When a nation’s citizens print money, it is called counterfeiting, and they go to jail. When a nation’s politicians print money, it is called stimulus, and they get reelected.
4
Instead of pushing for lower interest rates, the President needs to end the trade war with China. The cost of the trade war is hug. Businesses and middle and lower class Americans are paying a big price for that war. The Federal Reserve needs to run monetary policy independently. President Trump needs to back off from his attacks to the Fed.
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Let's turn the rest of the keys to the economy over to Trump. What could possibly go wrong?
6
You do realize this is how Don reduces the cost of borrowing for himself and Jared?
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If there is a Great Recession and Trump says the banks are sound, will you believe him?
14
The DOL jobs report for Aug. 2019 showed only 96,000 private sector jobs created. It also showed a decline of 11,100 jobs in the retail sector and a gain of only 3,000 jobs in the manufacturing sector, worrisome data.
If the DOL report is indicative of consumers' health, then concern regarding consumer confidence may be justified. The Univ. of Mich. consumer-confidence survey showed a significant decline in the longer term job facets of its survey for Aug. Perhaps this is reflective of an economic environment where the yield curve for some US securities has inverted.
Dr. Robert J. Shiller of Yale, a Nobel winning behavioral economist, discusses in Sun.'s (Sept. 15) NY Times, how consumers rely on "stories" to describe how current economic conditions affect them. And, like an infectious virus, negative stories can spread and reduce consumers' animal spirits; and tighten their spending. He notes that a consistent negative reference point for many consumers is the Great Depression, with its causes and effects. When Wash. Mutual went bankrupt in 2008 after a bank run, consumer anxiety increased markedly, he states, because this bank run and bankruptcy mimicked many media stories about bank runs during the Depression.
With Trump's isolationist trade policies dampening the global economy, and such isolationist policies also blamed by many for the Depression, a looser monetary policy may help to prevent such a bad story from taking root.
[9/16 3:55p Greenville NC]
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@John Joseph Laffiteau MS in Econ
While I know that the BLS uses terms like "job growth" describing positive changes in payroll employment, referring to them as "jobs created" is not accurate. What the Current Employment Statistics report are net changes in civilian nonfarm payroll employment which result not only from employers deciding to hire or not hire but also from workers deciding to leave their current positions to look for other employment, start a business or retire. When that second type of reduction in payroll employment occurs it is indicative of a healthy economy.
The BLS publishes the Job Openings and Labor Turnover Summary (JOLTS), which lags the payroll employment reporting by more than a month. The most recent report, for July, showed that (seasonally adjusted) at the end of July job openings were little changed at 7.2 million, hires edged up to 6.0 million and separations were also up at 5.8 million. The change in separations mostly came in quits which climbed to the highest level ever recorded, 3.6 million. This is evidence of a strong job market. Workers don't quit their jobs when they sense a recession is coming.
https://www.bls.gov/news.release/jolts.nr0.htm
While some folks may have recalled their grandparents talking about bank failures in the Great Depression, when WAMU failed no one, except its stockholders, lost a dime, not even the FDIC. WAMU went bankrupt in the middle of the night and it reopened the next morning fully solvent.
1
We the American public, including the GOP have absolutely to resist meddling by this man with a trail of financial disasters behind him, by a man with questionable moral and ethical values, by a man whose meddling in the Government oversite of the economy is fraught with conflicts of interest. Not only must he be stopped in this attempt, he needs to not be allowed involvement in his businesses while president and he needs to release all his tax returns. How dare he tell the Reserve what to do and call them names. He and the GOP remain shameful for this. And we are at risk for worse financial crises than 2008 ( which the GOP forgets Obama saved us from ) under his lack of responsible leadership.
8
"Either plan would probably leave interest rates lower for longer after recessions"
The Fed kept the federal funds rate target at 0 to 0.25% for 6 years, 8 months and 15 days and continued asset purchases to hold down longer term rates for 8 years and 6 months after the end of the most recent recession.
