo last week (picked up then by the American Banker) I described America’s longstanding antipathy to economic powerhouses, the Fed very much included. Anti-Fed sentiment is shared by populists and progressives, with most moderates not thinking all that much about the central bank, let alone sharing any of the conspiratorial theories that fascinate both sides of the political spectrum.

Given this political equation, Mr. Trump is running on an open field.  Democratic defense of the Fed framed as a defense of central banking isn’t a sound strategy. The Fed clearly hopes someone will stand up for central-bank independence and the finer points of data-driven monetary policy, but Democrats haven’t mounted the barricades against Mr. Trump’s anti-Fed barrage.  They may not know much about the Fed, but they can sense a losing side when they see it – no one in the presidential sweepstakes is likely to take a political chance on an unpopular institution like the Federal Reserve.

Presidential candidates also of course have plenty of other, more unifying anti-Trump targets in the wake of recent mass shootings, child incarceration, and the President’s propensity for racial and gender slurs.  But a few more days of market turmoil, let alone a financial-market shake-out, and economic policy will move far up the agenda. 

Democrats then face two choices.  As with his trade policy, they can join Sen. Warren and others and do him one better on “economic patriotism.”  Indeed, Sen. Warren has already raised economic policy, calling for a variety of monetary and regulatory changes along with a Fed-owned faster-payment system.  Might she next use assertions about “dark-pool” traders, Wall Street cabals, or other villains to side-step President Trump’s anti-Fed campaign and do him one better by beating up on bankers?  Big-bank plutocrats are if anything even less popular than complacent central bankers, suggesting that the break-em-up campaign could echo Mr. Trump’s lock-her-up mantra as a 2020 theme.

Sen. Sanders is a longstanding ally of Sen. Warren in the break-em-up brigade.  So far, these progressives stand alone, although Sen. Harris has joined Sen. Sanders in using a financial-transaction tax to fund massive social-welfare spending.  Vice President Biden hasn’t yet weighed in on the economic front, preferring a more centrist approach on policy and defending himself against attacks from his left and from President Trump questioning Mr. Biden’s readiness.  Might the Vice President pick up the anti-banker theme to give him a cudgel with which to attack Mr. Trump?

My guess is that he and the other Democrats will soon be forced to reckon with market turmoil, if not still worse.  They can’t pick on the Fed – that target is already full of bullet holes.  Cue the Wall Street “fat cats.”