The Fed staying on the sidelines would be a blessing. Starting with the savings and loan debacle, Greespan's "irrational exuberance", Bernanke's sub prime is no big deal and his retreat in the "taper tantrum" are just some milestones where the Fed has completely missed the boat.
Just get interest rates up to a natural equilibrium and then sit on your hands.
1
From what I understand re The Fed you are basically right.
However, The Fed should more forcefully make the statement and warn America re how damaging an all out, ill conceived, vendetta type trade war that the demagogue Trump is coming up with.
1
Will the chaos that has enveloped our country over the past two+ years ever end? Trade wars are easy to win, just ask POTUS. Thank goodness he prevented North Korea from annihilating us. The world loves us. Seventy-five percent of journalists are dishonest. Scott Pruitt is a fine man, but he receiving too much attention with all these scandals. Trump will give Elizabeth Warren $1 million to prove her Native American heritage. Right. And, a Chinese company claims it's making flags for his 2020 campaign.
This must be the rip cord Larry Summers asked the NYT and Irwin to pull, the ultimate fear test for America, that the Federal Reserve and Plunge Protection Team won't be there to protect America's pension funds and institutional investors in the free fall of financial markets sure to come if China were to really be held accountable for not getting Kim to comply. But have you seen Mike Pompeo lately? He's carrying a literal baby, a layer of stress, a hot air balloon about to explode, pressure mounting-- ultimately to give birth to North Korean Denuclearization and geo political stability, the only pillar holding America back. If Pompeo can't deliver this baby, if he's forced to have a late term abortion here, of all of his promises that he could deliver world peace and hand his party and the Koch dynasty yet another win, that won't do..... even a few points on the stock market is worth it for old Mike. This baby will be born.
Finally – an employment report that’s easy to understand! Along with that, why does the American Job Shortage Number (AJSN) tell us we could now fill almost a million more positions than last month? See http://worksnewage.blogspot.com/2018/07/here-comes-latent-demand-for-emp....
TRUMP WANTS TO RETURN To the bad old days of 2007 and 2008, when the world economy was in free fall due to the collapse of the US stock markets, thanks to the laws prohibiting legal oversight of trading practices. So, as Obama so aptly stated, the private funds of investors were used as if they could be used in a private gambling parlor. The Fed's policies are intended to anticipate overheating of theoo financial markets due to inflation and to stimulate economic growth. They've got a goofball ignoramus who's changes in policies are tantamount to throwing a piece of dung in the punch bowl at a large party (such as international trade). That expression was used to describe some of the more inept statements of the Governator Schwarzenegger in Kah-lee-fohrrrrr-nia. Well Trump may be able to pronounce California better than the Governator. But he's got way less understanding of how global economics work. What Trump is doing is applying the same unprincipled actions to world trade as he did in his own businesses, many of which failed. He's notorious for screwing employees, contractors, construction workers, consultants and suppliers out of the money that he was legally contracted to pay them. He may have his day in court yet, since his alleged violations of New York State laws he cannot pardon, as the presidential pardon is limited exclusively to federal laws.
The U.S. has, and has had, for many many years, a trade deficit of over $1 trillion a year with the world: CHINA = a NET $375 billion deficit+ G-6 = a NET $320 billion deficit + INTELLECTUAL THEFT a NET $400 to $800 billion, and, AT MINIMUM, A TOTAL OVER $1 trillion a year! How can anyone determine that everything is just hunky dory in the international trade 'business?'
A long journey starts with a single step. Let's try to suggest how ChzzMonkey can answer his or her own question. Start with learning more about economics. International trade won't be discussed much in the first semester or two, but perhaps you can pick up the broad outline of the consensus argument. Later you can begin to get into the details of this complicated topic. ChzzMonkey is smart enough to realize that the fine print often contains important facts, right?
After many years of hard work, ChzzMonkey will be able to begin to challenge his mentors. Perhaps he or she will turn from a student into a sensei.
The best thing the Fed can do is to maintain its independence and prepare for the eventuality. When the trade wars bear their bitter fruit - see homebuilding, it is estimated an additional $6,000 to $8,000 cost is added due to raising lumber price as the result of the Canadian tariff - at least the Fed will have some defensive ammo.
I thought monetary policy was meant to backstop fiscal policy when the latter reached its limits of effectiveness. It seems that Congress, as the manager of fiscal policy, has abdicated. So now we don't even attempt any fiscal policy (save tax cuts for the 1%) and rely on monetary policy to fix everything. It isn't anywhere near up to the task, so here we sit.
