Trump knows nothing about economics. He is known for throwing temper tantrums when his crazy ideas are not enacted. Mr. Powell must not cave to Trump. He needs to let the epithets and anger roll off him. Powell's responsibility is to the country, not to Trump's reelection efforts.
Lower interest rates, in an historically low-interest-rate environment won't stimulate the economy as much as stopping tariffs and trade wars will. The ball should be in Trump's court, not Powell's.
4
Donald Trump,Sr. projects is own innate intemperate insecurities onto others one bloviating buffoonish tweet and speech at a time.
Calling Jerome Powell out exposes Trump's cowardice, ignorance and stupidity. Trump thinks with the cheeky terminus of his digestive tract.
The first and last best business deal Trump made was his choice of a New York City real estate baron daddy to inherit 295 streams of income from that shielded him from the consequences of being the worst losing businessman in America over a ten year period.
4
“Jay Powell and the Federal Reserve Fail Again, No ‘guts,’ no sense, no vision! A terrible communicator!” says Mr. Trump of the Fed for not lowering the interest rate to zero or negative. He should have added: "no doing my bidding to help me get reelected." Negative interest rates? Wow, this is what makes no sense, business or otherwise, except him getting another term, at the expense of our long term economy.
3
There was no reason to raise them last year, or increase the money supply.
1
Don't understand. By cutting the interest rate, the Fed leaves no where to go if things get ugly. The same thing happened in the early 2000s under Greenspan - interest rates too low for too long. This, in part, spurred the housing bust and the worst recession since the 1930s. Under Obama, interest rates were almost 0% as his administration wanted banks to borrow and lend. What was not considered was that banks did not want to borrow; they were trying to re-center after being bailed out. The only time to lower rates is when a real recession hits. Rates should have increased under Obama faster than they did, but he wanted them low too.
Interest rates should be about 5%, but our global economy wants to keep 'growing' and the US needs people to consume. This in turn is driving, in part, climate change as the population expands, and consumes. Insanity.
5
It would be interesting to know the composition of the investments by Trump and friends in the US as well as his friends in Russia Putin et al .What would be the upside to their investments if the Fed reduced rates substantially.
8
Bad idea. There is little that the Fed can do with rates this low if we run into a real recession.
9
The Fed's modest reduction in interest rates is right in line with what investors are signaling as their economic outlook via what they are bidding for T-bills.
Trump's demand to reduce interest rates to zero is not only out of sync with investors, but is also dangerous and self serving. It is dangerous because our economy is still strong, we are not in recession or on the brink of recession. If we do get into that situation, the Fed will need to reduce rates by the 1.75%-2.0% rate we are at now to stimulate the economy. If they use up their fire power now to provide a "sugar high" to the economy, they will be unable to stimulate the economy when we get into recession.
Trump's demand to use all of the Fed's fire power now is self-serving. He wants the sugar high now to make the economy as strong as possible for the next few months to improve his chance of being re-elected. And, it has been reported that he would save hundreds of millions of dollars in interest payments on loans by Trump businesses. Trump is putting his interests above that of Americans.
11
Come on Powell, lower the rate to zero and be done with it, it is re-election time and you don’t want to lose your job. There must be a banker equivalent of O’Brien out there.
This is not an interest rate cut based on economics but one to placate our pathetic president, who is using the Federal Reserve as an adjunct to his next campaign.
George Washington worried that one day the US would be ruled by a king, and it appears that his fears were well founded because now we have one.
7
Trump and his lackeys tinker with the Fed to make the economy appear better; he flies out to California and demands that there be only one air quality standard. If his policies were working that would be one thing but his record of failure continues. His approach is wrong, his truthfulness non existent' it become clearer with each day that he must go. When will his supporters realize this?
5
I'm at a loss to understand how the measures of inflation can remain low, when for many of us the price of non-discretionary items continues to rise. Insurance of all types, property taxes, healthcare premiums, gasoline, rent. In the meantime, my wages have remained flat and the yield on my investments continues to decline. It seems like the only option is to assume more risk and how is that beneficial for the economy in the long term? The president certainly, but also the Fed, seem completely out of touch with most Americans these days and the choices we face.
4
Friends from Europe just left after a 2 week visit. They have visited yearly over the last 5 years. They wondered again how it is that year after year their costs are more when they hear, as we do, that inflation is low. The USD vs Euro is pretty much where it was 5 years ago. They are right. Discretionary items DO cost more, up a little and a little there and soon a little is a lot.
3
Now is the time has come for all brave people to come to the aid of their country .
Let’s show trump what guts look like and boot him out . He is a bully and does not understand the economy, people, climate change, or anything except what effects him personally.
9
The NYC Fed has had to intervene in the overnight repo market this whole week to prevent spikes up to as high as 10%. If the overnight repo rate keeps up this volatility with frequent spikes, the Fed Fund Rates become meaningless.
3
Make America Great Again. “Mission accomplished”
Cough! Cough!
4
Another stupid move by the FED. There is no need to cut interest rates at this moment, the market doesn't lack money, it lacks stability. Mr. Trump strives in chaos but business strive on stability and certainty. Increase the supply of money on the market won't solve the self-inflicted wounds cause by the cathrastophic actions of an unhinged president.
17
“Jay Powell and the Federal Reserve Fail Again,” Trump [tweeted], berating the Fed chair... “No ‘guts,’ no sense, no vision! A terrible communicator.” trump is such a bully!
trump wants the Fed cover to trump's failing trade war.
The Real No Guts Guy is trump.
trump doesn't have the guts to look you in the eye and say "You're Fired." Instead, he tells you 'let's talk about it tomorrow' and then, under the cover of nightfall, he furtively assassinates you, by tweet, or by messenger.
The Real No Vision Guy is trump.
No vision for: how to end the trade/tariff war with China; how to get Kim to stop firing ballistic missiles; how to end the stalemate trump after backing out of the Iran peace deal; thousands of separated families being held at tax payer's expense.
The Real Terrible Communicator is trump.
There are too many examples of trump saying the sky is blue and subsequently saying he never said the sky is blue. Boring!
trump needs a fall guy for his coming recession; it's not Jay.
Look into the mirror donald! It's you!
Your're the National Security Threat to the U.S. and the Globe.
16
@LivingWithInterest
Yes, Trump is the US's major National Security Threat and to the Globe. Should the recession happen, as some in the finance/economic world think it could; and Trump is faced with his expert-man-ship trade war failure, we the people and the world will witness (via TV/social media et al) Trump's long awaited melt down....but first and foremost for Trump - he will tweet/fire Mr. Powell.
8
"But, but, but ... the black man before me had 0% interest rates. Why can't I have them too? It's not fair!" [stomps feet]
- Donald J. Trump
16
Let's see ...
1. Attempt to arbitrarily and capriciously influence the apolitical "boneheads" at the Fed.
- Check
2. Destroy American trade and farm exports (with a quixotic trade war).
- Check
3. Wage a War on Business ("hereby ordering" American companies to stop doing business in China).
- Check
4. Alienate our long-standing allies and trade partners.
- Check
5. Go against the U.S. auto industry and the state of California on emissions standards (reversing states' rights)
- Check
6. Alienate over half of Americans.
- Check
A MAGA hat doused with Jim Jones' cult-flavored kool-aid?
- Priceless
31
And who should listen to an economic dress-down from a man who has had at least four bankruptcies in his prior life?
19
We cut to what point? Explain the benefit.
3
Mr. Powell is caving to a spoiled brat. Give him a little and the crybaby wants more. Just look at the companion piece. The pseudo-strong man pretending to be president was a failure at business and is failing in government. If Mr. Powell told Mr. Trump to go in the corner for a time out maybe we could get past this dangerous drama of seeking to appease him and get back to the job of managing the economy.
8
The tweet twit borrower-in-chief cannot feather his own nest fast enough. The swamp is thriving under this self serving administration.
6
Trump doesn't give a 'fig' about U.S. economy, all he wants is accommodation so he may assault the presidency again next year. His childish temper tantrums are well known by now, and his attempted assault of the Fed's need for independence is a disgrace.
16
Hooey, balooney, Fed is an extension for the corrupt administration. I don't believe nor do I care what Powell says, the Fed responded to the ignorant one to lower rates.
5
Trump has no qualifications to voice a position on this. He should just be ignored. Who cares what this idiot has to say? At this point, we wait him out.
11
Trump’s economic policies have failed miserably & now he is pointing the finger at his current straw man, the Fed, so he takes no blame.
6
trump fumes?
Good! Maybe he’ll explode!
6
Call it a hunch, but I it seems that Trump, just maybe, stands to gain personally from interest rate cuts? Unfortunately, as Sarah Huckabee so eloquently explained, me and the other few billion people who don't like Trump are just too stupid to understand his tax returns making it pointless to release them, so I guess we'll never know.
9
Please vote, and please vote for someone who will pay attention to what matters right now: our climate is cratering and every aspect of our energy economy needs to change. This discussion is tantamount to moving deck chairs on the Titanic. None of it matters if the planet is dead because we all will be too.
17
Trump saves millions in interest payments with a quarter cut.
Apparently he's still so deep in debt that he would like to be saving a lot more.
He probably thinks that if he can get Powell to call for negative interest rates, then that means all the lenders Trump owes money to will have to pay HIM for having debt.
27
As if we need to balance Trump’s desires and our entire country dropping into a recession?? Well I guess one of those would effect him.
8
Lowering the interest rate at a time when the economy is booming can serve only those few percent at the top who want to make a quick buck in an already overheated stock market or those who engage in some highly leveraged real estate deals. Those who don't own stocks and keep money in savings accounts are taken to the cleaners and lose again. No wonder why debt and bankruptcy king Trump wants lower rates.
21
Why do we continue to worship at the altar of continued economic growth? What's wrong with 0% growth an 0% inflation? More growth just causes more resource use, more pollution, more trash, more everything. What's going to happen when our national (and perhaps world) population starts to contract in a generation or two, as it should??
13
Mr. Trump has advocated for the Fed to give him 0% or negative interest rates.
His actions that create trade and business uncertainty are supporting the potential realization of his wishes.
It's like the arsonist begging the fire department to put out the fire he started.
If Mr. Trump succeeds in crashing the world economy, we will certainly get his wish for emergency-level low interest rates right here in the United States.
Be careful what you wish for.
12
The Fed is cutting interest rates because the economy is weakening.
How do you like dem apples, Mr. Trump?
This is all on you.
