Republican presidential front-runner Donald Trump accused Federal Reserve Chairwoman Janet Yellen of keeping interest rates low to prevent President Barack Obama from leaving office under a recession in an interview with the Hill Wednesday. The New York businessman also said the stock market is in another bubble that will soon pop.
“She’s keeping the economy going, barely,” Trump said of Yellen. “The reason they’re keeping the interest rate down is Obama doesn’t want to have a recession-slash-depression during his administration.”
Economists have been watching the Federal Reserve closely in recent months, and expect the agency to raise the interest rate, which has stayed close to zero percent since the 2008 financial crisis. U.S. stocks have risen over the past seven years, but the Fed has explained its low interest rate by citing low inflation and the still uncertain global economy.
“You know who gets hurt the most? People who practice the American dream and did what should have been the right way — the people that went through 40 years of their life and saved a hundred dollars every week [in the bank],” Trump said in the interview. “They worked all their lives to save and now what happens is they’re being forced into an inflated stock market and at some point they’ll get wiped out.”
Trump also took a swipe at the Dodd-Frank Wall Street reform law, saying that it has hurt economic growth in the U.S. and that he would “absolutely” repeal it. Since its passage in 2010, Democrats have heralded Dodd-Frank as a way to give regulators greater ability to hold Wall Street accountable and prevent another economic crisis. But Republicans like Trump and many others argue that the legislation is burdensome and hurts small businesses.
“Under Dodd-Frank, the regulators are running the banks,” Trump said. “The bankers are petrified of the regulators. And the problem is that the banks aren’t loaning money to people who will create jobs.”
While some economists agree with Trump and say the current administration’s policies could lead to another financial situation like when the bubble popped in 1999 and 2000, others say that the U.S. economy is doing well. Billionaire hedge fund manager Jim Chanos recently told CNN he thinks economic improvement has been great in recent years.
"The strides we've made the last eight years are pretty amazing," said Chanos, who is the founder of Kynikos Associates. "Of all the major economies right now, we're the place to be."