The uncertainty of the outcome caused by the American trade war with China lies outside of the bandaids and fixes the Fed can use to correct the underlying problems. The longer that Trump's trade war continues the greater the degree of uncertainty that will develop. The US economy is massive. It may take quite some time before the results of trade the trade war will be felt. Trump, in this case, is correct about several of the trade problems we, (our allies, too) have with China. Tariffs on US made goods, China's flagrant abuse of copyright and patent law, Chinese hacking into American industrys' computers and stealing industrial trade secrets and the policy of requiring American companies that wish to build a factory in China to have a Chinese partner. These are a terrible foundation for developing trust in a trade partner. I fear that Trump is the wrong man and his administration is the wrong administration to correct these problems. Diplomacy calls for quiet and discrete negotiations. These words don't exist in his vocabulary. His past behavior and lack of understanding of the Asian concept of "Face" lead me to believe he'll act like the proverbial bull in a china shop. Unless the Chinese give in due to economic problems created by the trade war I feel that this will be a long running situation, indeed. Only time will tell.
I can already see it coming. Trade war measures raise prices, while trade and investment suffers. Central banks react to "inflation" by raising rates. The world economy grinds to a halt. Whole world endures a rerun of the Great Depression.
One of the infinite possible paths ahead. No means assured.
It is unlikely that economic measures by the Fed can do anything about the lunatic who currently occupies 1600 Pennsylvania Avenue. The Fed's measures take time to function; Trump has the unpredictability and constancy of a gnat. Nor are his measures rational, so forget economic man. The Fed might as well buy a ouija board and hold seances. The 70,000 angry voters in the Rust Belt have left the rest of the country in a big-time economic mess, and it's not going away soon. Save your money, and put it in hard assets -- I would recommend good bourbon or Harleys, which will be cheap as foreign markets disappear in retaliation against Mitch McConnell's and Paul Ryan's spineless refusal to curb Trump's abuse of delegated power by use of their constitutionally mandated Congressional control over trade.
4
Once again, conservative economic pundit Neil Irwin buries the truth. Mr. Irwin repeatedly praised the strength of the economy, while refusing to acknowledge that it was President Obama who had built that strong economic recovery.
And in this column about the trade war, Mr. Irwin fails to mention who started this war- Donald Trump. Instead of pointing out that it is Trump who is endangering the economy with this economic war, he only mentions that the Fed has no tools to counteract the damage it is likely to inflict on the American economy.
Mr. Irwin should tell the truth: Donald Trump is endangering the health of the American economy and putting at risk the livelihoods of tens of millions of Americans. Refusing to name Trump as the culprit won't save us from the looming disaster Trump has put in motion.
6
You're certainly correct about President Obama laying the groundwork for the US economic recovery. President Obama inherited a god awful economy. President Bush started fixing the economy with the auto and bank bailouts. Voters should make note that the Republicans fought the auto industry and bank bailouts even though they were started under the Bush administration. Trump didn't support the bailouts either! The Chinese started this trade war, not Trump. The underlying problems have been prevalent for a long time. Last year I priced out a similarly optioned Jeep Grand Cherokee in the US and China, $55K in the US, $110K in China. The difference, tariffs. The Chinese flagrant abuse of our copyright and patent law, their constant hacking on US industry computers to steal trade secrets, their rule forcing foreign companies who construct manufacturing plants in China to have a Chinese partner weren't caused by Trump. Diplomacy dictates that negotiations be done quietly and discretely. Trump's a tweetaholic with a tongue that weighs more than his brain. He's the wrong man to negotiate with the Chinese who form the basis of respect on the Asian concept of "Face."
1
Trump is creating chaos with every move he makes. He proved his incapacity to run a business by going bankrupt so often that legitimate banks refused to lend him any more money. Thus his reliance on Russian laundered funds coming in large measure through the Bank of Cyprus (where Wilbur Ross was a major player).
Trump has made it clear again and again that he has no knowledge of trade or economy or history or diplomacy. His ignorant actions are designed to whip up the frenzy of his white nationalist base and to please special interests (follow the money) as well as his Russian allies.
The key question arises again and again: How much havoc will the Republican leadership allow their frothing and barking mascot Trump to wreak on the world economy at the expense of the American worker? When will they come out from under their desks in the Capitol Building to perform their sworn duty of representing the people?