21
@MidtownATL. That’s president trump like it or not it’s trumps America and it will be after 2020 as well live it up in Atlanta but look at your city and who runs it.... last I heard people are leaving that City because of crime ridden streets.... he has owned everything he has done and said exactly what he would do and is doing it and you can’t stand it!!! Look to the sky and scream because he’s staying well past 2020
A President who has experienced bankruptcy is hardly the person who should judge the Federal Reserve. In any event, it is not owned by the Americans
14
@Simon Fraser you should talk Australia was created by all of England’s has been crooks look you have no say fix what you did to the aborigines then you may be able to help us fix America
@ Derrick Let me state it clearly. Using as an argument what somebody’s ancestors did 2 centuries ago is at best weak, at worse a perfect opportunity to be spanked back. Secondly, you may not care about Australia but the Australians have a good reason to care about the USA as this last country has the capacity to bring the world down with it. You may agree that it is a noticeable difference.
3
The Japanese and Europeans dropped their interest rates to the basement and it didn’t help.
Negative interest rates. ?
Something is *very*wrong.
18
This is really hurting seniors and savers. People can’t make any money on their money, and retirees can no longer depend on a steady income of 4%, 5% or 6% return, let alone 3, and they really shouldn’t be invested in the stock market with low risk threshold. They are burning through cash.
Meanwhile, to further bolster an inflated stock market, we are leaving no arrows in our quiver to stimulate out of an actual recession. We are running stratospheric debts during an economic boom, all to further enrich the superrich. This is remarkably irresponsible.
Dejavu all over again. Feels like yesterday we did all the same stupid stuff, under another republican, only the last one is Plato next to this cipher.
22
Time was that the American public was not subjected to every whim, utterance, and mindless chatter of someone like Trump. In the past people like Trump were laughed at, ignored, and given no pause or quarter. They were disdained, shunned, and avoided.
Now mindlessness, arrogance, lawlessness, blatant criminal conduct on the part of Trump and his minions is celebrated on the front page as click bait.
Apparently, according to various media business models, Trump sells and is a corporate profit center. Advertisers want to be alongside articles about him. It's high profile stuff to publish garbage about Trump - any garbage of any kind - no matter how mindless, dangerous, or harmful it is to our nation and national security.
If people wonder how a disgusting creature like Trump ever made it to the White House, they can look to articles like this one that put him on the front page for public consumption when he doesn't belong in the news at all.
14
Please tell us, New York Times Staff, what qualifications the president has in understanding the workings of economics? We're still waiting.
11
The view from Europe
From the NZZ, with the FT, the best finance paper in Europe
"In fact, the US economy, annualized, grew 2% in real terms in the second quarter of 2019, with a historically low unemployment rate of 3.7%. Such a cyclical situation does not actually justify any further stimulation measures, which is why a not to cut the rate was also discussed in the meeting of the Governors. Fata published in the past few days suggest that the industrial sector, which has been weakening since the beginning of the year, has consolidated that private consumption continues to develop solidly. Finally, inflation picked up somewhat in August
https://www.nzz.ch/wirtschaft/federal-reserve-senkt-zur-sicherheit-erneut-die-zinsen-ld.1509742
So why would the Fed lower the interest rate ?
1. It wants to lower the value of dollar to boost US exports
2. Powell, the Fed Chair, is an appointment of the President, and his appointment is for four years
Previous Fed Chairs (Greenspan, Bernanke) have managed to hang on to their positions by astutely judging politics - even when the Government switched from R to D, and visa
versa.
A job , where you can send the stock market up and down with a few words is addictive.
9
Your generation has enjoyed cheap housing, higher education and healthcare and many have defined benefit pensions. Young people have none of this. Your generation is most certainly not underwriting the young. We’re all underwriting the extremely rich - the common enemy.
21
@Sean Taylor. When interest rates go down the affordability of housing goes up. Your generation has enjoyed historically low rates. You’ve enjoyed cheap money. Older people are making nothing off of so-called safe interest-bearing investments.
The point is, pitting generations against each other is pointless. Each one has legitimate gripes.
12
@Sean Taylor
Let the government pay me a lump sum settlement which I can leave to my kids, and I’ll be happy to check out permanently. I’m 66.
3
@NA
Incorrect. Interest rates going down does not mean affordability goes up. It means prices go up for owners.
You don’t gain anything if you don’t already own. You lose ether way because either you pay more in interest with a lower max cost of the house or you pay more with a lower interest rate.
It benefits land owners. Not the landless.
5
I hope Powell is cutting rates out of a negative outlook and not in response to Trumpian demands. The president keeps accusing other countries of "currency manipulation" when they cut rates which results in a drip in their currencies. Mr. Trump wants Powell to do the exact same thing.How is he not manipulating the American dollar?
12
He needed a bigger interest rate cut to continue the shell game of bank loans he uses to keep his failed business ventures afloat. Release his tax returns , disconnect him fro Presidential decisions , comments, tweets that are designed to line his pockets, not what is best for the American public or economy. The great con artist is at it continually. He knows no other way to live or do business. Being a leader of the American people is the last thing on his limited mind.
29
Here we go again. The Bernanke debacle lives on. Steal wealth from depositors and give it to debtors deadbeats and wall street. The economy is already flush with $$. This is again nothing more than a tax on depositors wealth. Just like Bernanke and his theory like a bug looking for a windshield.
The Fed once again inserts itself into real capitalism. Depositors bailed out the banks and wall street in 2008 +. Here we go again. When exactly did debtors take over the Fed? The underpricing of credit risk will come home to roost one day but by that time Powell and his band of chalk pushers will be retired on the Fed. Another taking of wealth without just compensation by an NGO out of control. Fed governors spend more time globe-trotting than working for Americans. When is the last time any of these folks spoke to the seniors trying to invest conservatively who watch the Fed once again tax their wealth?
Talk about the swamp! Time to dismantle the Fed and send them back to square one, providing liquidity to SOLVENT banks, period.
8
Wow ! Bill Marr would be proud of many of the posters. He too hopes for a recession, knowing it is the only way President Trump losses the election.
2
@Gary don’t worry he is t going to lose who wants socialism besides California and New York they already love that way so they don’t know any better
Now that Trump has Made America Great Again, why on Earth would he lose reelection?
That’s right, perhaps because it was just a lie for the gullible people.
4
DJT and his whining fits with his other behaviors. I bet a look at his personal finances would reveal his family buys stock when he drives the Dow lower and sells when he drives it up with a tweet. I would not be suppose to see the Trump organization refinances all its debt to get zero or lower interest. This puts the hotel stays, payments to his resorts and other emoluments in a new light, don’t you agree?
8
Unlike Powell, Trump does have a vision: Make America Great Again.
@NG
More like make America bankrupt again.
---
If the economy is doing so great, why do we need lower interest rates and more debt?
You can't have it both ways.
21
It is always easy to hide behind a simplistic slogan (from a populist standpoint, I have to my sadness to admit that it is a good one). What’s much more difficult is to elaborate.
Anyway, despite my poor English, I thought that the new Keep America Great simplistic slogan implies that Make America Great Again is “mission accomplished”. Or it isn’t?
1
Trump is focused on short-term expansion of the economy , so as to coincide with the 2020 election next year. He is not concerned with what happens post election.
Powell and the Fed are trying to keep the economy on an even keel as long as possible and trying to prevent a slumping economy in the months post 2020 election. Keeping the Fed Funds rate as high as possible allows it to be used as a tool when the economy begins to falter. At that point it can be lowered.
But just as it is unwise to time the market because of the uncertainty of the future in the complex world of economics, so it is unwise to take actions that are not yet needed. The immense Trump tax cut for the wealthy was not needed when passed , because it stimulated a growing, vibrant economy. That tax cut should have been held back until needed. By now its stimulation has petered out and soon new stimuli will have to be used.
To lower rates now down to negative is once again acting much too soon. Powell is correct in going much slower with these cuts so as to retain the lowering tool for when the economy begins to tank , as it always has in the past following expansion.
For Trump to intervene in Fed policy is simply stupid. His knowledge of economics is limited and his interest is only on reelection. The Fed will lose its own credibility (just as the president already has) if they give in to his insults and pressure.
11
Trump 'best economy ever' needs help.
6
Trump is truly in the throes of dementia right now. 0 or negative interest rates? Only to benefit the rich.
15
Trump, who bloviated concerning the economy, “I alone can fix it, folks,” is fuming because he’s being proven wrong, an election is approaching, and it is being revealed that he is a fraud and a phony who knows more about self-tanning than about stabilizing the economy.
12
trump fumes because jerome powell isn't the political stooge he hoped he would be. most of the fed, ceo's and anyone with any common sense see dark clouds on the horizon caused by trumps' ill conceived childish trade wars. powell is smart to leave room for further action should it be needed.
6
I wish Powell would raise the rates- Trump's head might explode.
17
Trump in his own words...
“No ‘guts,’ no sense, no vision! A terrible communicator!”
... could Trump be talking about himself ?
11
Will somebody please arrange another laundered, low-interest Russian loan for trump so we can get back to stabilizing our economy?
10
If what this President has done over the last three years isn’t enough to wake the American people up out of their ignorant slumber, and he gets re-elected; then we will have no one to blame but ourselves, and we will deserve it!
4
You need not wait. You can blame yourself because in 2015, your party chose an unelectable candidate to run for office instead of doing the smart thing and choosing an electable one. I’m worried we will collectively repeat this nonsense and chose another unelectable candidate in the primaries.
4
Trump is a property developer, and he knows you juice the bird before the election. Who cares what happens after the vote?
4
This is just another example of Trump trying to destroy our Institutions. It's unbelievable that the GOP and his minions do not recognize this. Heck, if we let Trump set the policy, our Country would go bankrupt like all of his other businesses and casinos did.....(who cannot make money off a casino!! The guy and his management style are unbelievably bad!!)
3
To use appropriate financial terms, trump is morally and intellectually bankrupt. Plus, as has been quoted from a respected member of his Cabinet, he's a moron.
Now the facts:
He is personally responsible for multiple bankruptcies. involving many millions of dollars and significant job losses.
He has stiffed numerous creditors claiming false pretenses. "Sue me!", he said. Many have, and have won.
He loves debt, and forfeits on it. Wait for it...it's coming...The United States of China, who own $X,000.000.000.000's (TRILLIONS) of our debt.
trump is betting our future that the Chinese won't call the loan. He figures he can just declare Chapter 11 - Bankruptcy.
On our country.
Where we live.
Where liberators died against the oppressors to ensure our freedom.
To breathe clean air.
To drink clean water.
Where you and I have no future as long as trump has any national, state, city, town, municipal or local swimming pool locker room influence.
trump must be emasculated. Look it up. It is entirely appropriate.
5
Sex, lies and more lies. Forget the dismal science! The purpose of the Fed for the past 30 years has been to support the stock market. (WJClinton deregulated Wall Street-- something a so called Republican president would NEVER have been able to pull off. Pretend Democrat Obama supported the biggest banksters-- the bailout began under Bush -- and gave us Romneycare instead of Universal Single Payer Health Insurance.
