Proving once again that the endorsements of celebrities and sports heroes is more important than politicians, Donald Trump dominated the Indiana primary, prompting the official end of Ted Cruz’s and John Kasich’s campaigns.

While his victory means the Trump-brand headache continues in the halls of power in Washington DC, there is perhaps no area of the country that has more to worry from a President Donald Trump than Wall Street. In fact, in spite of the rhetoric from Bernie Sanders, the other Indiana victor, Wall Street would likely rather Feel the Bern than Make America Great Again.

After all, for all the time Sanders has spent (fairly) railing against the Too Big to Fail Banks, he has never come close to diagnosing the core of their strength: the Federal Reserve and the protections they receive from the Federal government. Instead, the Bernie Sanders interpretation of the financial crisis that has all the nuance of the theatrical version of Facebook meme: big banks got greedy and government didn’t do enough to stop it, with policy prescriptions that match.

Lost in this cartoonish narrative are some important details. The Senator from Vermont ignores the corruption and moral hazard of government housing giants Fannie Mae and Freddie Mac. He overlooks the consequences of the Community Reinvestment Act. He has no interest in acknowledging that it was government regulators and their chosen rating agencies that downplayed the risk of bad mortgages. Most importantly, he fails to acknowledge that it was the actions of the Greenspan Fed that directly inflated the devastating housing bubble.

While it is true that a sound grasp of history isn’t necessary to be a scourge of Wall Street, Sanders has already demonstrated how his historical misunderstanding has a direct impact on his approach to financial reform.

For example, Sanders voted for the Dodd-Frank Act. While the legislation, ironically named after two Congressmen who personally bear some responsibility for the financial crisis, was sold as President Obama’s solution to solve the problem of Too Big to Fail, in practice it has had the effect of further consolidating the banking industry, limiting consumer choice and making the big banks bigger. The consequences off Dodd-Frank have been wide ranging, including causing the rise in ATM fees that Sanders occasionally likes to rail against.

Further, while Sanders has been an occasional supporter of auditing the Federal Reserve, his leading criticism of the Fed has been that it hasn’t done enough due to misplaced concerns over inflation. As C. Jay Engel explained in his takedown of Sanders’s New York Times’s op-ed, the senator demonstrates the fact that being “anti-Fed” is not enough:”

Sanders’s entire plan rests on the idea that what the economy needs is an influx of new lending: he wants the Fed to encourage — instead of discourage — commercial banks to increase their extension of loans. But this is completely the wrong model. What is needed is not more cheap debt. Rather, what is needed is improvement in capital formulation. What is needed is deleveraging and liquidation.
Ironically, it is this policy of low interest rates that has helped make Wall Street richer at the expense of savers and people who can’t afford to enter the Wall Street casino. Also, the Cantillion effects from the money that has been created during quantitative easing means that biggest benefactors of the Fed have been Wall Street firms and the areas of the economy that they have invested in, such as Silicon Valley (explaining in part the sky high housing prices around NYC and San Francisco.) In fact, our monetary policy has been one of the leading causes of the income inequality that has been so key to Bernie Sanders’s electoral appeal.

In contrast, Donald Trump has correctly identified the consequences of the Fed’s historically low interest rates:

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.] 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.
Further, he has correctly identified that while land developers like himself benefit from the current climate, the country as a whole suffers from the specter of growing bubbles:

Right now, we have the low rates. In terms of real estate, if I want to develop … from that standpoint I like low interest rates. From the country’s standpoint, I’m just not sure it’s a very good thing, because I really do believe we’re creating a bubble.
The Donald has even praised the gold standard, telling a Pittsburgh television station that:

In some ways I like the gold standard and there is something very nice about the gold standard. … We used to have a very solid country because it was based on a gold standard and we do not have that anymore.
The argument here is not that Donald Trump is Ron Paul. Considering his views on trade, crony capitalism, and a number of other vital positions, it is clear he could would be well served from a thorough reading of Liberty Defined.

But by calling out the Fed’s shenanigans and demonstrating a much firmer grasp of the threat it poses to American families, Donald Trump has articulated a better understanding of the true causes of Sanders’s “rigged economy.” A challenge to the monetary policy status quo is a much bigger threat to Wall Street than anything Sanders has proposed.


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