Hillary Clinton at the Old State House in Springfield, IL.

Andrew Harnik | AP Photo

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Last week in Atlantic City, Hillary Clinton rebuked Donald Trump as a failed businessman who will wreak havoc on the American economy. “[Trump] promised: ‘I’m going to do for the country what I did to my business,’” the likely Democratic nominee said. “Well, we should believe him — and make sure he never has the chance to bankrupt America the way he bankrupted his businesses.”

Clinton was referring to The Donald’s four declared bankruptcies, putting particular emphasis on his 2009 Atlantic City failure. Although hitting Trump on economic policy is fair game for most, Hillary Clinton is undoubtedly a hypocritical messenger. After all, it was her husband’s destructive economic policies — which she wholeheartedly endorsed — that drove Trump Entertainment Resorts into bankruptcy in the first place.

The Clinton Conundrum

In 2000, President Clinton reappointed dovish Fed chairman Alan Greenspan just years after his low interest rate policies brought about the Dot-com bubble. During his final two terms as Chairman, Greenspan continued to distort market prices and mislead investors by slashing interest rates downwards.

Interest rates are essentially the price of using money — they are supposed to be determined by the free market, not by the gut feelings of bureaucrats. This market signal is important for ensuring that balance and order is maintained in the American economy.

When the Federal Reserve neglects this market price and instead mandates lower interest rates, individuals are misled into spending more than they otherwise would have. Money appears cheap and affordable, so consumers continue spending and taking out loans until the cows come home. Eventually, however, the market recognizes this demand is artificial, resulting in a sharp decline in business activity that often leads to economic crises.

In the years before the Great Recession, Greenspan cut the federal funds rate from 6.5% in August 2000 to a mere 1% in May 2004. This incentivized millions individuals to buy homes, build homes, and invest in the housing industry. The Clinton administration also attempted to increase the national homeownership rate through the promotion of ultra-low down payments and a push for lenders to give mortgage loans to buyers with low incomes. The end result was a subprime mortage crisis, which led to the collapse of thousands of businesses and the loss of 8.7 million jobs.

The Donald’s (Sad!) Misunderstanding

Hillary is right. Trump was one of the millions that was fooled by the Fed’s distorted market signals. He, like most economists, said in 2005:

As long as interest rates stay low and the dollar stays weak — which is an unfortunate situation, but it happens to be good for real estate—then there will be no burst in the current housing bubble.

The Donald based his whole business model off of this assumption. He kept building and building in Atlantic City, just as the government and Federal Reserve were encouraging him to do. And, as Hillary is quick to point out, this judgement error hit him hard just a few years later. After the housing bubble popped, Trump Entertainment Resorts missed a $53.1 million bond interest payment in December 2008. Trump then drastically reduced his stake in the company and proceeded to resign as the organization’s chairman.

Hillary Supported Her Husband’s Policies

You can argue that Hillary — a First Lady with no formal say in economic policy — had nothing to do with her husband’s distorted economy. But, as a New York Senator and presidential candidate in 2007, she recycled her husband’s talking points on the causes of the economic crisis:

Responsibility belongs to mortgage lenders and brokers… Responsibility belongs to the Administration and to regulators… Responsibility belongs to the rating agencies… But finally, responsibility also belongs to Wall Street.

Not once did she shoulder any blame on the Federal Reserve, which misled consumers and investors into spending more than they could afford. Nor did she point any fingers at her husband’s absurd “A House on Every Lot!” platform, which convinced millions of Americans to purchase homes that were out of their price range.

Instead of denouncing these destructive economic policies, Clinton’s 2008 presidential campaign took substantial donations from associates of Fannie Mae and Freddie Mac — the infamous government-sponsored enterprises that financed most of these irresponsible home loans. In fact, Clinton was 2008’s fourth highest recipient of campaign contributions from Fannie Mae and Freddie Mac’s employees and PACs.

Our country’s monetary policy woes are the result of the Fed fueling economic bubbles by distorting market signals.

Some Things Never Change

On the campaign trail, Hillary has repeatedly said that she will continue the same economic policies of her husband. And, while appearing to waver at times, Trump’s opinions on economic policy have also stayed relatively constant over the past decade. This May, the business mogul called himself a “low interest rate person” and stated that he would appoint another dove to head the Federal Reserve, setting the stage for more American mal-investments in the years to come.

Hillary isn’t wrong — Trump is a train wreck when it comes to economics. But if Hillary wants to castigate Trump as an economic threat to the country, then she needs to embrace policies that differ from his (and her husband’s).

Sometimes, both candidates advocate for trivial “reforms” of the Fed — Trump wants an audit, while Hillary occasionally calls for more diversity at the central bank — but neither of those efforts will solve the problem at hand. Our country’s monetary policy woes are the result of the Fed fueling economic bubbles by distorting market signals. Neither Trump nor Hillary appears willing to accept this point or make the appropriate bureaucratic changes to rectify the issue.

One of the most important things the next president will do is appoint a capable Federal Reserve chairman, because the Fed chairman is the driver that steers the economy. Unfortunately, it looks like Americans will continue to be driven into poor investments no matter who you vote for this November.

Tommy Behnke is a Mises Institute Alumnus and the former Press Assistant for the Rand Paul for President Campaign.