The NYTimes reporter rationalizes the irrational and unforgiveable (inedible!!!). Who cares about the middle class and the poor. Only the rich who own the means of production matter. (We don't have competitive capitalism -- we have a monopolist system - thanks Bill... (why I would never vote for Hlllary, who did destabilize an entire country Libya -- thank you!)..
Did the market rise on the news??
I just hope I have enough to see out my days on this planet. The rest of you better get your acts together.. and I'm not at all sure Warren can do the job or even Sanders for that matter. The captains of industry have won...
1
The Fed is being relentlessly bullied by Trump who is always trying to feather his own nest.
We have a Parasite, not a President.
13
How can Trump be so stupid. He wastes his time and energy fuming about things he can't control. As Jerome Powell said, he doesn't--and doesn't have to--address remarks made by elected officials, including the mistake in the White House.
4
"No ‘guts,’ no sense, no vision!" Says the Chump in Chief.
You should hear what the Fed says about you. Just to start "no brains".
4
"No ‘guts,’ no sense, no vision! A terrible communicator!” As usual, Trump's attack really apply to him rather than the person he is attacking. A waffling moron in the WH is not helping us economically or internationally.
3
Now I am going to call Trump an idiot. Interest rates is something I know about and this man just certified himself as a moron. 25th Amendment on this alone is justified.
7
Powell, you are proving me wrong. I thought you would be another stooge. A few degrees above Mnuchin.
Hang in in there. The 25th Amendment may save us all. If we had leadership in Congress from the Democrats half as courageous as you!
3
" A terrible communicator" from our amazing communicator..... FOTUS!!!! Fraud of the US
3
Just like his many many bankruptcies - the Trump "boom" depends on trillion dollar annual deficits and the Federal Reserve cutting rates in a panic, adding more monetary stimulus just to stabilize the economy.
Trade wars and double-digit tariffs have cut global trade, ballooned the national trade deficit, and destroyed - perhaps permanently - well established global customer relationships and supply chains.
Would American workers and businesses benefit from having 7.6 billion customers to sell to or 330 million? Closed economies like North Korea and Cuba are not beacons of prosperity.
The American worker has been sold a bill of goods by Don the Con. Stop global free trade agreements and immigration and your old job will magically reappear.
Immigrants don't just take jobs, they make jobs. Half of Fortune 500 companies were started by first or second generation immigrants. Legal immigration at all skill levels helps the economy grow and offset declining birth rates.
Trade agreements do not take jobs, they transform the workplace as it has always evolved. Automation replaces workers, and businesses can depreciate the cost of the investment rather than contribute to pensions.
There is so much work to be done when a leader has the priorities of the American people and the globe at heart.
Infrastructure, renewable energy, basic research and a sovereign wealth fund for all Americans - funding health care, Social Security, education and housing.
12
A quarter point is so small as to be meaningless. It's just to make it look like the Fed know what they are doing.
"And every time the Fed cuts,
An Angel gets it's wings."
No.
That's not it.
Not even close.
Every time the Fed cuts the rate, Trump makes more money.
Or did you think that this had something to do with the welfare, of the United States of America?
David Fahrenhold of the Post, can tell you all about Trump's love of Fed Cuts.
"Follow The Money".
7
I wonder what the Fed's inflation numbers are indexed to. It just seems like food, internet, everything is skyrocketing, let alone rent. Trump obviously cares nothing about savers who can't afford to play and lose on Wall Street.
3
Of course, as long as Trump gets reelected, the next recession and a long slow weak Obama-like recovery will have the Republicans arguing again for no government spending, high unemployment, and more economic pain (as Trump and the elephants did for Obama) as long as they can blame the country’s pain on a Democratic President. Its painful to have a memory, and see how Trump and McConnell have completely flipped on economic stimulus and deficit spending as long as it might win his reelection — even if all economists say this path of action is going to cause much more hurt in the medium and long term.
9
For those not familiar with monetary and economic policy, here's an easy guide; if trump opposes something, it's likely to be sound policy.
15
Thank you for that guidence. It also applies to any policy or event. If Trump likes it it has to be bad. And vice versa.
2
The Trump tax cut did not stimulate the economy as promised and did not result in higher investment by corporations (but there were more share buybacks boosting stock prices and the executives compensation tired to that). Neither will this interest rate cut as it won't benefit those who have little or no savings (but it will certainly be highly beneficial to the highly leveraged Trump entities.
26
@H
The essence of M A G A!!!
He( DJT) is always bragging the economy is doing so well - lowest unemployment, higher wages, lowest Latino unemployment, lowest unemployment among blacks - so isn't this when interest rates are raised to prevent the economy from overheating? The lower the rate, the higher the dollar goes, reducing exports - the rates are still low enough that countries are buying US bonds, because other countries have no yield
I thought he went to one of the 'better'business schools- I have to assume somebody did his work for him
23
@John a
Or, that he is a dotard.
1
John a,
He went to Univ of Pennsylvania undergrad, never went for his MBA but since the Wharton School is part of U Pa., he drops the name as if he went there, which he didn’t. And probably couldn’t get in anyways.
6
Everyone here who is saying the stock market is ready for a big crash is missing something quite obvious. Those who have 401ks through our employers or otherwise are auto-investing in IRAs, etc. This happens continuously and there’s a immense pool of money in this market. That’s what continues to prop up this market due to the vast amount of continual buying. We’ve mostly been programmed to “save for retirement” which perpetuates the buying.
But imagine what would happen if that stopped?
What if everyone pulled their money out and sat on the cash?
7
@Hmmmm well, with Baby Boomers retiring in droves it seems like money from 401ks and IRAs will be coming out of the market as well (if only from RMDs)...
6
@Hmmmm
Sorry. Wall Street Robots run the market now, not the 401k investors. When the Robots say sell, the market will crumble. I figure 30% or more down by November 2020. Merry Christmas Donnie, Crazy Kudlow, Flimsy Graham, Moscow Mitch and the rest of the zealots!
9
Why does it make sense to take money away from savers (savings, CDs, etc.)? What's the logic?
10
@family
They have been "taxing" savers since 2008 to award debt6ors dead beats and wall street. The politicians let them get away with it so they could avoid raising taxes to fund the FDIC for bank bailouts.
2
@family
Because, trump has billions and billions of dollars of debt and lower rates are the only way he can WIN!!
4
Cutting the interest rate won't do squat to get someone to REALLY offer a quote for the many home project I would like to have completed. I would pay cash to qualified skilled labor.
6
For the millions of Americans living on their IRAs, this stings. For the rich and their investments, including Trump, no problema!
23
@pb An IRA is an investment. Every IRA, Roth or Traditional, should have a percentage of their investments in stocks. If you are too heavily in bonds and money markets then you will feel the pinch. A properly balanced IRA will hardly notice.
2
Grow up the days of real interest rates are over. I'm your age and I don't the days of double digit prime.
@Pecos Bill
Yes, I remember the early 80's with 20% interest rates on CD's. Retirees only can dream of that kind of return.
5
@John Harper Correct. Also, don't forget those massive mortgage interest rates. It's give with one hand, take with the other. Hopefully, those days are gone for good. It's never a given, though.
4
@Spanky
You're so right! We bought a house in 1982 with the lure of owner financing at only 13%! The going bank rate was more like 17-18%.
The King of Bankruptcy-aka-A Stable Genius is still hallucinating in his Make-Believe world of a stacked Monopoly game in which he anoints himself the banker then proceeds to cheat. And although a loser still proclaims himself a winner. Ah~ for the good old days when : “Fred Trump, through his attorney, bought $3.5 million in chips at a high-stakes blackjack table and left without gambling with them.”
13
Gregory, he bought those chips because his genius son couldn’t make a loan payment.
6
“Jay Powell and the Federal Reserve Fail Again,” Mr. Trump said in a tweet shortly after the Fed’s announcement. “No ‘guts,’ no sense, no vision! A terrible communicator!”
That's Trump's signature now, right - no guts, no sense, and a terrible communicator. It describes him perfectly.
28
Is it possible that he'll get so steamed up he might ........no, never mind. Don't want to build up bad karma over this ...whatever he is. The good sisters would have called him an "occasion of sin."
5
Trump "fumes" and everyone shakes and complies.
As women in abusive relationships are told: the bully tactics always escalate.
Trump abuses women, children, the list goes on. When will it end.
19
The Feds logic is that business investment has slowed because of fear of repercussions from Trump's tariffs. So why do they think cheaper money will change that? It won't. And could somebody in Trump's inner circle please explain to him that lower interest rates are no remedy for an idiot president. Equally important, as interest rates are already historically low, these changes by the Fed are meaningless. Ridiculous. Is Powell bowing to Trump?
11
@Aurora
Correct business invests if it earns its cost of capital. that's why when rates were 20%, investment was still going on. Now take a Trump. Lower rates, lower cap rates and guess what, your building is worth more while my $$ in the bank is worthless. Perfect.
2
What is staggering is there isn’t a mass outcry over Trump’s attack of an independent institution. Why is it a buffoon and bully in chief can get away with this? Is it because he attacks every other independent institution at will? When will Americans say enough is enough!? We sit here in the land down under, incredulous that the world’s greatest democracy, the leader of the free world can put up with such an embarrassment tearing down institutions, ethics, the environment, justice, respect, tolerance and fairness. To be replaced by hatred, racism, sexism, greed, lies and machiavellian principles that undermine any sense of truth and vision for the future.
42
@Thermal Mass
Forget Trump, the Fed became a failure under Greenspan and then Bernanke. The former dumped on derivative regulation. The latter got the wool pulled over his eyes by Paulson at Treasury. And on the way to the forum, depositors were hosed and their wealth taxed and transferred to deadbeats.
1
@phacops1
No the independent FED under Janet Yellen during the Obama administration lifted the economy out of the depths of the 2008 Bush economic crash. Interest rates were kept low to revive the moribund housing market. There is no reason now for Trump to compromise the Fed in demanding lower interests rates other than to refinance his own debt and those of his cronies.
8
@Thermal Mass
I’m as flummoxed as you are. I want to join daily loud and rowdy protests that number in millions of citizens as angry as I am but have found no one organizing anything except an occasional weekend march that doesn’t disrupt busy schedules. No one else sees the threat or cares, especially in liberal states like California.
It may be that our model of federalism that enshrined the tremendous power of individual states within the Tenth Amendment and the philosophical sorting of the population into liberal and conservative states that occurred over the last few decades has lulled liberal citizens, seemingly safe within their states, into not feeling personally threatened.
