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Trump: Federal Reserve is the 'only problem our economy has'

FILE - In this June 27, 2012, file photo, Donald Trump stands on the 14th fairway during a pro-am round of the AT&T National golf tournament at Congressional Country Club in Bethesda, Md. On Monday, Dec. 24, 2018 Trump compared the Federal Reserve to a folder who "can't putt." (AP Photo/Patrick Semansky, File)

President Donald Trump says the only problem facing the U.S. economy is the Federal Reserve, which has raised its key short-term rate four times this year given the low unemployment rate and brisk pace of economic growth.

The president is tweeting that Fed officials "don't have a feel for the Market, they don't understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders."

He adds, "The Fed is like a powerful golfer who can't score because he has no touch — he can't putt!"

Trump has argued that the Fed is hindering the economy through its rate increases, which are intended to prevent inflation from rising too high. His major target for criticism has been Jerome Powell, whom the president elevated to chairman early this year.

"He is seeking open warfare on Christmas Eve," said Peter Conti-Brown, a financial historian at the Wharton School of the University of Pennsylvania. "We've never seen anything like this full-blown and full-frontal assault. This is a disaster for the Fed, a disaster for the president and a disaster for the economy."

Trump's attacks amount to an intrusion on the political independence of the Fed, which exists to determine the flow of money based off economic data on employment and inflation.

Fed independence has long been among the bedrocks of the U.S. financial markets. It ensures that central bankers can make politically unpopular decisions, such as fighting high inflation in the 1980s or rescuing banks after the 2008 financial crisis.

Trump's criticismof Powell came amid a tumultuous month on Wall Street. U.S. stocks fell during early trading Monday, extending market losses after its worst week in more than seven years.

The major indexes are down 16 to 26 percent from their autumn highs. Barring huge gains during the upcoming holiday period, this will be the worst December for stocks since 1931.

Investors have grown jittery in recent weeks amid concern that U.S. economic growth will slow and hurt corporate profits. Stoking those concerns are rising interest rates, the U.S.-China trade dispute and signs that economies in Europe and China are slowing.

Coming off a turbulent week of trading on Wall Street, Treasury Secretary Steven Mnuchin on Sunday disclosed calls with the heads of Bank of America, Citigroup, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.

Mnuchin released a statement on the planned Monday meeting with the financial leaders, also known as the president’s Working Group on Financial Markets, or the "Plunge Protection team."

The CEOs all assured the Treasury secretary that they have ample money to finance all their normal operations, even though there haven't been any serious liquidity concerns rattling the market.

Worries about slowing economic growth and rising interest rates saddled the U.S. market with its worst week in more than seven years. Barring a turnaround, stocks are now headed for their single worst month since October 2008, when the market was being battered by the global financial crisis. That crisis was triggered by a reckless lending spree that prompted a taxpayer-backed bailout of several U.S. banks.

But the circumstances are dramatically different now that the U.S. economy has been growing steadily since 2009. Most experts believe the growth will continue in the U.S., but there are signs things are slowing down in Europe and China.

Dysfunction in Washington isn't helping the situation, with a budget impasse between President Donald Trump and Congress triggering a partial U.S. government shutdown that could last into the new year.

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Reporting for this story came from multiple AP sources.




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