Logic dictates Trump may have a point about the Fed making decisions based on political imperatives

Did Federal Reserve engineer market crash to hurt Trump?

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By Marc Patrone —— Bio and Archives September 14, 2016
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The current stock market downturn appears timed to help the Democrat Party by scaring investors into rejecting Donald Trump on the grounds he’d trigger a crash if the Republicans win the White House in November.
The Dow Jones fell again Tuesday this time over 250 points due in part, to fears of a rate hike at the Fed policy meeting next week.  These market jitters may well have been calculated for effect, and engineered by Federal Reserve Chair Janet Yellen in a bid to save her job from Trump who has vowed to get rid of her if he’s elected.
Trump has been harshly critical of Yellen, recently telling CNBC that far from being independent, Yellen takes her marching orders directly from President Obama.  He says she “should be ashamed of herself…because she’s obviously political and doing what Obama wants her to do.”  He says she’s kept rates artificially low to prop up stock markets thereby making her boss look good.  If she’s capable of that, she’s certainly capable of manipulating markets to make a potential upstart like Trump look dangerous.  Talk of hiking rates has spooked investors and could serve the Democrats politically by raising the specter of a Trump-inspired market crash not unlike the one in 2007-8.

Democrat Party nominee Hillary Clinton has chastised Trump for his criticisms of Yellen, saying, “Words have consequences. Words move markets.”  No one knows that better than the Fed and with an election coming, might think voters could be spooked into supporting the status quo as far as the managing of the economy is concerned.
Some, like billionaire Clinton supporter Mark Cuban have already telegraphed and warned investors that Trump is bad for stocks.  He told Neil Cavuto of Fox Business, “in the event Donald wins, I have no doubt in my mind the market tanks.”  He says investors hate unpredictability, which he claims a Trump presidency would bring.
All this is happening at a time when a rate hike makes almost no sense.  Rates have remained very low through out Obama’s tenure as president.  The Fed normally raises rates when the economy threatens to become overheated, pushing up inflation and thus necessitating the ‘cooling’ effect of higher borrowing costs.  The economy is nowhere near ‘overheating’.  In fact, it’s shown signs of a slowdown with mediocre job creation.
Second quarter GDP, a broad measure of goods and services produced across the U.S., grew at a seasonally adjusted annual rate of 1.2%, well below the 2.6% growth predicted by economists.  Obama will almost certainly become the first president since Hoover not to serve a single year in office when real GDP growth was at least 3%.  Given all that, why would the fed be sending signals that a rate hike might be warranted now?  Why indeed.
Logic dictates Trump may have a point about the Fed making decisions based on political imperatives.  Yellen and her friends in the Democrat party may well see a timely stock market mini-crash as just what the doctor ordered to cure Hillary Clinton’s falling poll numbers, and raise fresh concerns about Trump’s handling of the economy.  If so, shame on her indeed.