 The president said he could halt trade between the United States and countries with which it has a trade deficit if the central bank doesn’t do his bidding.
President Trump threatened on Friday to halt a broad swath of U.S. trade unless the Federal Reserve slashed interest rates, issuing a series of sweeping ultimatums that could prove costly to the economy if he were to carry it out. The Fed is a politically independent institution, and it has long kept rates steady as it tries to tame years of persistent inflation. Mr. Trump’s demand risked undermining that work, all the while choking off commerce in ways that could harm American families and businesses at the same time. The president delivered his threat on a day that began on a positive note for the White House. Newly released hiring figures showed that employers added about 162,000 jobs in August, evincing a labor market that has successfully weathered a range of shocks under Mr. Trump, from the global trade war he commenced last year to the war with Iran that has intensified recently. On social media, Mr. Trump heralded that development, before seizing on the employment figures to issue new demands. He called on the Fed to reduce borrowing costs to “the LOWEST RATE of any country in the World.” Mr. Trump insisted on Friday that the U.S. economy was “STRONG” and, as a result, could afford to reduce rates immediately. Such a move could actually worsen inflation, but Mr. Trump did not acknowledge the risk as he signalled he could interrupt global trade. “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged ‘the President’ has an absolute right to do,” Mr. Trump said. The president doubled down during a brief appearance in the Oval Office, where he lamented that other countries had lower interest rates than the United States. “If we don’t trade with them, they don’t have any money to pay the bills,” he said. “And, if we’re not going to be treated properly, we’re going to do that. And all we have to do to cut our trade deficit with a country is not trade with them.” “We could do tremendous good for ourselves by just not trading with countries,” Mr. Trump said Friday. He also mused aloud that the United States could “end all trade with Canada,” before pivoting back to his attack on the Fed. “What I’m saying very simply is that, we should be paying the lowest interest rate in the world.” [Thank you for your attention to this matter! Economics 101] JKA The New York Times
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 The Pentagon has entered a period of profound institutional turmoil. A crisis of leadership at home converges with a crisis of capacity abroad, Axios' Zachary Basu writes.
Six months into the Iran war, Pete Hegseth presides over a Pentagon with fewer senior leaders, fewer critical weapons and less public accountability than at any point in President Trump's two terms. The most striking departure yet came Monday with the resignation of Army Secretary Dan Driscoll, Vice President Vance's close friend and Yale Law classmate, once viewed as a potential successor to Hegseth himself. Driscoll, a rising star tapped by Trump for sensitive diplomacy in Ukraine, is stepping down after months of clashes with Hegseth over the Army's leadership and modernisation. Driscoll's exit, following Hegseth's firing of Army chief Gen. Randy George last spring, leaves the service without Senate-confirmed civilian or uniformed leadership in the midst of the Iran war. Hegseth has fired or forced out senior officers across nearly every service, including the chairman of the Joint Chiefs, the Navy's top admiral and the Army chief of staff. The Washington Post counts more than two dozen top officers dismissed under Hegseth, who has restructured nearly the entire Joint Chiefs. Only the Marine Corps and Space Force chiefs Hegseth inherited are still serving. The New York Times reports that Hegseth has personally removed at least 45 officers from promotion lists this year. An "extraordinary" intervention in a system traditionally insulated from political leadership. NBC News reported yesterday that Hegseth has blocked more promotions in recent weeks, including more than a dozen Black, Hispanic or female officers across the services. The cumulative effect is a thinner senior command at the precise moment the Iran war is testing the limits of what the U.S. military can sustain. The Washington Post reports that the commanders overseeing Europe, the Pacific and Latin America, along with the replacement top admiral, formally objected to extending forces for the Iran war. They warned that prolonged deployments are degrading their ability to confront threats elsewhere. Admiral Daryl Caudle, chief of Naval Operations, told Hegseth that barely one-quarter of U.S. destroyers are ready to deploy, according to the Post. The only dedicated Pacific carrier has also been diverted to the Middle East. The war has consumed 65% of the U.S. Patriot interceptor inventory, squeezing supplies for NATO and forcing the Pentagon to preserve weapons that would also be critical in a war with China. (AP) The Atlantic reports, During a White House meeting last week, Army Secretary Dan Driscoll brought his concerns about the future of the Army under Defense Secretary Pete Hegseth directly to President Trump, a sign of how far tensions between the two Pentagon leaders had escalated, a measure of the dysfunction inside the Pentagon. |
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