The last time this country had true, persistent uprisings was in the 60s over the Viet Nam war. I once thought Baby Boomers, the generation protesting that war, were progressive, peace-loving heroes. But after living for over three decades in the self-absorbed and gluttonous country they built by decimating the tax base for repeated tax cuts and dismantling the great social and technological progress of the mid-20th Century, I realized they weren’t protesting war. They were protesting being drafted to fight. They inherited greatness but didn’t want to do the civic work necessary to keep it great. And here we are today.
Similarly, no one is going to bother fighting Trump and Republicans beyond occasional pointless marches until lives and lifestyles are personally and seriously threatened.
5
If Powell is a disaster. If he is a terrible communicator. If he is ruining the Fed. Then Trump should fire the guy who appointed Powell. None other than the Donald. Trump clearly must fire himself. Now that is reality TV that will get great ratings. Trump will be number one.
6
Does it smell like America's great again yet?
17
In other words:
Our economy never recovered. We never reached a point where things could function smoothly with reasonable rates, and we never entered a period where normal people could save their money without having to play the stock market. Young professionals just starting out have no idea what saving via a standard bank account looks like. That's a piece of history now.
We eliminated the savings opportunity of our entire adult population for a full decade, and we lied to ourselves about a recovery, citing farce-like unemployment numbers but turning away from data about labor participation, wages, job stability, insurance, etc.
And now, the Fed, worried that our non-recovery might have played itself out, will send rates down from "negligible" to zero.
What a country.
12
@Anonymous
You're so right. As a (soon to be) 70 year old, I'm amazed that everyone is supposed to understand "the market" and come out ahead with enough to fund their retirement. Not to mention their disadvantage against computer trades. No longer banks giving you a small percentage to use your money, now you're paying someone to risk (and sometimes lose) your money.
The rates should be going up not down so that the Fed will have something to cut when the next recession hits. This is just pandering to the cheap money junkies on Wall Street that have had a decade of almost free money from the Fed and other central banks.
24
Two words - Janet Yellan :)I doubt these cuts will aide Middle America. The banks will continue to gouge with huge credit card rates and zero interest in savings.
9
Trump is just trying to refinance his debt at a zero interest rate.
26
@Alan Bingo!
This is why many Americans didn't think a businessman would be a good president. The Federal Reserve is the end of the line! If a bank takes losses or, god forbid, goes under, the market fills the void. Unfortunately, if the U.S. economy suffers "losses", we are all the void.
8
The most self-centered person ever to occupy the oval office is willing to cause whatever long term damage may come, all for a short term artificial economic spike. His only short-term purpose is to help win reelection. All of this in the same way Trump has artificially extended the economic cycle by putting $1 trillion worth of tax cuts and excess military spending on the national credit card. The socio-economic hangover we are all going to suffer from the Trump years will likely last for decades.
18
Yes, I know, President Trump knows better. He is, after all, an expert in warfare (he knows more than his generals), an expert in intelligence (CIA, FBI - what do they know), but I wasn't aware that he was also an economist. Wow, we are really blessed to have one such as he at the helm . . .
8
The president can never leave well enough alone and trust the central bank. He thinks he knows more the experts. The Fed should never bow to the president’s cockamamie judgment especially considering they are an independent organization that does not bow to politics.
7
Giving the very rich tax cuts while cutting HUD low income housing and food stamps is appalling. We have always been the most generous country, with gratitude for refuge from famine and war being in the upper mind of most Americans.
This administration continues to weaken every branch of government while seceding it to the most avers. We need to stay alert.
19
So, according to Trump, this is the Greatest Economy ever experienced in Human History, but 2% interest rates are threatening it. Huh.
27
Did Trump really go to college? Did he graduate? Can he read? Do math? Know geography? Study economics? Know the difference between supply and demand?
Trumps reasoning for lower rates is he needs to get himself out of the tariff problems, tax cut problems, budget problems and his personal problems.
21
@Gazbo Fernandez
Answers:
No, No, No, No, No, No, No.
As you say, Trump's reasoning for lower rates is because it is all about him. When are people going to learn he only does/says things that benefit him and him alone.
13
OK, enough, we will be moving into an election year where there should be no undue influence exerted by the Fed. If Trump want to continue his trade war, that's on him.
5
I hope and pray the Feds stick to helping our country and don't give in to Trump pressure for his re-election.
11
I am currently reading "The Great Crash 1929" by John Kenneth Galbraith for the 3rd time. Change the names and dates and here we go again. It is sadly funny because we as humans keep falling for the same scam over and over again. I am reminded of a cartoon that showed a diner with a sign in the window that read "Free Lunch $9.99".
26
@3Rivers
"History doesn't repeat, but it often rhymes." - Mark Twain.
Tax cut causes 1.5 trillion debt, Tariffs cause 30 billion welfare to farmers (just the first of many payments) 6 billion dollar loss to consumers . Just a few of our losses due to the total ignorance of Trump people. Now, he blames the fed for all this disaster by not creating "loose" money?
25
Trump has "no guts, no sense", no vision about financial markets or much else.
13
If the economy was doing as well as Trump says it is, the Fed would have raised rates, not lowered them.
If Trump really cared about the American People, instead of throwing temper tantrums
in the hope of getting to the Fed to help reelect him, he would be leading a serous discussion (sounds crazy right?) about legislation to reform the Fed to make it work for citizens instead of global banks.
The only thing Trump cares about at all is Trump. We all know it (and that is exactly why his base loves him). That makes every official decision Trump makes an act of corruption, because the job of president is to execute the law, not self aggrandizement.
Trump is a series of High Crimes against the Constitution, which specifically ended rule based on the personal whim of the executive. Trump never made a decision that wasn't based on his whim.
List and explain Trump's attacks on the Constitution, which are High Crimes.
Stop worrying about Iran, and worry about the true threat to the USA, dismantling Our Republic from the top down.
By the way, when the Treasury creates money, to grow the money supply, it belongs to We the People, not global banks. The Fed should decide how much they want to grow the money supply by, and divide it equally between every citizen of the USA. You can't grow the U.S. economy by giving low interests rates to foreign banks that invest in low wage countries or bet it on derivatives.
Money in consumer pockets grows the economy and drives investment.
14
As usual, Trump wants somebody to clean up his mess. If it works, he takes credit. If it fails, he blames them.
Has there ever been a more deficient human being as president of the USA? Let’s agree to get somebody with some class in 2020.
35
@Mike Iker
Class would be nice, if I’d settle for literacy.
6
@Mike Iker Yes. Class, competence and deep usable knowledge please.
2
Who really cares what donald thinks? If he wasn't whining about interest rates he'd be whining about the media, or the Democrats, or ___________________________________________________.
Anytime I want to verify donald's business qualifications I only look at the pics of the Trump Tower and Casino. If I want to seek a source for donald's reasons to advise the Fed I'd start with Deutsche Bank. 1/4 % means a lot to an Oligarch. It's really about that simple.
12
trump has clearly lost all control. This is why the 25th was written.
13
I don't know why Powell doesn't listen to the great businessman in the White House. After all, that "great businessman" has 'only' put six companies in bankruptcy and lost a BILLION dollars, more than all others put together.
20
@BigFootMN Correction - The Current Occupant has lost more than any other SINGLE person. But it was over a billion dollars.
8
If the President weren't throwing wrench after wrench into the gears of the U.S. and world economies, maybe this would never have been "necessary." Please fume into the mirror, which we know you use liberally, Mr. President.
7
Trump obviously doesn't care about anything but himself and re-election. With interest rates low and tax rates low, the next recession will have no tools to combat the downward spiral. This is an omen that wall street doesn't seem to care about. And remember how many of them called the last recession---essentially zero.
Interest rates in Europe negative...and low in the US leaves an uncertain horizon--especially with debt beyond ridiculous.
Hold on to your assets, it is going to be a wild ride.
7
Trump tweeted that “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”
naïveté?
Has someone hacked Trump's twitter account?
9
Where was it that Trump earned his PhD in Economics? I forgot.
9
Trump U, that world-renowned center of academic excellence.
6
Must have been trump university, that world-renowned center of academic excellence.
3
Fed should not have cut rates. First time the Fed in history with the economy at full employment acted so wimpy. Low rates kill the return on bonds for the retired. At this time every President after Trump should just keep yelling at the incompetent Fed. There was no reason to cut unless they wBt a weaker dollar.
4
It’s a shame that yet another supposedly independent body of experts has decided to pander to the president.
4
The Fed is lowering interest rates as a consequence of uncertainty caused by trump's trade war and he fumes they are not doing enough. Perhaps if trump ended his trade wars and put his twitter phone away it would have the same effect. Try cleaning up your own mess Donnie Boy.
8
Trump has found the perfect dog to kick when it comes to the economy. What were his grades in Econ in college again?
1
Evidently, America didn't really take the hint when Trump's casinos went belly-up.
5
So, according to Powell the economy is strong and unemployment numbers are low.That is good! But wait, there are uncertainties.That is bad! Why doesn’t he just come out and say that Trump’s Trade War is hurting the economy-why doesn’t he say that the chaos that Trump creates on the world stage is affecting other economies.Powell does not say these things because he is part of a Fed which is accommodating Trump and his economic idiocy.For years the Fed has been independent and trusted to run monetary policy with trusted economic models. Under Trump, the Fed has caved and is wiling to go for cheaper and cheaper rates, whether or not they are needed.When rates are zero, what does the Fed do to help an unexpected economic shock?
5
Great to see Powell and the rest hanging touch and showing Trump who's boss.
I want to ask Trump, "What's it like to rule over millions of people, the majority of which are much smarter than you? It must be terribly lonely at the bottom."
7
I could care less whether the "Pres." is happy about this or not.
1
If you could care less, then you must care a little.
1
The nest of rationale attributed here to the Fed's cut today is an enormous mishmash of irrelevancies and flat out lies. Typical.
1
"No guts, no sense, no vision. A terrible communicator." (It's maddening hearing this buffoon describe competent people this way.) How dare Powell refuse to be another presidential lapdog. I guess not everyone is on board with the one and only administration goal: getting trump re-elected while helping his personal bottom line.
5
So the grifter in chief wants zero interest rates and castigates Fed Chair Powell.
The grifter in chief is a disaster.
Thanks GOP.
7
DT, the so-called king of debt, is pressuring Powell to get us to a point of no return. WHEN the recession hits, the fed will have no wiggle room if Trump gets his way. Let’s please vote this disgusting bully of a president out of office in 2020.
6
Recession on the way. Thx Trump
6
Good boy, Jay, good boy...here’s a bone...got to prop this thing up until a year from November...
3
Must be tough on the Fed trying to figure out how to counteract whatever stupid thing the president is about to do.
5
our economy burns, Putin dances
5
Trump doesn't know what he's doing!! His daddy gave him all his $$ interest free, no doubt, or he knew ways to write off the debt, not to mention how many times he declared bankruptcy. He's "leading" our country now and criticizing the FED for having no vision? LOL. Please, Mr. Powell, keep your armor on and don't listen to him!