The Fed seems powerless in the face of Trump's madness. The feckless Republican Congress serves only their donors and they need Trump's racist/Evangelist base to do so. It will come down to the US electorate to act in their own interests by getting out the vote, showing up at the polls and throwing Trump and his Republican sycophants out of office ASAP.
7
The Fed is not powerless but is executing its mission. The absolute worse outcome would be the Fed stepping out of line and ignoring its constraints, Strong economy and low unemployment- double mandate checked with the Fed cruising.
Trump's trade war is to please Putin.
2
With all due respect Mr. Powell as as much an illegitimate Fed Chairman as is this creature on the SCOTUS. Janet Yellen's rightful position was stolen from her.
2
The one proven record of Donald Trump ...Bancruptcy. Thats where we're headed. Feeling great yet?
4
To play devil's advocate, it was strategic bankruptcy. Absolutely immoral and not fit for someone to lead politics, but strict finance principles would celebrate his doing so.
A trade war has only ONE purpose: to destabilize world markets.
Why cause this upheaval?
Is this an ATTEMPT to derail the train of clean renewable energy, barreling unstoppable at supersonic speeds across the planet?
From Australia and Indonesia to Germany and Sweden, from Texas and Iowa, to Ethiopia. the Greek Islands, and the Indian subcontinent, from China, to Brazil and the UK exquisitely beautiful wind turbines are already installed by the thousands... and tens of thousands are planned. (https://www.cnbc.com/2018/06/04/from-china-to-brazil-these-are-the-world...
The increasingly desperate coal, oil and natural gas, have met their mortal enemy: market forces. The moral weakling in the White House is wearing a teeshirt "Trump Digs Coal".
Black dirty coal that damages children's lungs with life long asthma. Black dirty coal whose combustion releases pounds of mercury, a neurotoxin that causes childhood retardation. Only a few ounces suffice to poison a lake, rendering fish inedible. Mercury is the reason pregnant women are advised to avoid eating nutritious fish not to damage their fetus. Black dirty coal, oil, and natural gas that pollute the air with cancer causing volatile organic compounds and bronchitis causing with inorganic SO2, NOx and ozone.
Trump digs coal, was it a teeshirt I saw, or a sign held to his chest? Is this a last, all out attempt, to avoid the inevitable end of dirty energy? Too late, this horse has bolted.
5
No, it is not. It may be a component, but oil and gas companies are just as angry with the tariffs. Three main reasons in my opinion for trade war:
1) Campaign bluster
2) Reestablish American domestic supply lines
3) Break Western order
Next up: our fearless leader will want to eliminate the income tax, since high tariffs were revenue generators in the 19th century, and Trumpian logic dictates that soon every country will be buying more of our higher-priced goods. Trump doesn't just want to turn the clock back; his goal is to take a hammer and smash it into bits. No wonder "may you live in interesting times" is a Chinese curse...
1
Yes, there are imbalances between the US and China, and the US and other countries, regarding trade. China's theft of US intellectual property is particularly dire. But Trump is approaching this world war as if he has no room for negotiation or dialogue, and his advisers are reportedly at loggerheads as to what this all means and how they want it to play out. Trump's bullying tactics and inflammatory rhetoric is needlessly humiliating to China; anyone with a barebones knowledge of Asian cultures knows the importance of "face," and to disrespect that is shameful. In his short Presidency thus far Trump has inflicted long-term damage on environmental regulations--as the US bakes under a historic heat-wave--as well as on immigration, labor laws, race relations, and so much else. Now this man-child brings his ignorance and ego to wreck ruin on a global scale, disrupting decades of carefully constructed trade agreements, supply chains, and economic balances. I hope the pain from this incompetently-managed trade war hits home quick enough to negatively impact the Republicans in November so we can start the long and brutal battle to restore sanity to our suffering, endangered Democracy.
2
It cant use interest rates because, as I have been repeating like a broken record, they are at zero...for too long.
The Fed has destroyed its arsenal for economic control. What next? More QE? More asset bubbles? A bigger crash next time?
Perhaps the best news yet. A trade war will disproportionately hurt rurals and other Trump-Pence supporters. Pain is the best motivator for changing behavior. Maybe they will finally learn that a TV huckster with a religious zealot sidekick are not the best choice for leadership?
2
Now if we accept the near universal verdict that bankrupts are fiscally irresponsible and lack foresic forethought, what will be the impact of Trump's 1930s economic policy?
Unfathomable this 5x bankrupt ever became a candidate; except now the world has to mop up the mess of more than a few mothballed hotels and casinos. Truth, Trump has always been over indebted. We just don't know how many heads to his hydra, or how his edicts benefit Trump's own back pocket.
