🚨Why do the U.S. President and the Fed Chair always clash over interest rate cuts?

Since Trump took office, he has basically wanted to rub Powell's face in the ground, with only one demand —

The Fed should massively cut interest rates from around 4.25% now to 1%.

But old Mr. Powell is not an ordinary person; under pressure, he remains calm and collected, neither resigning nor cutting interest rates.

In fact, looking at past presidents and Fed chairs, there are clear differences of opinion on the topic of "interest rate cuts." We can first review a period of the Fed's dark history —

In the early 1970s, then U.S. President Nixon was very anxious, as the U.S. economy was deeply mired in stagflation, with an unemployment rate as high as 6.1% and inflation exceeding 5.8%.

Under normal circumstances, it is basically as difficult as climbing to the sky to seek re-election with this score. The variables of the complex plan are too large, and there is no time to wait, so only a strong measure can be taken - forcing the Fed to quickly cut interest rates to create a short-term illusion of prosperity to assist in the election.

So during that time, Nixon did the same things as Trump, meeting up to 17 times each quarter, each time with high intensity and openly coercing Fed Chairman Burns, for example:

"If we lose the election, this will be the last time Washington is governed by conservatives."
publicly refuted Burns' technical analysis, saying that what he said was all nonsense;
Warning: Burns has no authority to nominate Fed board candidates;

Ultimately, Burns chose to compromise, and in 1971 the Fed sharply cut interest rates from 5% to 3.5%, while the growth rate of M1 money supply soared to a post-World War II peak of 8.4%. Nixon successfully achieved re-election as he wished, and in 1972 became the first sitting U.S. president to visit China.

But Burns was nailed to the pillar of shame —

After a brief prosperity, coupled with the oil crisis, domestic inflation in the United States exploded, the dollar index plummeted, gold prices soared, and the U.S. economy collapsed. As a result, Burns carried a lifetime of blame, and his name became synonymous with the "loss of independence of the central bank."

Later generations evaluated Burns like this: he survived, but his reputation was ruined; he kept his position, but lost history.

So you can see that after the passage of the "Great American Rescue Plan", the Trump administration is going to expand the debt by several trillion dollars, and with the midterm elections next year, that's why the understanding king is so eager to cut interest rates.

But Powell is just as stubborn as a turtle eating a scale, refusing to be the second Burns.

I'm out, do whatever you want; but as long as I'm still in power, I must ensure that I won't leave a bad legacy!

There are still 10 months until the end of the term, and now the understanding king is starting to change strategies, directing the criticism towards Powell personally. It feels like facing a rogue understanding king, and it's only a matter of time before the old man compromises!

Image from: Jinshi