5
I hope we get a recession in time to vote the yellow haired idiot out from office.
4
@MikeG
DJI 16,000 by November 2020.
Even with Powell FIRED!
This is insane. Lowering interest rates will not stimulate the economy it will actually do the opposite. Many individuals and institutions rely on interest rates as part of their fiscal viability. Older people who do not want the risks of owning stock have money in CDs paying almost nothing. Likewise institutions such as pension funds see their reserves shrink as bond yields drop. All this is doing is propping up a bubble stock market that badly needs a correction. I feel like this is September 1929 and a few of us are frantically shouting a warning that is being lost on the wind.
120
@Richard Perry
So you are 100% correct . There is plenty of money out there as it is. Corporations can get a loan any time it wants. The word bubble is almost taboo right now on the street, but they know exactly what is happening. Squawk box had a guest about a year ago who referenced 1929 have not seen him since. The street keeps saying this is different this time, that it is the consumers who are just buying. Well just like all the other " it's different this time" when the consumer stops guess what, its not different. All corporations did with there tax cuts were to basically buy back stock to inflate there worth, so it is not just the consumer. When they can't refi there debit with the lower rates the ones who are overstretched on the margins will crash.
6
@Richard Perry
Oscar, I didn’t live through the Great Depression but did live with its aftermath. Born in 1941, I became aware that it had wiped out my family’s wealth. We “ used it up, made it do, wore it out”. The lessons learned guided me through life and the Great Recession, and I live modestly to this day. This may or may not be like September, 1929, but I’m prepared for any eventuality. I plan to vote for Bernie Sanders in 2020- none others. All the other candidates, taking corporate cash, will dance to Wall Street’s tune.
3
Aside from the millions of dollars he personally saves with every rate cut, Trump must want the interest rate lowered so that the tax payers who’ve been paying for his tariffs and his tax cuts for the wealthy can borrow more money to pay for his next boondoggle and another round of bribes for the farmers.
15
Hector,
Taxpayers are paying the tariffs? Are you sure? Our economist-stable genius president says China is paying them. I’m crestfallen.
You'd be crestfallen if you believed anything he said, and suddenly discovered the truth, but I can tell you don't get your "news" from Fox. Make Apathy Great Again.
@Hector
Sorry, but you missed some obvious sarcasm. Rob agrees with you.
There is something terribly wrong about Trump criticizing the actions of the Fed. Does this man think he has expertise in everything? This is a person that ignores science. Whether it is economic or physical. He has all the answers. Really? Let's see what happens when the bill comes due on the huge deficit we are running. Let's see what happens when he and his administration are wrong about climate change.
9
OneSmallVoice, you think they’ll know (or care) when the bill comes due? They’ll be long gone, but trump will be tweeting from the golf course and blaming the next president for messing up “his” fantastic, amazing, incredible, best-in-history economy.
4
@OneSmallVoice
But isn’t it true that they are already wrong? Do they care?
Even as he insults the Fed Chair, that same chair recklessly takes away normal tools available to the Fed in advance of when they would be most needed.
6
Trump super charged big business with his tax cut and de regulation; Big Business can literally do anything they want. What could go wrong?
6
I am no economist.
While on one hand - judging from the excellent graph - we are on the cusp of a recession.
On the other hand - this move may have stalled it's 8nset by a couple of years.
The graph is also powerful in telling us that America's economy has structurally changed - at least as far as rates go.
Less than two plus decades back - we were roaring at 6 percent Fed rate.
Economists follow trends based on historic data.
If Fed suggested a hike - I think the White House will get riled up by a tweeter storm.
1
For a non partisan independent entity they sure pay attention to a lot of noise...
6
They threw Toddler Trump a tiny bone for his tiny hands, but not one that will cause harm. If they did what he really wanted the cut would have been substantial
It's just so weird how the "strongest, most amazing, beautiful, greatest economy of all time, with historic low unemployment," would necessitate a multitude of rate cuts.
It's almost like the economy is only amazing if you are already rich.
26
@Mike
Also, for some people there is no ceiling on their desire for money. They have an endless appetite for money. The economy may be good, but the rich can get even more rich, so they want to push Dow 30,000 and make their fortune.
Meanwhile, slashing rates and getting to Dow 30,000 doesn't help the vast majority of people very much. You're right that it mostly helps people who already have a lot of money to invest. Part of what makes the stock market go up is companies being more profitable, which probably means they are not raising wages much.
As far as Trump, he just wants easy money like he has had for his whole life. There are no consequences for him being greedy and reckless like there are for so many Americans, including most of his supporters.
4
One great worry for economists at the moment is the threat of recession. If we are hit with another recession and we have already bottomed out interest rates, how are we supposed to reignite the economy?
13
@John
That is traditionally done by fiscal stimulus. You know, borrowing at low interest and using the money to employ people. Maybe you forgot since it hasn’t been done too much lately.
If Trump's not happy about the cut it must be the right thing.
Powell has shown that he is the adult in the room and I hope he stays that way.
17
@BTO
And what room might that be, surely no room for Republicans.
Yes, there was a tiny lowering of interest rates. But this is not needed. The Trump Tax Cut took care of all of the financial problems that Trump inherited from Obama! Actually, I am just joking--Obama left a roaring economy, but Trump does not want to admit that.
Trump and the GOP gave big tax cuts to the ultra-wealthy and big corporations so they would bring back that money earned outside the USA. The (feeble) hope was that the big corporations and ultra-wealthy would invest in US factories, but an extra yacht, but the big corporations just bought back their stock and gave their executives a big bonus and did not buy a yacht or two or three. Now that boost to the big executive's effective salaries (bonuses and lower tax rates) are over that Trump needs a winner for his (hoped for) reelection.
Trump reeally needs this, since as no longer president (a job he is unsuited for), but as an ordinary citizen, he would be indicted for obstruction of justice. And convicted, on the basis of his televised statements.
18
What Trump wants is a monetary policy that will smooth out or better, negate, the consequences of his terrible trade and fiscal policies for the next 12 months. Does not care what happens once he is re-elected.
22
'President Trump, who has been pushing the central bank to cut interest rates to zero — or even into negative territory'.
Hmm, I wonder why he is so adamant about getting interest rates low? That would mean borrowing would be cheaper, wouldn't it? And, real estate developers need cheap capital, don't they?
I guess being President has advantages when you are a 'successful' businessman.
Hmmm.
45
@Gdnrbob
Yeah his rich buddies have to be loving him...first he gives them a huge tax break (which) the middle class will pay for...then he gives the cheap money...
2
@Gdnrbob I guess he could also refinance his mortgages on his properties.
1
The last republican president , George Bush, left us with a Federal interest rate of .25%.
That still wasn't enough to stave off the biggest financial crises since the great depression.
Trump has proven to be a business man that stiffs his creditors by claiming bankruptcy.
I don't know anyone who has claimed bankruptcy once , let alone six times.
27
They did it in 2007 lowered the rates and another bad GOP President Bush took us into a very bad recession. Wallstreet was right Trumps recession is coming soon. Good his supporters will reap what they sow.
9
@D.j.j.k.
Unfortunately, so will the rest of us.
Trump pushing for lower interest rates represents a big conflict of interest (pun intended). He owns a real estate business, and their single largest cost is loan interest. Lower rates benefits him directly to the tune of millions a year.
For some reason, this never gets reported in the stories mentioning him pressuring the Fed to lower rates.
52
@Danielle Yes, it does, but nobody much cares since they know he's lining his own pockets. His base loves it!
1
If you look at the chart it is obvious that over the last 34 years the rate, in both non-recession periods and periods of recession, has been trending downward. This means that the Fed has been boosting the economy through lower interest rates regardless of the economy’s health. Thus the economy has built in an assumption of low interest rates and responds negatively to increased interest rates even if the economy is booming. It also means that when we actually do have a recession there will be very limited ability to boost the economy through lower interest rates.
142
@Lance Michaels haven’t rates been trending downwards because inflation also has? I’m no expert on the matter, but thought the primary purpose of monetary policy was to keep inflation under control.
However, Mr Trump seems to think monetary policy is there to boost asset prices... generating price bubbles, which inevitably end up busting — all this resulting in, who knows, yet another financial crisis.
But the great era of 2008 international cooperation is well behind us, so any future financial crisis will be far tougher to tackle.
4
We will never know if this is just Powell caving in to Trump, who has bullied Powell because he needs to offset his disastrous China tariffs, or if there’s suddenly a legitimate need for help. I strongly suspect the former. The economy would be booming but for the tariffs and is still chugging along. If only Yellen had been like every other Fed chair before her and served two terms. But Trump can’t stand women so we lost a great Fed leader.
20
On the positive side, "what's his name" will likely lose millions of votes from the retired folks that depend on CDs, T-notes, bonds and interest to meet expenses. Those options were just barely yielding 2% and now that's gone again. Next they will probably go after SS/Medicare and higher taxes on the old folks.
23
@Taoshum i would not be so certain... they do not mind pain so long as everyone else suffers
Speaking as a senior, I really resent the way that I and my contemporaries are being forced to subsidize the economy with these absurdly low interest rates. We are the age group which is most concerned with income from our investments (as opposed to hoping for long-term capital gains, which we won't be around long enough to enjoy). Therefore we would like to be able to invest in bonds and T-bills -- but with these miserable interest rates, what's the point? Now Trump thinks we should even be charged for investing in bonds & T-bills (to say nothing of all the CD's whose interest rates depend on the interest rates that the govt. is paying...). Seniors, when are we going to wake up and start wondering why we should be the underwriters for everybody's else's satisfaction....
369
@Piri Halasz
It’s not like this was hard to see coming. I remember back in 2015 telling as many people as I could that Donald Trump was a terrible businessman, and I also recall a lot of Boomers telling me that I was too young (30 is too young?) to understand the economy.
I don’t like being right. I’d much rather have an equitable economy that works for everyone instead of the quagmire we are currently in where the only people benefiting from the market growth is already wealthy people, but here we are.
Elections have consequences. My only hope is that seniors vote for the Democrat candidate (whoever that is) in 2020 to regain some semblance of a functioning government again.
211
@Piri Halasz
Are you sure seniors are the underwriters? It seems as though everyone that falls below the much talked about one percent is an underwriter assisting said billionaires with their continued growth.
75
@Piri Halasz Not just seniors should notice this. Of course, any child alive today is on the hook for paying back Trump and GOP tax "savings" of the TRILLION dollar 2017 tax bill, which gave huge permanent tax cuts to the rich and to businesses -- even as everyday people, some 98% of the population, got a small, TEMPORARY cut. Will kids today notice their future debt, lessened opportunities, and poverty? Knowing as almost all do now that global warming and continued population growth are making the earth uninhabitable-- will kids notice? or vote?