1
The slogan should be: "Make America a Real Estate Company Again"
Those poor people who bought the snake oil thinking they would see new jobs in their own town and have "beautiful" low-cost health care.
Made in China.
I feel so helpless. We are allowing certified ignoramus to ruin our democratic institutions, destroy our economy and put the Nation under the sway of a sworn enemy. The Republican Party controls all the levers of power in the Nation's Capitol. Why won't they do anything to change course? Maybe it's because they get their guy on the Supreme Court. I just wonder if the loss of the institutions we hold dear worth and the destruction of our economy worth the price of a Justice?
2
Could a trade war possibly lead to another tanking of the economy like we saw in 2007/2008?
Well, I did notice variable student loan interest rates just jumped a full point.
That sure won't help.
So the Fed has a 2% cushion against a trade sanction induced economic slowdown as companies stop investing in new plants, reduce overhead (jobs) and face rising costs (trade war induced inflation). Not to mention, the current rate on the 10-year treasury is 2.846%, less than a 1% spread above an inversion. I personally don’t see how this can end well for the United States, especially if our former trade partners (now enemies) stop buying our 10-year note.
Well, here is one solution: Vote against Republicans on Nov 6, 2018 and install a new Democratic led Congress that will stop Trump in his tracks, legislate an end to Trump’s trade war disaster and most likely end up with the Most Unqualified president in American history being impeached or quoting in disgrace.
1
The mainstream media is doing all it can to hype up the trade issues as a "trade war." Trump has only asked for fair trade in situations where the U.S. faces unfair trade barriers or massive industrial espionage and disregard of intellectual property rights. His blustering style is not helpful, but there are definitely unfair trade barriers for the U.S. in multiple markets.
That argument may work for China but not so with Canada (we've won numerous court battles over the "perceived" unfair trade practises against the States). Furthermore, if Trump really wanted to take on China he would have stayed with the TPP rather than bailing! Your leader is in bed with Russia and a good many Americans see this as a good thing resulting in your loss of face with the rest of the world. Picking fights with your allies strengthens Putins hand and weakens Americas standing as world "leaders". Tired of winning yet? Thats what you get when you elect a man who bankrupts Casinos (and anything else he touches), attacks immigrants, non-whites, thinkers, leaders and all other things American......but Putin and Kim are to be held in high esteem! Elect a reality tv star for President....you get reality TV to live by!
1
The trade war is good for him and his family if not for the US. He and Ivanka still get their products made in China and making big bucks with the Chinese trade. Wasn't Ivanka given a number of patents by the Chinese government and her husband's family promising golden visa's to wealthy Chinese in return for investment in Kushner properties. This is all such a shell game but as long as Republicans control all branches of the government nothing can bee done except watch the slow destruction of the country.
1
The authors of The Constitution warned us, but We the People did not listen. Congress abdicated many of their functions to the executive and agencies because they want to work their own personal agenda (as well as that of their financial backers). The absolutist tendencies make compromise impossible. The fact that elected officials don't care about their constituents, other than those who write big checks, leads us to where we are today.
Congress could put and end to all this but they won't because their backers don't care.
Little wonder that Trump acts like he is KING and not answerable to anyone.
Our only hope is the next election but since all humans are subject to being misled and We the People are under attack by the wealthy interests who try to manipulate our thinking, it is only going to get worse. This is not going to end well.
A man who declared bankruptcy four times and has been the subject of multiple lawsuits is leading us into a trade war.
I have seen my stocks plummet several times during this atrocity of a decision. Should I stay or should I go? Sell or hold?
Why am I living in this reality TV show where Trump just wants to make bold announcements, and then pretend that they have no consequences?
3
CONGRESS...way past time to wheel HIM in. Is there not ONE patriot in that senate? This must stop.
2
But the trade deficit finances the budget deficit, right? Let's just say all this DID close the trade deficit, setting aside the effect on the economy. Wouldn't we have less structural demand for US Treasuries? Wouldn't that push up rates?
The loudest complainers of the tariffs are also the biggest losers as the US rebalances our trade priorities. No longer allowing the outdated, skewed deals that caused the massive trade imbalances of the past to continue. While the Trump administration is at it perhaps we can do something about foreign ownership-of our media. It appears as though foreign ownership is allowing our media to be used as an internal propagation vehicle for this foreign ownership's purposes.
1
Wow. How can one man, a former reality TV star, have the unbridled authority to literally destroy people’s financial lives with these absolutely moronic and unnecessary tariffs?
