President Trump would never even think of doing that!
So we've heard again and again, from Trump allies apparently trying to pre-commit the president to not doing something stupid or dangerous that he's obviously inclined to do.
They said it when they claimed, way back when, that Trump had no interest in starting any trade wars. They said it when Trump was contemplating defying a Supreme Court ruling on the census citizenship question. And they said it when Trump made his supposedly unintentionally racist comments about four congresswomen of color, when they wanted to bridle his itchy Twitter finger.
Each time, right after such pronouncements, Trump either immediately did the stupid or dangerous thing, or threatened to do it soon.
With his latest threats to weaken the dollar, we're seeing this pattern once again.
Trump, obsessed by the prospect that someone somewhere might be cheating in a way he hasn't yet tried, has lately been complaining about perceived currency manipulation. The dollar is strong, the president believes, because other countries are deliberately devaluing their currencies to make U.S. exports more expensive, and thereby foil his trade agenda.
It’s true that the dollar has been rallying, and that this makes U.S.-made products look less competitive to foreign buyers. But the dollar has been strengthening relative to other major currencies primarily because the U.S. economy looks much stronger than other major economies right now. Which is a comparison Trump usually touts.
While U.S. economic growth has disappointed lately, Chinese growth just hit its slowest pace in almost three decades, in part because of Trump's trade war. Meanwhile, Britain and the European Union are going through a messy, high-risk divorce, likely to inflict huge damage on both economies, and an Italian debt crisis looms. Investing in either pound- or euro-denominated assets looks unattractive. Understandably, investors flock to greenbacks.
Trump's own loose fiscal policies are also likely contributing to the dollar's strength, at least if you believe that the tax cuts are working as Trump's supporters claim. Not only are they goosing the economy; they also were (at least theoretically) designed to attract more foreign investment here, and foreigners generally need to buy dollars to make those investments.
So what's a president to do?
He could bully the Federal Reserve Board into cutting interest rates, which would have the effect of weakening the dollar. Lo and behold, in defiance of a multi-decade-long policy for the president to respect the central bank's independence, Trump has been attempting exactly this. Hence his threats to fire the Fed chair, an action that would likely cause worldwide financial panic.
Also hence, of course, all those assurances from his advisers that Trump would never even entertain firing the Fed chair.
Incidentally, the Fed is expected to cut rates at its meeting later this week, which Fed officials suggest is not an acquiescence to Trump's bullying so much as a response to risks from abroad and the escalating trade wars.
Even that expected rate cut, however, apparently will not be enough to sate Trump's appetite for devaluation. So, last week, the president convened a meeting of his economic advisers to brainstorm whether and how the administration could take its own action to devalue the dollar.
It's not clear what Trump's Treasury might do. It could sell off the limited stash of dollar-denominated assets from its Exchange Stabilization Fund. Or there's another mechanism so dangerous that I'm almost nervous to mention it in a national newspaper, in case Trump hadn't already thought of it: He could threaten to default on our debt. It's something Trump had earlier proposed for completely unrelated reasons, but it would certainly be an effective way to get investors to dump U.S. (dollar-denominated) bonds.
In any case, shortly after that meeting, White House advisers were quick to assure journalists that Trump had unambiguously sided against massive currency manipulation. White House National Economic Council Director Larry Kudlow even went on CNBC and declared that Trump had "ruled out" a currency intervention.
The White House valued a "steady, reliable, dependable dollar," Kudlow said Friday, echoing language that Trump's Fed pick Judy Shelton has used while inveighing against the central bank's supposed currency "debasement."
Predictably, mere hours after Kudlow's comments, Trump told reporters the opposite: "I could do that in two seconds if I want to," Trump said. "I didn't say I'm not going to do something."
If Kudlow was trying to hem Trump in, it clearly didn't work. Which should have been expected. Trump has never prized consistency as a virtue. And even if he did, he doesn't understand the underlying economic issues well enough to achieve it.
Catherine Rampell
Catherine Rampell’s email address is crampell@washpost.com. Follow her on Twitter, @crampell.