63
Say what you will, but President Trump has been the lone voice calling early on the Fed string of interest rate increases a mistake.
And he correctly put pressure on the Fed to reverse course.
The Fed, reluctantly, has no choice but to recognize that the President was right, and the Fed was wrong and is reversing course.
Of course, the President wants them to correct their mistakes faster.
The USA now has the highest interest rate amongst our developed country peers in Europe and Japan (which have negative rates even).
Trump was right all along, and is right. The Fed is lagging the economic reality.
It is incalculable how much damage has been done by the Fed raising rates so many times in the past 18 months.
And this week, the Fed could not even keep the minimum money reserves liquidity - it's basic function - operating normally. Companies didn't have cash available to pay their taxes.
The Fed and Powell, indeed, were boneheads. They should be ashamed.
@Baron95
It is normal to raise rates when the economy is doing well to allow for lowering when the economy needs a boast and to keep inflation in check. What is not normal is Trump's trade war and what it is doing to our economy. Trump knows he has our economy in a bad place right now and needs the Feds help sooner rather than later due to the upcoming election.
5
@Steve "It is normal to raise rates when the economy is doing well"
The Fed has FAILED all these years to hit their inflation targets. That is their self-imposed goal.
They raised rates too soon and too fast. They are backtracking.
It is NOT normal to raise rates when inflation is significant below your target which is what they did.
They have a symmetrical 2% target, which means inflation should be sometimes above, sometimes below symmetrically around 2%. They have NEVER hit 2% under Powell. And he was raising rates.
Until the President forcefully called them out on their error.
@Baron95 Nonsense. The Fed was doing what needed to be done, then along came Donnie's trade war...
2
One of the best performances by a Fed Chairman I have witnessed. Powell was cool, articulate and clearly knowledgeable about the steps taken and its basis. His press conference was outstanding in the manner in which he addressed his many questioners and dealt with every query with patience and respect. Our Fed is in capable hands.
10
@Karn Griffen
Also he's able to operate while being insulted constantly by the wanna-be dictator president we have now. All the more power to him!
What goes up must come down. It's not if, but when the stock market will crash (again). It's at record highs so it will probably be a record crash.
With the interest rate and taxes already so low, what can be done to stimulate the next depression? Besides tweets from an angry clown, that is.
19
Feds do not cut already historically low interest rates with a strong economy - It is being done solely to artificially make the economy look better than it is going into the 2020 elections to appease Trump. This is not a good idea, and will make the looming recession even worse.
91
@S B I doubt it will be "only" a recession. This is a record-high economy. We are surfing at the top of an high wave - a wave so big there is no precedent.
5
@Observer
On paper it looks like a strong economy. In practice, it is not strong. and there are many indicators to show this. Many people still are not doing well. Housing prices are out of control - wages have been stagnant. So, the economic recovery has not been evenly distributed.
12
I think it’s time we give trump another job, he can also serve as the president of the federal reserve.
After all folks he is an economic whiz, just look at what he did for all those kids at trump university!
19
@Jonathan P
And all those New Jersey Casinos!
Not to mention the thousands who lost jobs, pensions and benefits when he bankrupted four casinos. Thankfully trump himself didn’t lose any money!
So did Powell do this to avoid being called a Bone Head again or even worse. I don't mind so much as I am currently saving money for a down payment for a house in the near future, so Powell if you want to cut the interest rates again in the near future, be fine with me, and I won't even call you names.
5
@Ricky I agree, I will call him good names and send him thank you notes as I also prepare to buy a house.
Fed is acting like a inexperienced and frightened soldier. It reacts to nervous stock market like a soldier shooting off all his ammunition at shadows. When the assault or recession comes, it will have no ammunition.
24
@Robert Fallon
It appears to me that the Fed is lowering rates to avoid a recession before it starts. A recession caused by Trumps failed trade war.
1
@Steve
When you don't have many bullets it is sometimes best to fire them early when you see trouble.
Please someone make it stop. Trump sabotages the economy with erratic and capricious trade and tariff policies. He handicaps our fiscal outlook with deficit-fueled tax cuts that did little to stimulate the economy. Then he browbeats the Fed for not adequately counteracting his own policy failures.
This is the economic equivalent of a dog chasing its tail – except its putting us at risk of a recession and costing American businesses and consumers billions of dollars in tariff payments to the US Treasury.
The outcome of the fight ‘Tariff Man’ picked with China is foreordained. China’s is a 3000-year-old civilization and should have no problem waiting out Trump until January 20, 2021.
21
We know where this is headed. The Fed will cut and cut and cut...till there’s nothing left to cut. Negative rates ahead!
4
Excellent informative article. Good journalism.
5
Tragically for Donald Trump, America has not become his fiefdom YET. The Federal Reserve exists to serve us and not "The Chosen One" AKA "Michigan Man Of The Year." The Federal Reserve Board needs to keep our countries best interest in mind when they make rate cuts and sadly that is now in question.
7
PLEASE , Son of Liberty, don’t besmirch my home state like that!!! There are plenty of critical thinkers here in Michigan, and we know a beady eyed rat when we see/smell one. Michigan Man of the Year, indeed. Foist him off on a red state that REALLY loves him, like West Virginia.
And good riddance.
4
Thank you President Trump for putting lie to the fanciful notion of central bank independence. Feel free to continue your beat-down of these unaccoutable monetary mandarins for more interest rate reductions.
4
And who should Federal Reserve Bank be accountable to? The stable genius in the White House? Our politically riven Congress? The Wall Street profiteers? Everyday Joe and Jane who can’t spell central bank, let alone have a clue what they do?
No thanks. I will stick with them doing their technocratic best to fulfill their dual mandate while they ignore the short-term thinkers all around them, not to mention those who barely think at all.
1
@Mike Iker
How about accountable to the United States of America? And not their masters in finance and banking where the next career move is likely to reside.
1
1 year: 4 months: 2 days until Trump is out. But who's counting? :/
28
@Harmon Smith
Can we have a clock to the minute like the national debt one?? CAN'T HAPPEN QUICK ENOUGH!!!!
1
Weak President. Weak Federal Chairman. Creeping us towards a dangerously fragile and weak economy.
18
And, Trump attacks the Fed as gutless and without vision. I will trust the Fed first, as President Bankruptcy Six Times knows not what he is talking about, of course unless it benefits him above all.
12
@TIm Love Lower interest rates *do* benefit Trump. He owns a real estate business, and interest on borrowed money is typically the largest expense for such businesses.
Pardon the pun, but this is a big conflict of interest for Trump.
2
Bullying from 45 is the cause of this. This FED leader is incompetent if he can't keep his decisions separate from the president. There is nothing sacred left in our institutions under this deplorable administration. 45 will do anything to get re-elected which he does not deserve.
9
Is there anyone who isn't afraid of the bully other than Iran, North Korea, Putin and the Saudis?
7
The destruction of our country continues unabated!
IRS, DOJ, USAF, NOAA, and now the Federal Reserve. All corrupted by the Trump maladministration. No one will trust any government agency again after this travesty.
11
When you keep cutting the rope there may not be anything to hang onto. Just saying.
6
Ok Don, look in the mirror, and repeat this in a perpetual loop: “No ‘guts,’ no sense, no vision! A terrible communicator!”
6
Outstanding.
Trump creates a financial crisis with his abominably ignorant tariff idiocies and then bullies the Fed into dropping the rate yet again.
We know what this is all about.
So he can essentially do a re-fi on the billions he owes to banks and oligarchies around the globe.
It’s like a whole new level of dishonesty from what has to be the most dishonest president to ever stain the Oval Office.
I think we have an answer to Nixon's famous quote just before he quit in shame.
Our president is a crook.
He needs to go now. November 2020’s too late.
37
The president’s petulant remarks are beyond tacky.
4
Beyond manly, too. Where is repeat where is Our President's testosterone, the world wonders.
Let us look at the last time when interest rates were low, The banks refused to lend to the SMB client base, rather used their cash to prop up the stock market and made money for themselves.
The real reason why the EU, BOJ are looking at lower rates is to spur domestic consumption, and prevent the weak EU economies of Greece, Italy, Portugal, etc from destroying the Euro. EU economies benefit from domestic consumption as they have double digit VAT's or GST type taxation built in.
In the USA, retail is collapsing, Auto is mired in labor dispute, tariff wars, and regulation that is State led, rather than Federal.
If the banks pass the lower rate to clients, to refinance homes, buy cars at 0%, reduce interest on student loans, then this will have impact.
It is also supposed to help imports, but with our Tariff weapon being unleashed at China, EU, other allies, that is dented deeply.
What a sad state of affairs. A president imposing tariffs on a whim and when he can't get what he wants. He's hurting our economy, the stability of trade around the world, hurting American farmers and other businesses which are subject to retaliatory tariffs, hurting all American consumers with higher costs of living, people already struggling to survive.
He couldn't care less. He's playing a game with our economy when he's not playing golf. As the economy falters he blames others and villainizes the Fed. But only he is to blame.
Oops, take that back...he, the Republicans in Congress and their voters are all to blame.
Make America great again must be a reference to the period in American history prior to the hard work Alexander Hamilton, et al did to unite the states with the Constitution, rescue our nation from bankruptcy, and put us on a sound financial footing for economic growth.
That period had everything Trumpian: economic insecurity verging on national bankruptcy, white male power dominance, blacks oppressed, states divided, people suspicious of one another, deep distrust of the federal "government."
But one good thing American government had in that early period of our history, that we don't have today, is men of genius, knowledge, self sacrifice, vision and patriotism. Such men and women are now running for the Democratic nomination. So there remains hope.
7
This is not what a free market economy looks like, and we've seen what happens when the economy running on borrowed money.
Please vote for Elizabeth Warren.
She can win, and she can make capitalism work for the people who are actually doing the work.
9
Greatest economy ever needs constant rate cuts?
21
"Sharpie-gate" should give everyone a crystal clear view of the lengths that Trump will go to in order to protect his incorrect views. To have press conferences and vitriolic statements about the National Weather Service to defend one of his tweets when he could have just let such a minor issue die is indictive of the infinite length he will go to in order to promote his view of our economy.
Mr Trump has defaulted on many debts in the past. His overwhelming desire to take from lenders via artificially low interest rates to fund his agenda (and personal real estate empire) is yet another example of how others pay the price for his riches.
9
John, speaking of Sharpiegate, is nobody surprised he even found Alabama on a map? I know I am.
Low interest rates and deficit spending were the only things keeping the Obama Economy afloat.
Why should we expect anything different now?
@EGD
So you are saying Trump is copying Obama? Trump would probably fire you for that if he could.