This is as important as deciding to wage war, so how is the US Congress unable to stop it?
2
Of course the Fed rate rises are driving up costs directly by raising the price of credit and indirectly in a host of ways. This slows the economy. Added to the costs associated with burgeoning trade wars with our main trading partners and the consequences of retaliatory action on specific sectors the overall impact is going to be slowing. How much slowing? Watch this space.
Fed can set aside the planned interest rate increases. The tariffs in effect producing the same results as increasing the interest rates, viz., slow the economy.
1
We impose import duties on Chinese products for which there are ready substitutes, either from other countries, or through domestic production. The Chinese put import duties on soybeans, pork, and automobiles.
I don't think we sold that many cars in China that were not actually produced there. As for the pork and soybeans, I have read that there is very little substitute supply available on the world market that is not USA sourced. And China doesn't have the feed to home grow its own domestic pork to replace what it imports from us. So, the effect may be not much on the USA, but higher prices paid by the Chinese consumer. That is, assuming the Chinese government does not find some way to subsidize these products to their people in a way that offsets the tariff, at least partially.
@RM
Vermont
Well you have read wrong pal. There are plenty of alternative sources for soybeans, sorghum, pork and other agricultural products.
ZIRP was in place far too long to begin with. The Fed should stand aside and normalize rates. Unemployment is low by any measure and the Fed's job is to prevent inflation. There is no lack of capital around worldwide. The Fed has no mandate to prop up already inflated real estate prices in places like NYC and California. Let alone grossly inflated stock prices.
2
Trade wars create StagFlation. It's really that simple. Prices rise, while economies suffer and growth slows.
The article is spot-on: The Fed is powerless to counteract a trade war because lower interest rates would boost inflation further.
And TBill and Bond rates are bound to rise as China and other creditor nations scale back or even dump their holdings of U.S. debt in secondary retaliation.
Welcome to the very well thought out Art of the Deal ..............
17
The kind of damage the Trump led multi-front trade war is going to cause to the US economy with also disrupting the global supply chain leading to the economic slowdown in the US is impossible to be remedied let alone reversed by any state policy move , not even by the Federal Reserve's monetary policy intervention.
16
Surely the Fed realizes that Trump's trade war is all part of a strategy to diminish America and the international trade
agreements, and cause conflict as he then agrees that Russia will be a trading partner, as the world is rejecting America.
As the world economic system exists Trump can't withdraw
the economic and trade blocks/sanctions against Russia,
so Putin has come up with dismantling and destroying all trade agreements and causing chaos.
America will decline into an economic depression,
and the hard right wing base of the GOP will suffer the most,
as trade and manufacturing in America declines and
is destroyed in the long term.
The decline and fall of America as an economic power,
thanks to Putin.
14
Trump is openly and in plain sight conspiring with Putin to destroy Western democracies.
This is political insanity.
November 2018 will stop Trump and Putin,
as the Vote is the power that can't be over come.
2
Yes, but pork will become really cheap and Americans will have a choice of an extra portion of free soybeans or sorghum to go along with the pork. Forget fresh vegetables, nobody to pick them.
Didn't Trump promise he'd not get into "stupid wars"!
13
Trade wars are no big deal and easy to win. The NK nukes we were told to be terrified of are not any threat at all now and we can sleep without worry. I know these things are true now that I have joined the cult.
18
Reality check how many trillions has are own government spent on imorts for government use in taxs from unemployed? As long as government xontinues to use tax money to purchase imports tarrifs is futile.
1
Why is Trump doing this? Because he can.
6
Would he even be stopped by a “blue wave”?
No, the Federal Reserve won't save you. Your federal government could, if they cared.
This is the thing. As a Canadian, I don't have a choice in fighting in this trade war. Americans out-number us 10:1, and your GDP is higher. If we cave to the Trump administration's outrageous demands, your economy will swallow us up and spit us out. We'd be at your mercy forever. We'd become an economic colony, totally dependent on current US domestic policy.
Most countries are in the same boat. Think about how Wal-Mart tanked so many manufacturers and Mom-and-Pops, by throwing massive contracts (for wholesale prices) at small companies, then waiting until their business model depended on those massive contracts before squeezing those companies like an anaconda, knowing that they couldn't afford to lose such a gigantic customer. Think about how Wal-Mart lowered their prices until there was no competition left, then raised them as high as they wanted, knowing they were the only shop in town. This is what the United States is doing to the rest of the world. We don't have a choice but to fight, because to not fight means to lose everything.