2
Please consider adding my recently published article through the Campbell Law Review journal entitled, “The United States' National Debt and the Necessity to Prepare for its Default” to your web site. Here is the link: https://scholarship.law.campbell.edu/clr/vol41/iss2/3/ .
Abstract:
In many ways, the 2008 financial crisis seems like a distant memory one that many would just as soon forget. Another financial crisis is coming that will make the 2008 crisis pale in comparison. The future financial crisis lies in the massive national debt that has now passed the $22 trillion mark. The national debt continues to grow dramatically and, within the next few years, will surpass $25 trillion. Its growth is fueled by the inability of members of Congress and the Executive to address Social Security, Medicare, defense spending, and taxes. The resulting crisis may portend the collapse of the largely unregulated derivative markets that, by some estimates, are between $600 trillion and over $1 quadrillion. The future of the United States lies in the members of Congress and the Executive's ability to be prepared to default on its debt under domestic and international law so that, when this event happens, the crisis can be mitigated.
Best wishes,
Dr. Donald D.A. Schaefer
4
Good news for the wealthy.
8
trump bullies, the leaders run scared, trump buys votes and gets wealthy. What a guy, there will be books written on him and he flipped out a nation.
6
Is the economy great, or not, Mr. Trump? Because if it is, there is no need for a rate cut. You can't have it both ways. The recession doesn't scare me as much as the Fed having nothing left in the toolbox when it comes.
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It's good to see that at least one of Trump's appointees has a backbone and takes his work seriously. Unfortunate that Trump is setting Mr. Powell up to be the fall guy for the recession that has been brought on, in large part, by Trump's completely erratic economic/trade policies. I think the conventional wisdom after three years (seems like decades) of this administration should be if Trump wants it then its good for him and bad for Americans.
10
"The Little Boy who Cried Wolf" comes to mind. Everything is a Trumpian Crisis. " The economy is great" but we should lower interest rates (already near zero) to strengthen it. "Oil prices are low and We're energy independent" but we might open the strategic oil reserves to offset lost Saudi capacity - just in case. Everything is a crisis! If we do what Trump wants we will have no tools left when a real emergency occurs.
12
Would be so nice to remove the humans from the equation! As far as I can read everywhere there is no factual evidence than lowering the interest rate will do anything more than a temporary bump in the markets. The Fed should go on evidence it sees and be honest and say the issue affecting the economy is the trade war by and large and if Americans are behind that then it has to whether whatever is required to stay the course. I am not arguing that position by any means, just saying that the Fed really doesn't have a card to play that can help out here.
2
The simple fact that Mr. Trump insists on a rate cut is more than enough reason for the Fed to RAISE the interest rate. Six bankruptcies and counting...
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Lower interest rates, raise them, or do nothing--we're still getting a recession.
8
Credit card interest is the elephant in the room. It’s not uncommon to see north of 13%. The average American gets buried by this interest.
People who want a 70% rich people income tax can’t, don’t, won’t see this elephant.
4
When one looks at the members of the Fed Open Market Committee It is easy to see why the Fed is agonizing about lowering interest rates to accommodate Trump.He has appointed four of the members of the Board of Governors and one is a Democrat and two seats are vacant.The Committee includes the Board of Governors plus the head of the Federal Reserve Bank Of New York plus four more of the other eleven Reserve Bank members.Over the years the Fed has largely made independent monetary policy with the likes of Paul Volker, Alan Greenspan and Ben Bernanke and Janet Yellen.I do not remember any that were harassed by a president to lower rates and none had to adjust monetary policy to the trade war whims of an erratic president.Jerome Powell should act like an economist and not like a lackey of Trump.
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"The big question facing the Fed is whether the expansion will need additional support from the central bank."
No. A bigger question is why is consumer and business demand is so low as to require continued and extremely expansionary monetary and fiscal stimulus to keep on an even keel? Another big question is what will we do when the economy does have a big shock (and they always come) after we have already maxed-out monetary and fiscal policy tools?