1
@EGD I will take the stability of the Obama administration over the erratic mess we have now. Obamas policys especially his meaningful middle class tax cut raised up out of a almost certain depression. The debt he inherited from the previous republican administration was the result of a reckless tax cut while putting a multi trillion dollar war on the credit card. I'm sure you probably know this.
2
Great. Another personal benefit for Trump. Another "nothing" for the American people.
Trump gains $850,000 for every 1/4 percent interest drop. That's why he pushes the Fed so hard to lower interest rates.
He owes Deutsche Bank $380 million in 4 variable interest rate loans, so lower interest rates benefit his personal wallet enormously.
He's done his best to trash Americans' personal economy, and with his trade wars and tariffs, has trashed the world's economy.
This ranting at the Fed to lower interest rates is aĺl for his personal benefit.
So, Ka-ching! Trump just won himself $850,000!
Sources: Business Insider and Bloomberg, August 2019
331
@Lilou
Great points. They make me wonder if Trump actually had a nefarious motive when he began throwing gravel into the gears of the world economy with his trade wars.
Hard to believe Trump could be clever enough to conceive of such a stunt, but he certainly possesses the requisite greed.
5
@Think--I think he's really familiar with tax dodging, with inflating personal wealth to get loans, then deflating the same wealth to pay taxes, or to pay loans back. He is not alone in this--it's typical of those who have enough wealth to hide.
He knows how to use real estate loopholes, how to benefit from banking transactions, how to pump up how excellent his properties are to attract investors. Then he refuses to pay the contractors who build them.
He knows the ins and outs of being sued and winning, the art of the payoff and that of the settlement. He bullies employees into signing nondisclosure agreements. He's well-versed in bankruptcy, having gone bankrupt 6 times.
He knows how to not obey the letter or the spirit of the law. HIs dad and mum taught him racism, dad schooled him in tax dodging. They were both sued for refusing to rent apartments to people of color.
So he has a ton of knowledge and experience in taking advantage of institutions, laws and people to accumulate wealth. No one ever accused him of being kind.
His tax returns probably reflect undervalued property and overvalued debt, plus dodgy deductions.
I'd like to know about his investments in fossil fuels. He loves them, has destroyed the EPA and environmental protections for them. What is his financial return in them? I think it's more than campaign donations, and possibly well-hidden in off-shore accounts under proxies.
2
@Lilou
Grifters gonna grift.
1
1. The Fed does not operate in a vacuum. It operates in
a global economy. That is, its decisions are influenced
on what the Central Bank of Japan (BOJ) and the
European Central Bank set as rates
2. The EU is the words largest economy . Last Thursday
the ECB cut its deposit rate to a record
low of minus 0.5 per cent and restarted its
€2.6tn quantitative easing programme of bond
buying to supresss the long term interest rate
(Contrary to Mr. Krugman’s claim in the NYT on 0/15
the Central Banks since 2008 set both the short term
AND long term interest rates. The latter with QE)
Japan is the forth largest economy.
The BOJ targets are
- 0.1% for the short term interest rate, 0% for the long
term interest rate
3 Two days ago, the ECB announced that it was prepared
to cut rates again
4 Last Thursday, Mr Draghi, head of the ECB denied
that his
his move was to lower the exchange rate of the Euro
Of course it is. The Euro promptly fell to a new low,
The EU economy is export driven, and the best way
to boost it to make exports more competitive by making
the Euro fall
5. That is, we ARE in a currency war, never mind that the
Central Banks deny it. Of course they would
1
In spite of the trump tariffs the Chinese have him over a barrel. If US consumers need clothing or household goods where are they going to get them from at any price but China. We don't make anything in the US anymore.
6
@Steve
US industrial production is as high as it has ever been. We just don't need as many people to do it due to productivity improvements. What the US doesn't do as much any more is low skill/low capital work. An example is clothing. Cotton from Alabama is shipped halfway around the world to Asia to be sewn into T-shirts, then shipped back to Alabama to be sold at Walmart.
Cotton farming is very capital-intensive, needing big tractors, balers, and transport trucks. Sewing only needs a $600 industrial sewing machine and a few weeks training to do quickly. So it goes to the places where labor is cheap.
Let me understand. Our economy is fine, Germany's not so fine. That's not a sufficient reason to cut our rates further to historical lows. If there's comes a time when there's a real problem with our economy, they will have already used up their ammunition.
The Fed should be an independent body as much as possible to balance economic growth and inflation. It's not possible, under this particular President.
11
One must step back a few years, maybe a lot farther than expected. And, ask the question where have all the $Billions gone that the gov't gave the business community to build, to grow, to add jobs, to increase investment, to raise wages, to lower unemployment rates, to increase jobs, to increase exports, to lower business taxes, to do all those wonderful things economist and the GOP say are needed, that will result in a vibrant, increased economy, where have those $Billions gone? All those dollars paid for not by the wealthy, but by the working middle and lower classes. What has been accomplished?
35
@Me Too
Stop whining, We made the oligarchs super wealthy and the investor class. Jamie Dimon of Chase is worth over 1.5 billion dollars and makes $33 million a year before investment income and he is small change compared to Mark Zuckerberg or Jeff Bezos. We can all be proud that we made them the Masters of the Universe, just ask trump. We owe a debt of gratitude to the Republicans for being the facilitators. You will soon have the opportunity to give up your Medicare and Social Security so that we can further enhance their bank accounts.
11
@Steve
I'm not whinning, just asking a valid question. As to medicare and soc security, you are right, less for me and more for the wealthy's bank accounts. Thanks for the reminder.
3
@Me Too
I was being funny.
So much for Trump’s hope that cutting rates would boost the market, the only measure he cares about. Even if it indicates a weakening economy.
His motivation to push for negative interest rates, punitive for savers, is also based on the expectation that the market would be thus artificially inflated, as people have no other forms of investment left. I suppose it would be a good time to purchase real estate - if you can take that risk in a bad economy! once again, the rich get richer
13
Trump probably thought the stock markets would go up after the rise. The guy understands nothing about economics, and little worth anything about business.
Except the criminal way of running one. Which is how he's trying to run the USA.
20
@Barry Williams
Without a doubt,a perfect description of where we are right now.
I am continually impressed by the vision of our Founders. The emoluments clause is an example. How did they know there would be a DJT?
@Mike Westfall That actually isn't that hard to predict - their world had seen it before. Especially men like those, most of whom had read at least some of the Bible or had some familiarity with enough of the Old Testament.
Evidently, what they didn't foresee...or hoped they had provided for enough to forestall...is how the nation they forged could end up with so many venal, craven politicians running it such that things like the emoluments clause can be all but forgotten.
Apparently our economy is much weaker than we had been led to believe. While the Times article dwells exclusively on cyclical factors to account for that, I think we should give attention also to structural factors. One of these is an undereducated, oversubsidized labor force. Another is overregulation of industry, which has driven millions of jobs off shore. Another is the payroll tax, which drives jobs out of industry and into the "gig" or shadow economy.
6
You object to payroll taxes? Where do you think Social Security checks come from?
4
@Rob Kaufman That's just the point. Business is forced to subsidize these programs like social security, which contribute nothing to profit and productivity. And then we wonder why foreign manufacturers are eating our lunch.
@James Ribe: Hope I live long enough to see you get to be old and poor. Pa-tooey on youse.
So if the economy is so great, why do they keep lowering the rate?
34
How fragile and illusory was the independence of the Federal Reserve. It disarmed itself before the coming recession because of a few mean tweets from the President.
19
@Walt Bruckner Actually, no. They're trying to head off a recession. Problem is, they have little wiggle room left for tweaking interest rates - certainly not in the headwind of Trump's inane economic policies. You'd only go negative rate if the economy was in deep trouble - and that would be a panic move.
A few weeks ago a Trump supporter commented why should we worry about the economy - the government can just print/create more if we need to. Seems like that might just be what Trump thinks, too. I mean, that's pretty much what he wished he could do for his failed businesses. It's what he basically experienced when it was Daddy bailing him out again and again.
6
@Barry Williams It is really a recession if an economy is just returning to a more normal rate of unemployment? To think that we can operate long-term with 3.7% unemployment is more than optimistic.
The Fed erred by waiting too long to increase interest rates after the recession of 2007 and letting unemployment get below the long-term norm. Now Trump will do anything to maintain our current level, regardless of the long-term consequences (note his assault on decades of environmental regulations that have improved our lives). What works in the short term will only make the inevitable worse.
The reason that there is so little wiggle room with interest rates is that late stage capitalism is an oligarchic kleptocracy that requires a state subsidy to survive. That is essentially why the Davos crowd (and their acolyte in the presidential race, Andrew Yang) is so enamored with Basic Income Guarantees. It is a bribe to keep consumption-based capitalism intact, as is artificially low — and soon to be negative — interest rates.
What impact will this Fed interest cuts have on whatever profitable Trump Organization advantage that is hidden from the American people in Trump's personal income tax return and business accounting financial records arising from Trump's occupation of the White House?
Trump calling for Jerome Powell to cut interest rates has already given the appearance of corrupt craven dependent political partisan fealty by the Feds.
21
Trump's main beef with Powell and the Fed earlier this year was the bank's turn toward (very mild) hawkishness under Powell.
In other words, Powell has been doing what Janet Yellen should have done years ago, but lacked the guts to do.The rate hikes under Powell are far too small, of course, and the Fed's balance sheet continues to be enormous. Powell knows that dumping the Fed's assets, which would have few buyers in the open market, deflation would likely set in.
(According to the dominant ideology in DC, this would be a terrible thing.)
But at least Powell appears to realize that unless the Fed can get the target rate back up to a level sufficiently above zero to allow for maneuvering in case of recession, the Fed will be boxed in.
Trump, who has never demonstrated any actual grasp of monetary policy — or economics in general — just wants to keep the current boom going. And whether he knows it or not, the "false economy" Trump pointed to under Obama is now Trump's false economy.Trump doesn't want that to go away so he now publicly calls for lower interest rates.
Given this, it's now a pretty safe bet that if recession does come during Trump's presidency, he'll be calling for ever-higher levels of stimulus and QE infinity. If he's pushing so hard now for low rates, just imagine what he'll do when the going gets even tougher.
The most dangerous words in the English language" This time is different."
12
Now who here really believes this is about keeping the economy strong? I am going to go out on a limb (not really) and say that a certain "King of Debt" businessman masquerading as a president is loosing HUGE amounts of money and would love to refi his debt near zero, or negative rates, because wouldn't it be great if the bank paid you for taking out loans? Especially billions of dollars worth. Nah, I don't believe Trump's rate obsession had anything to do with the economy.
31
I mistakenly thought Chairman Jerome Powell would be a Profile in Courage. Interest rates must get to 3% to provide stability to our financial system and citizens. This is not complicated.