The real question is, why would the Trump administration start a fight with the entire world? I mean, Wal-Mart is great - for the CEOs. Don't workers at Wal-Mart still have to eat from food banks?
38
Such a silly argument. No one forces anyone to shop at Walmart. There’s a Walmart close to us, but there’s also other supermarkets in the same plaza, so I shop at the other stores in order to ensure their survival. I suggest that you do the same.
When you shop, seek out the place of origin, and if the USA, then don’t buy it, or if absolutely necessary, buy less. Don’t plan visits to the USA until an administration which value friends, allies and norms is elected, and even then, never forget this administration.
But you are in Toronto. In many places in the USA, Wal-Mart IS the only place to shop for miles and miles and miles for the very reasons C points out.
To say the Fed has little they can do is suggesting we know everything the Fed does. The Feds open market policies seem to parallel the market thus it may be the tail wagging the Dog, especially since the President has his own new version of Voodoo economics.
2
If existing institutions cannot save us from the potentially serious negative implications of such moves by one man, who was installed without a mandate, who is supported by a radicalized minority, and who is among the least civil public figures in American history, then I really wonder how long the uncontested reign of capitalism can last in this country. I am a centrist, but most of my younger friends are beyond disgusted at this point with anything that even smacks of the "establishment." I see an upcoming generation that doesn't even consider the possibility of staying the course of an American status quo and that fully intends to sweep all business as usual away. I can't blame them, as the current excesses are simply too great, blunt, and brazen not to have a dramatic effect on a relatively powerless youth whose only real option at present is to feel the effects of them. I am sad to say it, because I think it is all so unnecessary. All we had to do was perform intelligently, but we can no longer expect intelligence from government. Given the pace of automation and other developments, socialism and other forms of organization are in fact becoming more realistic possibilities than before. So if capitalism's staunchest supporters in this country continue to perform as poorly as they are now, they could find themselves replaced in whole or in part by a competitor. They shouldn't complain. Supposedly they value competition.
35
Trump's not finished with his ignorance in creating havoc in the world. It's only a matter of time until he gets to infect the Fed!
24
The real problem is a 600 Billion trade deficit that exports millions of American jobs. No other country in the world would allow this fiasco.
Now that we have their attention we can negotiate a real free trade deal based on removing anti American roadblocks.
The irony is that beside American workers the big beneficiaries will be foreign citizens that will soon have access to American goods and services that are competitive.
1
of course - its going to be so easy another trumpian rousing success.
5
You are being gaslighted by 45 to believe something that is not true. Read this: https://business.financialpost.com/investing/investing-pro/lets-get-this...
12
As if those things were connected.
First, if you add the services to the trade figures the US deficit is much lower. DJT "cleverly" omits to mention that.
Second, the loss of jobs is mainly caused by automation, not by the US "exporting" jobs. Even if the trade & services balance would be shifted more towards the US that would not mean more jobs in the US.
Third, since there is almost full employment in the US, it is hard to understand why DJT is so fixated to get more jobs back to the USA. Who shall fill all these jobs now that ICE is successfully jails each and everyone not having a US passport?
1
The Federal Reserve System is the central bank of the United States. It performs five general functions to promote the effective operation of the U.S. economy and, more generally, the public interest. The Federal Reserve
conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy;
promotes the stability of the financial system and seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad;
promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole;
fosters payment and settlement system safety and efficiency through services to the banking industry and the U.S. government that facilitate U.S.-dollar transactions and payments; and
promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and the administration of consumer laws and regulations.
2
I hope my fellow patriots will join me in a rally to demand that our tax refunds be paid in bushels of soybeans, our social security payments in bags of unshelled pecans (the way the Chinese used to like them) and our disability payments in slabs of St. Louis style pork ribs.
I am looking forward to taking delivery of a Spartanburg, SC-built BMW. Unfortunately, the engines for these cars are imported from Europe. So it will be sitting immobile in my driveway until our amazing engineers develop a coal-powered motor.
47
I like the small baby back ribs basted in Baby Ray's barbecue sauce. I think it's the honey and hickory one. Price of pork is going down too; I'm thinking Double Slab. You have to grill them slow, real slow.
It's hard to believe one man will inflict so much pain on so many for no explainable reason.
In these circumstances the Fed. is not equipped to deal with stupidity at least at this level.
75
He is not one, he is backed by GOP Militias.
