Trump to Fed: No More Easing Because Dollar Is ‘Going to Hell’

According to Donald Trump, the Federal Reserve should continue to hold off on any monetary-easing and let the economy recover on its own. Donald Trump believes that the "dollar is going to hell" and the artificial stimulus has been doing nothing to help the economy.

By Forrest Jones
Tuesday, 17 Jul 2012 09:42 AM
Money News

The Federal Reserve should hold off on unleashing fresh monetary-stimulus measures and let the economy recover on its own, real estate mogul Donald Trump said.

Weak jobs reports, disappointing consumer-sentiment figures and soft retail sales, among other indicators, have fueled expectations the Fed will feel obliged to stimulate the economy to steer it away from deflationary decline and contraction and toward growth and hiring.

The Fed's tool of choice in the past has been bond buybacks from banks, known as quantitative easing, which pump massive injections of liquidity into the economy to encourage investing and job creation, but as a side effect, the dollar weakens and inflationary pressures may increase.

The Fed has intervened twice in the past, pumping $2.3 trillion into the economy, but enough is enough, Trump told CNBC.

"The dollar is going to go to hell, we're no longer the great source and lots of things are happening and lots of bad things are happening with the country," Trump said.

"All of this artificial stimulus — it's proven it's done nothing, and we've got to get back on track. We have to get back on track by paying down debt. We're not going to be doing it if [Fed Chairman Ben] Bernanke goes wild."

Fed Chairman Ben Bernanke is due to give his semi-annual testimony before the Senate Banking Committee, and markets are hoping the country's top central banker will indicate whether the Fed favors intervening or not.

Stocks rise when the Fed stimulates, and poor retail sales are stirring up talk the Fed will intervene and juice the economy with a fresh round of easing.

Retail sales contracted 0.5 percent in June, well below market calls for an increase of 2 percent, according to Reuters. It was the first time retail sales had contracted for three consecutive months since 2008.

"I think people have started to re-price more easing coming through from the Fed after the retail sales data," said Brian Kim, currency strategist at RBS Securities in Stamford, Connecticut, Reuters reported.

Some Fed officials have said they favor stimulus, even before poor retail-sales data hit the wire.

"So far data has been coming in weak and I gave a weak forecast myself," Boston Federal Reserve President Eric Rosengren said on Monday, Reuters reported. "I think it's appropriate to have more quantitative easing."

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