19
So this begs the question, did they do it because of sound financial analysis, or because simply Trump wanted them to?
48
When people are at the extremes, the marginal effects of monetary policies are slight. There is not enough wealth amongst consumers to increase demand and without that potential, investors and lenders will not change what they are doing by much. The factors leading to recession are not going to be offset by an interest rate cut with such low interest rates previously in effect.
7
I am so strung out already. And Trump says that this is a “great” economy. Real, working Americans will not be able to handle another crash or even slump in the economy.
I work at a factory in Ohio. We already have employees sleeping in their vans outside, blocking the light out with trash bags. The Fed will have nowhere to go once’s things get really bad. We need good quality healthcare. We need affordable childcare. We need unions We need structural change.
309
@Mike If you need structural change, do not vote for Republicans. They do not care about struggling Americans.
68
We need to vote Trump out of office.
32
@Mike And America needs folks like you and all of your fellow citizens to vote wisely.
15
Oh dear, the chancellor won’t like this - as we all no he wants minus points. So be prepared for another job change. Has anyone seen Ivanka holding a calculator?
10
The Fed is making gradual interest rate cuts in contrast with Trump, who wants drastic action. But most agree that the recovery is slowing and some stimulation is called for. The one organization that differs is probably the most important. According to the IMF, world growth was at 3.5% last year, has dropped to 3.2% this year, but is expected to return to 3.5% next year.
Despite all the supposed signs of decline, the world economy seems to be doing ok. If you stimulate a healthy economy, you tend to create inflation. We have been in a long period of growth without inflation. But we were burnt in 2008 and have been traumatized. Everyone from Trump to Krugman is fearful of another recession. No one fears inflation. That is a mistake.
9
This move is sadly lacking in consideration of the future. If the economy tanks, as some economists say it will, how's the Fed going to counteract that?
Trump is only looking out for his reelection prospects. The economy is the only thing he has going for him. If it tanks, so does his likelihood of reelection. This is not at all fiscally responsible.
33
@VickiFuture?
Future? What future?
1
The good thing about Trump is that none of our most important institutions listen to him, thank goodness. Powell sees sluggishness and wants to gently stimulate the economy. He has little room to maneuver with rates this low, which is why the cut was not unanimously supported. Anyone who thinks that zero rates are good need only to look at Japan and The Lost Decade(s.)
12
Spot on!
I fear that this rate decrease is to not “stimulate” borrowing but to increase liquidity and bail out the big players in the bond market. Some folks made some big bets. The 40 basis point jump in 10 days is hard to comprehend. 60 basis point drop during the month of August. 2.08 to 1.47. What big “Long Term Capital” player got bailed out. I think this has something to do with why Trump has moderated his position on “lock and loaded”.
I am waiting for the other shoe to drop. The NY Fed intervened for a reason. What is that reason? Who or what requires a 50 billion bail out?
Normally an attack on the Saudi oil fields would have seen a huge flight to treasuries. But between Friday and Monday only a 6 basis point drop in the 10 treasury yield.
Who did the New York Fed bail out? This retiree wants to know!
57
Let me understand this:
* Unemployment at all time low
* Wages rising
* Inflation likely to go up due to oil prices going up
* Everyone says a recession is looming soon
Yup, perfect time to lower interest rates to zero. When the recession does come, Powell can sit on his hands because he has nothing left to counter the down turn.
It doesn't take an advanced degree from Stanford, like mine, to figure out this is the worst possible action the Fed could take.
274
@MoneyRules
Milton Friedman repeatedly insisted that the Fed cannot control interest rates. They can control the money supply by printing money (writing checks with no backing to the Treasury for Treasury notes, otherwise called monetizing debt, sort of a fictitious direct deposit to the Fed). No need for any sort of advanced degree to grasp the idea, as he spelled it out in an easy to read little book entitled Money Mischief. None of his work is conceptually difficult in any case, including his work on money, though he did not have much of a grasp of science or statistics. But making it easier to lend money is useless when no one wants to borrow. Trump doesn't get that, as he always wants to borrow money. And trying to control the debt market, which is auction driven, can be dicey if buyers simply don't pay attention to your intentions: witness, for example, the failure to raise interest rates when the Chinese bought everything in sight at auction, keeping rates low, during Bush the Younger's administration.
5
@J Chaffee Maybe this will be a time for developers and resource extraction companies to borrow. Could it be that Trump intentionally engineered this for these types of organizations, against the everyday voter and their family? Or is the current economy just an accident born of failed trickle-down voodo and rash trade efforts?
7
@J Chaffee A) this was a theory, B) The fed has trillions already on its balance sheet from QE that cannot sit there forever and C) interest rates to matter because they determine bank lending rates. There's a huge surplus of capital in the market place creating an asset bubble never before seen in history. Good luck with that one.
6
Will this move by the Fed panic market investors into thinking that a rate cut means the Fed sees trouble down the road?
9
@RLW
It does that to me. I will be looking to pare stocks.
3
Yes.
Well, now we know who’s gonna be blamed if Trump loses in 2020. Nothing like serial bankruptcies to make one an expert in economics.
39
Trump is dealing with the economy like he has been with climate change, national security, infrastructure and other critical issues. He is ignoring those with deep knowledge and expertise about how the world works and what puts global stability at greatest risk. He enriches the rich and exacerbates the growing concentration of wealth in this country to the detriment of most Americans and ultimately, the wealthiest although it's the former who will suffer the most and longest.
28
What will we do when the business cycle does its thing?
5
I thought the economy was in great shape- better then "other countries" . So what the rewal story- you know, the truth?
8
Donald needs more cough syrup medicine for his weak economic house of mirrors.
Oh he's a 'businessman' alright.....that drives businesses out of business; you can look it up in bankruptcy court.
November 3 2020
137
Seeing your comment brightens my day despite the gloom that pervades everyday since Donald J. (Genius) Trump was anointed president.
1
Yes, mr trump, we will lower interest rates yet again to further enrich you, your family and your sycophants.
50
Trump is going to be REALLY mad, and scream they should have done 1%.
He and his buddies were all long, and the market didn't rally by 300 points.
Well, actually he did:
Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!
4
September 5, 2016 - YOUNGSTOWN, OHIO (Reuters) - Republican presidential nominee Donald Trump, who has previously accused the Federal Reserve of keeping interest rates low to help President Barack Obama, said on Monday that the U.S. central bank has created a “false economy” and that interest rates should change.
“They’re keeping the rates down so that everything else doesn’t go down,” Trump said in response to a reporter’s request to address a potential rate hike by the Federal Reserve in September. “We have a very false economy,” he said.
“At some point the rates are going to have to change,” Trump, who was campaigning in Ohio on Monday, added. “The only thing that is strong is the artificial stock market,” he said.
Funny how his tune has changed.
421
@Susan
Susan, you know that, if challenged, the Swamp King will tweet furiously that he never said that, that it is only fake news … and his base will lap it up, as they, lemming-like, go down with the sinking ship.
24
@Lone Protester, and Susan, the hypocrisy from con man 45 is par for the course.
13
@Susan
I doubt 45 could even spell 'hypocrisy' without looking it up.
9
Powell clearly isn't independent in his decisions but rather influenced by the Trump tweet tirades. He has not only lost support for his decisions within the Fed, but also significantly lowered his response opportunities should these cuts fail and the US slide into a recession despite. Look for a free fall in that case.
12
Good news for the wealthy, including Wall Street investors, Fed members and their cronies, politicians, and presidents.
13
Just act based on the data Jay, not what Trump wants. He and Jared have massive debt to refinance at lower rates. That's the primary reason he wants lower rates. Act on the data.
24
Based on th chart, the rate cuts do nothing to prevent recessions. It seems more like a response that is too late.
1
B-b-b-but I thought the Trump tax cuts were a panacea for everything that was wrong with the economy? I don't understand.
[/sarcasm]
46
Even Powell's own committee was unhappy with this decision. The vote was 7-3 and non-voting members were not favorable either. The FED is rarely this divided.
Meanwhile the economy continues to be strong and core CPI yoy is surging above target. Unemployment is at record lows and the stock market near record highs. It's not the environment for emergency measures.
Despite this, rates are being cut in an attempt to placate the chosen one, who is going to be distinctly unhappy the FED is not cutting rates to zero and restarting QE.
Sad to see a supposed independent body this politicized. Surely Trump will fire Powell and replace him with uber dove Bullard, the sole member to vote for a 50 basis point cut. That seems to be the way people get hired in this "administration".
31
@James Trump cannot fire Powell as he doesn't have that power. Powell reports to congress, not the president.
3
In the context of malignant macro economic conditions created by Donald Trump's corporate welfare and reverse Robin Hood gifts bestowed upon wealthy corporations and individuals via unnecessary tax cuts, this interest reduction is an ominous portent of an impending massive economic reversal. This next recession is going to be a doozie. Brace yourself!!
15
While the interest rate cut helps some Americans, it hurts those Americans who depend on interest income for retirement. It discourages savings. Adjusting interest rates to steady the economy that has been upended by Trump's trade wars is like wagging the tail to control the dog. American leaders must forcefully tell Trump that he is destroying the economy and must stop. They must galvanize pubic opinion.
61
@Francis "American leaders must forcefully tell Trump that he is destroying the economy and must stop. "
But he listens to no one but himself.
20
The RISK is Trump.
Period.
230
@Phyliss Dalmatian Phyliss, you have that right. Probably the worst president in American history.
11
What about home refinancing? Theres not much of value here on the upside for consumers or homeowners. Just a global focus. Insufficient news piece.
There is no appeasing Trump unless everything is precisely his way, wise or not. Meanwhile, is this rate cut, to say nothing of a near-future cut, wise? We will be so close to zero as to have little leverage when we do hit a recession.
Negative interest rates will hurt almost every saver, but especially retirees, who depend on interest in part to support themselves. Terrible idea!
103
The house of cards continues. Keep believing and it can go on forever...or not.
67
The cut is a mistake we will regret as conditions worsen and this source of relief will have been found to be depleted.
Powell is playing to Trump’s toon but will nevertheless be lambasted for not swinging hard enough. Serves him right. Hard to respect a chairman who doesn’t respect the independence of This country’s central bank.
126
So, Trump has made America is no better than China when it comes economic manipulations.
157
@Independent American Trump has no ethics. No morals. No ideology. He doesn't believe that two wrongs don't make a right. All the whataboutism he and his supporters display indicates that their attitude is do what you can get away with, right or wrong. Even if the ones you accuse of doing it didn't really do it at all.
But a lot of Republicans, like Mitch McConnell, have been doing that already, for a long time. At least the relatively fewer Dems who do it try to hide it, and are embarrassed when they get caught.
9
@Independent American
Fishy.