1
This article essentially tells us, trade wars are in many ways like military wars. Who has the larger more well trained Army, existing assets, who's on whose side, and who started the dumb war in the first place.
Much of our treasury bills (debt) is in the hands of China, Europe, Japan, and Canada. The U.S. started the trade war, and most of the countries where tariffs are being imposed do trade with one another already. Therefore making it much easier for them to work together and against the U.S.
We on the other hand have lots of clout with massive tax cuts, ballooning debt, and companies beginning to move parts of their business activity offshore.
Goodness gracious where did we go wrong electing this Administration? Oh that's right, 62 million Republicans. Hope all of you are in good financial shape, because prices are rising, and that miniscule wage increase you just got was wiped out about a week ago. And it's just going to get worse, much worse.
78
cherrylog754,
Confirming that to work for a prominent economist over a span of nearly two decades does not make one a financial tycoon.
In the 1980s on the front cover of The New York Post, the headline read $6 Billion Deal between Time Warner and General Electric. On good terms with both chairmen of these companies, my supervisor invited them to meet for breakfast at his apartment, where a mutually convenient and congenial agreement took place.
All this was news to my ears, but I felt singularly rich of a sudden, and nearly treated myself to a $400 sweater at lunch. My home phone was also engaged, and calls of congratulations were pouring in from persons I had long forgotten.
Today, a Republican acquaintance of mine, still working beyond retirement age to make ends meet, decent, honest and cordial, on occasion expresses his gratitude for 'Trump's Check' and is trying to sell his family house; his goose egg. He likes bacon and at the supermarket, we compare sales, prices and discounts on this produce. We stop at the gasoline station.
This is a small anecdote but neither of us really understand the pain that might be implemented by a Trade War with China. He is more likely to watch Fox News and believes Channel 7 is for those 'Liberals', the cause of all our trials and tribulations.
Trump may wait until the November votes are in before proceeding to provoke his working class voters and other supporters, but China might feel otherwise in the timing.
The Fed has inflated a dozen bubbles with 0 % interest rates and QE. In many US cities, home prices have doubled or tripled since the bottom in 2012. House prices have doubled or tripled in cities across the globe. A lot of new construction is in the form of skyscrapers full of condos which are being kept empty by owners for price appreciation with no real end user demand. Everywhere you look around, there is a record. Record junk bond issuance, record borrowing by emerging markets, record values for profitless unicorns, record margin debt, record student loans not being paid, records in stock market indices. Problem with the Fed is that it only concerns itself with goods and services inflation while asset inflation is regarded as benign. We saw a similar runup in Asset prices when the Fed lowered interest rates to contain the damage from the Asian debt crisis, Russian default and LTCM in the late 90s, that resulted in the dotcom bubble. Again the Fed lowered interest rates to contain the fallout from the bursting of the dotcom bubble which resulted in the housing bubble. The author had correctly identified the problem in his 2014 article
https://www.nytimes.com/2014/07/08/upshot/welcome-to-the-everything-boom...
Only thing changed from 2014 is that the Fed has woken up and decided to prick the bubbles before more damage is done. President Trump said during his campaign, we are in a big fat ugly bubble, for once he was correct.
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enjoy the trump tanked economy.
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The Federal Reserve is independent of the Executive Branch of government and has not shown deference to Trump's will. He'll show them who's the boss, even if it means starting a trade war and tanking the economy. The only plan he has for anything is to make everyone else more miserable than he is.
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The new Fed Chief Powell will certainly hold back interest rates to keep stocks humming until after the November 2018 elections.
As any man in power, he wants a second term. And he knows that President Trump is likely to be the man to re-nominate him.
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Tariffs mainly shift money from most of us to a few of us. For example, all of us pay more for end products with steel and aluminum, making the steel and aluminum producers wealthier and the rest of us poorer. Since we're doing more of stuff we do less efficiently than other countries, overall we hurt productivity and total GDP (a measure of both production and income.) In other words, we sub-optimize to help a few.
However, I disagree that the Fed can't help. The Fed could simply print money to pay off student loans. If inflation doesn't jump, then it could start adding up to $7,000 each year to the accounts of the bottom 99% of the population, to get us back to pre-Reagan inequality levels (at 1979 inequality, the bottom 99% would have $7,000 more per year in income).
If the Congress doesn't like it, it can raise taxes on the 1% to do the same thing, paying for the college and healthcare of the bottom 99%, reducing the burden on the Fed and lowering the risk of inflation.
How about a little Fed pressure to get Congress to do its job?
