MW Trump attacking Fed Chair Jerome Powell is a public relations ploy - and it's working

By Brett Arends

And that's one reason why he probably won't try to fire Powell

President Donald Trump is a genius.

There, I said it.

OK, maybe he's a genius of a type you wouldn't want to emulate. Maybe he's a genius you hate. Maybe, like Rocky's opponent Apollo Creed, he is just a master of disaster. You make the call.

But he's an absolute genius when it comes to public relations, propaganda and manipulating public opinion. As his latest shock-and-awe campaign against Federal Reserve Chair Jerome Powell shows.

Trump, having begun the decline in the U.S. dollar that he wants, and having possibly caused a recession that he may also have wanted, is now engaged in a brilliant campaign to blame it all on somebody else.

He can hardly blame anyone in the administration, as he appointed them all. He can't blame the House of Representatives or the Senate, both of which are controlled by his party. He can't blame the Supreme Court, as it has a clear and unambiguous conservative majority. He can't really blame foreign countries, or he'd look weak. It's only a couple of weeks since he declared a trade war on them, after all.

But every "populist" needs a clear enemy, and Trump has found his: Powell (who, incidentally, was appointed to his job in 2017 by that well-known agent of the Deep State, President, er, Donald J. Trump).

Trump has attacked Powell for failing to cut interest rates shortly after the president's "liberation day" tariffs helped liberate a generation of Americans from a chunk of their retirement savings. He attacked Powell again soon after. And he is attacking Powell again this week, sending the dollar, the stock and the bond markets all into a tailspin.

It's the old tactic: Create a message so simple anyone can understand it, then just repeat it - over and over and over again.

The U.S. dollar DXY has fallen about 6% against international currencies since Trump's "liberation day." It has fallen 4% against the euro, 7% against the Swiss franc and about 10% against the most international currency, gold bullion. It has fallen by about 3% against the Mexican peso. Fears - and "leaks" - that Trump is looking at ways to fire Powell caused a particularly sharp selloff for the dollar on Monday.

A falling dollar brings some of the benefits of a tariff, with little of the hassle. It makes imports more expensive in the U.S. And it makes our exports cheaper to foreign consumers.

Oh yes, a falling dollar also helps the value of nondollar assets such as certain cryptocurrencies. Great news for, say, any rich family that has big investments in crypto.

You see how this works? Trump gets his economic turmoil. But he avoids the blame.

Trump, helped by his faithful echo chamber in the media, is now crafting a narrative that anything bad that happens in the economy is the fault of the Fed and Powell, not the chaos unleashed on the markets and the economy by the president's tariffs. Whether it plays among the 48.3% of voters who voted against him last November is neither here nor there. It will play among the 49.8% who did, or who want to believe.

The latest daily tracking poll from Rasmussen finds that 35% of the public "strongly approve" of the way Trump is doing his job. OK, so that figure comes from the conservative polling company Rasmussen, so it might be flattering. And it went no lower than 29% even in the middle of the tariff debacle. But it's still a bounce - and an impressive figure, all things considered.

Nothing helps tribalism like having an enemy, whether it's "illegal immigrants" or "Crooked Hillary" or "the Deep State" or "the FAKE NEWS MEDIA" or a "Mexican" federal judge (from Indiana) or "Lying Ted Cruz" or "Lil Marco" or "Low Energy Jeb" or "Sleepy Joe Biden" or "Ron DeSanctimonious" or "the FAILING New York Times" or "Crooked Joe Biden" or "Crazy Kamala," or all the others too numerous to count. Today's enemy is "Mr. Too Late" and "major loser" Jerome Powell, who is apparently killing the U.S. economy by failing to cut short-term interest rates.

Let the record show - this will make no difference to the fanatics who will write in, naturally, but I like to throw it in anyway - that I was flatly opposed to political pressure on Powell to cut rates during the Biden administration, as well. I urged him not to cut rates last August and September, when liberal Democrats were asking him to. I am hoping he won't do it now, either.

It was the Fed's foolish decision to cut short-term rates by half a point last September that caused it to lose control of the bond market. (Check out this chart. The yield on the 30-year Treasury bond, falling all year, bottomed out the week of the Fed cut at just below 4%. Today it's one-fifth higher.)

Does Trump actually want to fire Powell now? The markets are spooked by the probability, encouraged by alleged "leaks" that Trump's team is looking at options. I have serious doubts - for three reasons.

First, the leaks may well be just another part of the propaganda campaign. When Trump really wants something hidden, like the scale of his April 2 tariffs, they don't seem to leak.

Second, if Trump tried formally to fire Powell this would surely produce a level of mayhem that might even cause some of the 273 Republicans on Capitol Hill to show up and start doing their jobs. As Powell also shows no signs of leaving quietly, and his job has strong legal protections, it's hard to see how this route could end well for the president.

Third, and maybe most important: A populist always needs an enemy to blame. If Trump managed somehow to fire Powell tomorrow and install a puppet as his successor, who would he have left to blame for the economic turmoil that followed? "Crooked Hillary" again? George Soros? Me?

But let me add the obvious caveats. Casey Stengel was right, and we should never make predictions, especially about the future. When it comes to the Trump administration, that goes double.

Meanwhile, one of the ironies of all this turmoil is that by undermining confidence in the Federal Reserve and the dollar, Trump's campaign against Powell is hurting the economy even more - by causing long-term interest rates to rise. The yield on 10-year Treasurys BX: TMUBMUSD10Y has jumped 20 basis points since "liberation day" to 4.4%. The interest rate on a new fixed-rate 30-year mortgage has jumped from 6.7% to 6.9%. Those rates have been moving sharply in recent days as the president has ramped up his attacks on Powell, even though in normal circumstances they'd be falling in reaction to slowing economic growth.

If this causes a recession, will the guys in red hats blame Trump, or will they blame Powell? Have a guess.

-Brett Arends

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 21, 2025 17:00 ET (21:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.