Today President again Donald Trump announced he would demand the Fed drop interest rates immediately (CNBC). This was during a video address to the World Economic Forum.

Chairman Powell has emphasized the need for the Federal Bank to remain independent of politicians and political processes. After all, we are not a socialist nation. Economic stability benefits from the board members purely economic evaluations and the disregard of political flows.

In 1971, then President Richard Nixon pressured the Fed to lower interest rates. According to this Marketplace article Nixon even tried using leverage against chairman Arthur Burns. This was leading up to an election year and Burns caved. The resulting premature lowering of interest rates caused inflation to take off. We call this era Stagflation (Investopedia) or Nixonflation (Econlib).

With the beginning of the oil embargo, the prime lending rate was raised to above 21% to reduce inflation. In 1985 Fed lending rates were still around 8%.

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