On Trump and the Fed: On which planet is it?

You sometimes read what someone else has to say and you wonder if you are on the same planet as this person. Or even in the same galaxy.

That was my reaction when I read the Wall Street Journal's transcript of his Tuesday meeting with Donald Trump in the Oval Office.

I'm talking about the part involving the Federal Reserve, which has led me to wonder if Trump and I live in the same economic universe. My conclusion is that we do not do it.

Let me show you why, taking just three of the many strange things Trump had to say about the Fed.

[‘We have a serious problem’: Paul Volcker is worried about something worse than inflation]

We know, of course, that Trump used the Fed as a boost to explain the recent decline in the stock market, which has declined significantly from its highs just a few weeks ago.

If all that Trump had done in the interview was to repeat his now usual Fed strategy – he attributes his merits to any economic success but blames the Fed for any problem – I would not write this column.

But he went well beyond that, as you will see if you read the transcript.

One of the things that seemed quite bizarre was to talk about how Barack Obama got a better deal from the Fed. "I am very unhappy with the Fed," said Trump, "because Obama had zero interest rates and I have almost normalized … interest rates." He went back on the complaint that "Obama had an unfair advantage" on several occasions.

[As Trump goes after central bank, Fed chair builds GOP support]

Hello? Obama – disclosure: I was not exactly a fan – took office in 2009 in a climate of financial panic. In the United States, stock markets were in free fall, unemployment was rising rapidly and the economy was weakening in your eyes. Trump, on the other hand, took office with rising stock markets, low unemployment and a slowing economy.

From an economic point of view, I think that anyone with the right mind would prefer what Trump inherited, with current rates at 2.25% in the short term, what Obama inherited, with short-term rate of about zero.

Then there is what Trump had to say about how the Fed would have prevented him from starting repaying our national debt.

"I would like interest rates to be low and I would like to repay the debt," Trump said. "But you can not pay the debt when [Fed Chairman Jerome Powell] continues to increase interest rates. . . . I would like to leave all the interest he has in repaying his debt, and we could do it. We would pay a lot of debt. "

Huh? In fact, as any impartial person would say, our debt and fiscal deficit are growing rapidly, not because the Fed is raising short-term rates, which are the only rates controlled by the Fed. Debt and the deficit are increasing largely because the huge corporate tax cuts in the 2017 tax bill that Trump and the Republicans have imposed have reduced federal tax revenues. on the income of several hundred billion dollars.

Then there is my favorite part, which follows Trump's earlier claims that he knows more about economic issues than the Fed.

[Dow deepens losses, officially wiping out its 2018 gains]

"I'm just saying that I did very well with instinct," he said in his interview with the Journal. "My instinct is that [Powell] raises [rates] too much."

But let me ask you this. If Trump has such a great economic instinct, how come the companies under his control who bought and built New Jersey casinos in what is said of him was a saturated and overvalued market, filed five bankruptcies under Chapter 11? Not to mention a sixth bankruptcy of the Plaza Hotel in New York, that he bought with borrowed money during a market frenzy?

In fact, Trump's economic success really began when he became a reality TV star in "The Apprentice." This earned him national visibility, as opposed to the local coverage that he had had in New York, where he was not so big. treat.

At the time, the fact that Trump lived in an alternative financial world is of little importance to anyone but Trump. Now it matters to us all. That's why I introduced you to this exercise. And why I thank the Journal for making the transcript accessible to subscribers.