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The fed and interest rates do not care about troubles of small businesses that will be affected by a downturn due to Trump, his trade wars or anything else he hatches. What may happen to affect interest rates is a sudden drop in consumer spending across the board, such as a recession. The uncertainty that Trump is creating could ripple out, creating more caution as he joyously whipsaws the world into a tailspin over any of his imagined threats. If countries stop buying our treasury notes what happens then? Or he goes further off the rails, and his lies aren't getting any less absurd, in fact, more so, what happens if other countries decide dollars are just not worth it? He is doing his best to punish most of the world - I think at Putin's behest.
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There a no effective rational response to chaos when chaos is in charge.
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What has become of the Republican Party? Apparently they have no authority in the American government anymore so why don’t they all quit and save us the money from their salaries. They haven’t deserved any pay this year anyway. They are zero.
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What if they do not lower rates to counter damage--but raise rates?
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Why is this happening and why hasnt evil
erk Trump not been cancelled?
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Of course they can't.
The tems will change by 6PM Friday, but THOSE will be the best deal ever.
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Now, follow me on this abstract............ The wealthy individuals and corporations have always favored Republicans disproportionately. A corporation won the right to throw campaign money at their favored leaders. It was the "Citizen's United" Supreme Court decision. The wealthy flooded the Republican campaign coffers. The Republicans won what is now a monopoly government. The Republican Congress passed a Trillion dollar tax cut act and disguised it as a "Christmas Present" that went largely to the wealthy individuals and corporations. Trump lobbied for and signed the tax cut bill. Now the Republicans are trying to offset the 1.27 Trillion dollar deficit increase over the next ten years by instituting Tariffs on foreign goods. Those tariffs will tax the entire supply chain and consumers of our economy. All that tariff money will go to the treasury to make up for the tax cuts to the wealthy. In effect, the middle class, which received a meager tax cut, will now be taxed every day in every way to offset the fountain of wealth now going to the Wealthy because of the tax cuts. Summarizing; the burden of government finance has been thrust upon the shoulders of the middle class so the rich can get wealthier and the middle class gets poorer and assumes more debt, that the wealthy will make more money from.
Since the 27 dollar oil barrel at the onset of the Trump campaign, Oil has risen to around 75 dollars per barrel.
All things in consideration indicates recession soon.
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You conclusions may be right, but tariffs are not the Republican vehicle to offset the tax cuts. The tariffs are simply a consequence of the massive ignorance of basic economics on the part of Trump and his advisors.
Republicans plan to offset the tax cuts by cutting services: medicare, social security, medicaid, etc. - that's what's in the House bill.
The intended result is to widen the income gap even further.
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If we are both right, it's really bad behavior by the Republicans even more so.
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I'm sure I'm right as the tariff monies will go to the treasury as earned and the social program cuts merely cut future spending growth. I'm absolutely convinced the tariffs are meant to offset the tax cuts loss of revenue from the wealthy.
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The Fed essentially bailed out the US in 2008 from a depression. If now they say there is nothing it can do, now that the US is running its massive debt up, is in a huge stock market bubble, credit is tightening, the president is immune to facts, and Congress is deadlocked on policy, then we are in vast trouble. The cliff approaches. I'm 70% bonds/cash and ready to hit the brakes harder on stocks even more.
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I hope the Fed reconsiders.
Tax cuts for 1% doesn't exactly trickle down or save the stagnant wages.
The fact the we have close to full employment but still no movement on cost-of-living wage increases is the most indication to me for interest rate regulation.
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The Feds will have to use interest rates to counter the economic damage from the massive tax cut for billionaires; the trade war is on its own.
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Explain “real income” for those playing at home.
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Investopedia: "Real income refers to the income of an individual or group after taking into consideration the effects of inflation on purchasing power. For example, if you receive a 2% salary increase over the previous year and inflation for the year is 1%, then your real income only increases by 1%." Too funny, isn't it? more like inflation is 2% and your income has gone down 2% making your real income Decreases by 4%.
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Real median household income is one important measure; it's annual and reported with a lag, so we only have through 2016 at this point. Median means the 50th percentile family, a good proxy for middle class. When Bill Gates walks into the room, the median doesn't change but the average goes way, way up. Inequality is so bad that averages are only meaningful in comparison to the median.
https://fred.stlouisfed.org/series/MEHOINUSA672N
Here are real wages under the two main inflation measures. The rising gas prices since last summer are why the blue line has declined.
https://fred.stlouisfed.org/graph/?graph_id=471831&rn=8352
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