What If President Trump Takes Over the Fed?

TrumpDuring the ten weeks since he’s moved into the White House, Donald Trump has taken a great deal of unprecedented bold action. Depending on which side of the aisle you favor, you’ll regard his confrontational approach to the presidency as either refreshingly honest or maddening and, perhaps, even risky.
He’s withdrawn U.S. membership from the Trans Pacific Partnership. He’s given the go-ahead for building a wall between Mexico and the U.S. to help limit the flow of illegals and drugs into our country. He’s ordered a freeze on federal hiring except for military, public safety and public health jobs.
He’s ordered a dismantling of the Affordable Care Act, more popularly known as “Obamacare,” named for his predecessor, the creator of the legislation. Again, in defiance of President Obama, he’s reactivated plans to go ahead with the Keystone Pipeline.
And, citing his authority to do so under the U.S. Constitution, the President has issued a ban to travelers from seven countries looking to enter the United States. Nobody can claim that Donald Trump has been a passive or laissez-faire chief executive.
He’s given us every reason to believe he’ll continue to take bold steps where he sees fit during his remaining time in office during the next four or eight years.
Danny Vinik, editor of The Agenda at Politico, presents a scenario in that web publication of how Trump might make more sweeping changes to the Fed than any president since Ronald Reagan.
Almost all presidents have appointed Fed members from the ranks of economists and bankers, but as Vinik points out, Donald Trump routinely surrounds himself with a more unorthodox if not altogether hawkish group of advisors. Many are certainly hawkish in their approach to money and a bevy of them even support a gold standard, a notion not seriously entertained by any president since Herbert Hoover.
Among Trump officials and close supporters who advocate a gold standard are Ben Carson, Secretary of Housing and Urban Development (HUD); Judy Shelton, the director of the Sound Money Project at the Atlas Network, who was on the President’s transition team; John Allison, the former CEO of BB&T Corporation, whom Trump interviewed for treasury secretary in November, and many others.
In other words, there’s a real possibility that these politicians, if given their way, will help re-attach what President Nixon unattached in 1971 – gold and the U.S. dollar. Gold-standard lovers tend to distrust bankers because, among other reasons, they like to print money.
With a gold standard in place, Fed officials will be prevented from printing money, and that last resort of desperate bankers, quantitative easing, will fall by the wayside.
It’s hard to say just how aggressive the President will be about the Fed at this point. But one thing seems clear. The gold-standard sentiments of Trump and his supporters certainly make gold a worthwhile wager for anyone looking for an investment that can simultaneously serve as protection and a source of profit.
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