Could the Fed ‘Fire’ President Trump?
Editorial of The New York Sun
Could the Fed Fire President Trump? “You know, Mr. Chairman,” says the caption on a cartoon of the Federal Reserve, “he can’t fire you but you could fire him.” The cartoon appears in the latest number of Grant’s Interest Rate Observer. It, and the lead article in Grant’s, illuminate what is, by our lights, the most important story of the year — that the future of the Trump presidency may be hostage less to Speaker Pelosi & Co. than to Chairman Powell and the blasted bond market. What seems to have ignited Grant’s on this particular fortnight is an astonishing spike, back in September, in the overnight “repo” rate under which the Fed lends overnight to commercial banks. Grant’s quotes what it calls a “must read” column by Karen Petrou in the Financial Times. Ms. Petrou reckons that by the end of January the Fed is likely to have committed $11.5 trillion in “gross cumulative support” to the market in these repo loans.