Another Treasury Gaffe
The record of ineptitude by Bush’s Treasury secretaries continues. Yesterday, Snow said that he’d be “frustrated and concerned” if interest rates didn’t rise next year. For a short list of reasons why it’s really, really bad for Treasury secretaries to make statements about future interest rates, visit Brad DeLong’s blog.
So today it was left to people who understand how the financial markets work to clean up the mess that this statement left in the financial markets, as reported by CNN/Money:
Officials at the Treasury Department and the White House quickly moved to clarify Snow’s remarks, saying they weren’t meant to hint at future Fed policy but were just musings on the typical relationship between economic growth and interest rates.
This statement settled things on the financial markets, but some permanent damage has been done.
What really concerns me about this, however, is that these sorts of instances reflect more than just inept media management. They really betray a fundamental lack of understanding of the relationship between economic policy making and the financial markets. So once again, I’m forced to conclude that the Bush White House really doesn’t know what it’s doing when it comes to economics.