With the economy in about the 10th year of recovery, we want be re-arming our monetary tools by increasing interest rates (so they can be lowered when needed for stimulus) and running a budget surplus instead of a deficit.
That we still have weak demand proves we have deeper structural issues. By now the economy should be in a strong expansion, allowing the re-arming of our tools; but it is not.
The long-term structural problem is wealth and income inequality. Too much of the income from annual production goes to the rich who save instead of spending. This reduces demand and weakens the economy. The only solution is to solve the inequality problem.
One for doing that is increasing marginal income tax rates on the rich. We had a strong economy in the 1950s when the rate was over 90%. We had a strong economy in the 1960's when the rate was mostly about 70%. Now it is under 40%, leaving room to safely increase it.
Other tax and minimum wage law changes could also help.
19
Inaccurate inflation analysis (it is actually much higher) combined with a lack of full understanding of the impact of global trade wars (highly destructive in an interconnected world) may encourage the Fed to lower interest rates, but it merely postpones the ultimate reckoning. The ultimate necessary recession will be massive and the longer it is postponed by the preposterous idea of negative interest rates (functionally impossible in the long run), the worse it will be. The world has been changed into a "ship of fools" by virulent nationalism. We deserve what we get.
9
In other words, the Fed is emptying the economic toolbox in aid of Trump's re-election.
37
Let’s not forget that the perceived current weakness in the US is ENTIRELY (pardon the caps) the doing of Trump and his game show policy producers (some of whom should know better). And for added made for TV & Twitter titillation, we have Trump’s intellectual incontinence to stoke fear about whatever Fox News deems fear-worthy. Completely illusory and ignorant.
Oh, and let’s not overlook the effect of lower interest rates on the Trump family’s interest payments! He is, after all the self proclaimed “king of debt” (or is that king of default?) just trying to give his sons a boost in their performance numbers running his companies while he ruins the world’s economies.
SAD. (Pardon the caps.)
15
Whatever Trump says so we won’t be fired like the Birmingham weather-forecasters.
4
Trump's attack on the Fed is simply a trump tactic of setting up Powell. If the economy takes a nose dive, and it will, he has someone to blame and deflect from his reckless spending and incompetence.
39
Ahead of the Carter vs Reagan election, the feds pushed the interest rate over 18%.
The smell of Rat is still in the air.
5
Trump cannot, and should not, try to micromanage our huge economy. This sham artist and economic ignoramus cannot even manage his own grifter finances (witness his MANY failed enterprises and bankruptcies, OUR untenable new national debt, etc.).
The Fed must not help him to destroy our free-market economy, especially for political reasons. Powell knows better. Let Trump fail as Trump, but don't bring the rest of us down with him.
26
Eventually the US economy will have to stand on its own. Continually decreasing the Fed interest rate will continue to inflate the already ballooning stock market valuations. When that balloon pops, as it surely will, the Fed will have little ammunition left to ameliorate the financial disaster.
From the Washington Post:
“The larger issue here is barely discussed — the dependence of U.S. economic growth on constant doses of “stimulus,” whether bloated budget deficits, super-low interest rates or negative rates. Their waning effectiveness raises hard questions of whether the economy can achieve adequate growth on its own.”
14
The whole concept of fiat currency rests on the time value of money. At zero percent interest, money stalls out stuffed into mattresses.
14
@Steve Bolger
Yes, and worse if low inflation turns to deflation. Then people really start stuffing the mattress since money will buy more later.
6
It seems to me that the effect of a rate decrease will be seriously blunted by the news coming out of the Middle East where major Saudi oil installations were bombed, whether by Iran, it's surrogates, or otherwise.
If I was the Fed I'd find a reason to put this meeting off for a week to see what happens and assess the damage the bombing inflicted upon world markets before making a decision and having the effects of a rate decrease wasted.
22