Trump makes the most powerful woman in the world “lame duck”
Sven for the standards of a Donald Trump, the recent action of the US president is particularly brutal. Immediately before the really important appearance of the American banknote Janet Yellen before the US Congress Trump obviously its position in position.
According to reports of the usually well-informed political magazine “Politico”, Trumps economic consultant Gary Cohn had the best prospect of inheriting Yellen already after the first term of office.
The magazine referred to several persons from the Presidium, the Ministry of Finance and the Congress who are familiar with the process. “Gary will, if he wants, and I believe he wants it,” a not-named Republican was quoted. Yellens term ends in February next year.
Bad time to weaken Yellens authority
Such an operation would be extremely unusual for the history of the US banknote. With a few exceptions, the lords of money were at the top of two heads. Alan Greenspan accompanied the office almost 20 years. The time is also tricky. Not only the appearance of Yellen before the congress becomes a side issue.
Globally, the central bankers are delighted to find a way out of the most extreme interest rate policy without provoking a crash on the markets. After all, since the financial crisis, the monetary authorities have pumped 13 trillion dollars into the markets. This corresponds to 17 per cent of global economic output.
This money must now be withdrawn from circulation without jeopardizing the global economy. A US banknote on demand is hardly trustworthy. With the launch of a potential successor, Yellen has almost become a “lame duck”. Now the entire financial world will rather speculate about the monetary policy of Cohn, than to follow Yellens.
The post of Fed Chairman almost as important as that of the US president
The head of the US banknote is by far the most important office in the financial world. And since the markets have become more and more important for the world economy over the past decades, the head of the American bank is one of the most powerful players after the US president and perhaps a few heads of state and government.
The respective gentlemen and ladies of money have put their stamp on the economic period. After the Second World War William McChesney, Arthur Burns, and William Miller were ardent political strategists who provided Washington and the US economy with cheap money.
That changed with Paul Volcker, who found a stagflation, a US economy that stagnated at the same time high inflation. He gave new confidence in the US banknotes as money guards. Of course he had to raise interest rates to counter inflation, and pushed America into a recession.
Trump has already changed his mind about Yellen several times
He was followed by Alan Greenspan, who turned into a bust of the markets and countered any slump in currencies on Wall Street with interest rates. Successor Ben Bernanke, on the other hand, had to carry out the clearing-up of this policy. Because the implicit Greenspan insurance, the famous Greenspan put, had provoked the market participants to ever riskier betting. In the financial crisis of 2008, the system collapsed.
Bernanke’s strategy: He not only lowered interest rates, but also pumped money into the cycle. In his term, the balance sheet of the US banknote expanded from a good $ 800 billion to $ 4.1 trillion, a policy that Yellen now wanted to take back. But it will probably not come to Cohn’s next year.