President Donald Trump gestures with Jerome Powell at the White House in Washington, D.C., November 2, 2017. (Carlos Barria/Reuters)

“Who is our bigger enemy,” President Trump asked, “Jay Powell or Chairman Xi?”

What if I told you it was . . . [dramatic pause] . . . neither?

(First, a little rhetorical criticism: It would have been a better tweet if he had written “Chairman Powell or Chairman Xi,” for the parallelism.)


Jay Powell is the chairman of the Federal Reserve. He was put there by Donald Trump, a notable social-media figure who serves as president of these United States in his spare time. Xi Jinping is the Communist boss in China. He’s the guy on the other side of that “great, and easy to win!” trade war that Trump has started, which could end up inducing a presidency-ending recession. Trump has miscalculated badly vis-à-vis China, and he wants the Fed to bail him out, but the Fed’s mandate is dual rather than triune: It is to work toward price stability and low unemployment, not price stability, low unemployment, and Donald J. Trump’s political convenience.

China is not our enemy, and it is a mistake to think of China as our enemy. China is our rival. You do not have normal diplomatic relations with an enemy. China certainly is a potential enemy, and our military and intelligence operations do well to keep that possibility in mind. But we are not at war with China. We are in a destructive tit-for-tat contest of tariffs and trade barriers, which already are leaving both countries economically worse off. There difference is that a recession in the United States might mean President Elizabeth Warren, whereas a real economic disturbance in China could mean blood in the streets — and not just in the so-called People’s Republic.


Trump promised excitement. Here it is.


If I were designing the United States from the ground up like a kid with an ant farm, I don’t think I’d include a central bank like the Fed or a national bank guarantor like the FDIC. But we have a Fed, and an FDIC, and other institutions of that nature, and the thing about them is: They work pretty well. I was not a supporter of the bailouts associated with the financial crisis, but the institutions we have executed the program that was put into place pretty well — and pretty well is nothing to sneeze at in government. And certainly not in the U.S. government. You can have a long and happy life on pretty well.

One of the problems with populists — with Trump-style populists but also with Comrade Muppet and the rest of those ghastly knuckle-draggers on the left — is that they are anti-institutionalists. Show them a NAFTA and they want to set it on fire, show them a Federal Reserve System and they’ll wonder why it can’t stand on its head or ride a unicycle.


For Trump, it’s all swamp. And there is much that is in need of reform. But the Fed works pretty well, in part because we do not (usually) ask it to do too many different things.


At the same time: We have a lot of longstanding and productive business practices based in part on certain trade relations with China. We should not be under any illusions about what Xi et al. want, but neither should we impoverish ourselves unnecessarily in a fit of populist pique. “But we have to do something!” No, no we don’t. And we certainly don’t have to do something dumb and destructive.

H. L. Mencken famously wrote: “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” Trump was elected to be a disruptor. Warren, Sanders, and the rest of the Left are promising disruption, too. And the American people seem eager for disruption of one kind or another.

Pray that we do not get too much of what we are asking for too quickly.