Debt is being "bundled, sliced into securities, and sold off to investors." That's Sept. 2008 deja vu folks ! That combined with corporations taking on more debt and the federal gov't. under Trump going over $1 trillion in national debt, and I can see a worse financial disaster than '08 since the Fed has much less room to cut this time. This is the reason I just paid a $2700 penalty to bust a bank CD paying 1.5% into a 5 yr. CD at 3.25% before bank rates plunge after the 1st rate cut. And forget about putting money in the stock markets now.
The Fed should not adjust interest rates as a bailout to failed administration policies on trade, taxes, or spending. If they start cleaning up after Trump, they're on a wild goose chase and will end up complicit in whatever economic mess is created. Instead, Chairman Powell should leverage the Fed's independence and speak out against policies that bring harm to the economy.
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The Feds are fools to lower the interest rate. Why, because our economy is not market driven, it is a false, inflated, government run economy. It is no different than China. It is one running on false taxation as a result of GOP's tax reduction plan for businesses and the wealthy, subsidies that only subsidize prices, just like Trump says China does thus needing the self destructibe tarriffs that are imposed. Doesn't the Feds realize the absurdity of this situation. If it lowers rates it will only lead us to a worse situation, and it will not be known for being conservative but for being a team member with the White House: meaning just a political player owing its allegiance to the White House.
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The Fed stands ready to once again manipulate the US currency. And it is not OK for the Chinese to do the same. Because I said so.
3
Correct me if I'm wrong, but the Federal Reserve does not exist to do Wall Street's bidding. Have we forgotten that the US taxpayer bailed out Wall Street a decade ago despite the financial industry's greedy, incompetent behavior? Wall Street is acting like a spoiled child whose parents have given him an extra helping of ice cream and now demands more.
3
If he really wants to help people he should cap credit card interest and not allow banks to borrow unless they keep credit cards alive. That one area is where banks squeeze their customers with relish!
1
Why does the federal government want a positive rate of inflation? Because inflation helps borrowers and hurts savers, and the federal government is by far the biggest borrower in the US economy. Why the "magic 2%" rate of inflation? It must be what government and Wall Street have worked out for themselves, behind closed doors, as their Goldilocks number: Enough to help the government, but not enough to do much violence to the wealthy's cash holdings. It's "just right."
And for the rest of us? It's everyone for themselves in this rigged, smoking-gun economy.
3
Let's not forget that interest rates are still far below a 'normal' historical range. The fact is that, like hard drug users, the financial industry has become *addicted* to 'free money' for the past decade at the expense of the US taxpayer. Many Wall Street workers have enjoyed phenomenal wealth as a result. It's past time to give Wall Street a big dose of Nacan and raise the rates.
3
Paul Krugman wants easy money also (i.e. lower interest rates). He agrees with Trump. Traditionally, it was supposed to be good for the laboring classes. But Wall St has ALWAYS loved cheap money.
The ironies of a society in decline.
Good luck America.
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* Stock market near record high
* Unemployment well below what is considered "full employment".
* The last round of stimulus went largely to corporate stock repurchases and to the 1%.
There is no need on earth to lower our already low interest rates except to line the pockets of Wall St. Basically, Wall St. has priced in all of the gains that we've made since 2007 and is begging for more. They are addicted to the Financial Fentanyl of cheap money from the Fed.
Worker wages haven't kept up because they lack bargaining power. Lowering interest rates doesn't change that.
Price stability = 2% inflation? By definition that statement is incorrect. This is bad math created by lawyers. What they are really saying is a stable *rate of increase* or stable *rate of currency devaluation*.
Inflation is nothing more than a tax on savings.
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What happens to our economy, when Trump can no longer rig parts of it in favor of his friends and family?
I can't imagine people's jobs or retirement accounts are safe for much longer.
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People’s jobs and retirement accounts haven’t been safe since the 1970’s.
2
I hope the fed waits until a cut is needed for the economy and not listen to wall street.
6
If rates are lowered now, when the economy is still fairly good, what tools will be left in the toolbag if an actual recession occurs? Is this sound management, or a patently political gesture to prop up a Republican president?
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One would hope that the Federal Reserve is not responding to Trump’s bullying tactics with tariffs.Tariff wars can be started and stopped and should not be the main theme of the calculus to lower interest rates.Trump has no grounding in economics, otherwise he would not have had five bankruptcies and left many bond holders and banks holding the bag.Trump’s insistence on lowering interest rates is specious.It is his simple minded solution to the chaos he is causing by ratcheting up trade wars and trying to use trade as a main tool of diplomacy.The Fed should not be complicit with Trump’s tariffs as his form of diplomacy.
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Just note: the perfect scenario is established to rein in wage increases. Could this be why Trump's advisors give him room on tariff bantering?
4
So we cut interest rates to prop up an equity market? For consumers, interest rates are historically low. Cutting rates will hardly increase their capacity to borrow for homes, autos and hard goods. Just how are corporations supposed to earn profits without customers?
We tried all sorts of tricks to prop up the economy 2004 - 2007. What we got was an asset bubble. How did that work out for everyone?
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Articles such as this one, when reporting year to year wage growth, should include inflation rates so that real ( i.e. inflation adjusted ) wage growth can be calculated. If such were done that 2007 wage growth wouldn't look so good.
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With low inflation, and a stable economy (even with seemingly unstable events transpiring constantly), it appears that the interest rate raises came too fast and too frequently. A slow and deliberate approach is best, let's see how things progress going forward.
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@G G
The interest rate increases by the Fed after the crash of 2007 couldn't have come slower. They came so slowly that Wall St became addicted to cheap funds and priced everything accordingly. We have an entire generation that has never seen interest rates of any significance. Now look where we are.
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@G G: Interest rate fell swiftly after a financial 'crisis' a decade ago in which the US taxpayer funded a TAR
@GG: Interest rates fell to zero swiftly eleven years ago and the US taxpayer was suddenly responsible for a tremendous TARP to bail out a corrupt financial industry. Many years later the fed started with a .25% raise and continued slowly over a couple years to get to (the still small amount of) 2.25%. And yet you maintain that "interest rate raises came too fast and too frequently". I know who you work for.
to
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Why is the Feds foolish and cowardly consideration not receiving more alarming coverage?
The Fed isn’t here to serve the stock markets.
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The trade wars will put the fed between a rock and a hard place:
They cool down the economy which requires the fed to lower interest rate, but at the same time they will trigger inflation which requires the fed to increase interest rate.
2
Jerome is afraid of Trump and has fallen into line to keep the Wall Street party roaring while penalizing savers, as has been the case for over 10 years now.
19
Another misleading article about wages by the NYT. When GDP figures are analyzed, one speaks of real, not nominal, growth rates. That takes inflation out of the equation, so that real growth is left.
Not so with wage increases. Nominal wages increased by 3.1%. With inflation running below 2%, that means that real wage growth is more than 1%. The author says that wage growth has not touched the 3.6% rate of June 2007. For nominal wage growth, that is correct, but it is false if one wants to know about real wage growth. In 2007, inflation was 2.8%, so real wage growth was 0.8% at its peak. That means that real wage growth currently is higher. The story is much the same if you look back at the 1990s, when nominal wages grew more quickly, but inflation was higher.
3
We are in big trouble as Wall Street again runs amuck. When the recession hits again, there will be no room for interest rates to "save the day." Clearer minds need to prevail and determine interests rates with the future in mind.
27
It is telling that Trump's actions are actually a negative variable that the Fed must consider, that speaks volumes .
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