Absolutely spot on in implying that monetary loosening aims at depressing the exchange rate.
Begins to look like the 1930s: Populist leaders, trade wars, competitive devaluations.......
1
Too bad the Trump Slump will end 10 years of a great economy, eight during the Obama years.
16
I hope it is a big recession lasts for years and hurts many GOP supporters of Trumps. They need to learn how their votes really affect the world economy.
6
It’s a race to the bottom the USA won’t win.
Remember just after trump was elected the dollar strength spiked to 1.06 to the Euro.
trump wants a dollar more like 1.6 to the Euro like when our economy crashed.
2
Article after article is published in this paper since yesterday only on one issue. What are you suggesting ?
Do you really think there is s down turn in global economy or aimed at something else ?
Is it not to facilitate the big companies to take more loans at low interest so that they can make huge profits out of it on account of their pressure.
Rate cuts will definitely benefit middle class as far as housing and other loans are concerned that too at the time of ever increasing rents and even home prices and college tuition fees.
The media--print, electronic, and flapping caffeine-fueled lips--have all united to convince everyone and thereby ensure that a recession is a few short months away. Great...
1
We are quickly approaching a point where America will be blamed for an economic disaster if this doesn’t work.
Bypass McConnell Republicans and impeach the president.
13
The trade war will now be coupled with a currency war.
Reminds me something about the Great Depression of 1929 and the countries that jumped off first from the gold standard: it helped transmit the crisis from one country to the next.
6
@SJP
I don’t think it’s a currency war. It’s an attempt to try and keep things afloat with the one tool central banks have.
The president does not have the wisdom and knowledge to admit this entire trade war enterprise was a mistake from the start. He will insist upon taking the entire global economy down with him, so that he does not have to admit error. Instead, there will be blame toward Jerome Powell, blame towards his critics, blame toward media. It is as if there is only a vast emptiness in the president, something incapable of error and harm that he calls "Trump", in the third person.
30
Imagine what he’ll do if he loses the election!
4
I wonder how these drops will affect Venezuela?
The Fed. must NEVER become an ER for stupidity!
8
Meanwhile Trump is giddy for a trade deal with the most methodically sabotaged currency in the world, British Sterling.
8
When all countries cut rates at the same time, the net effect on exchange rate would be reduced, and lower rate would not necessarily increase investments as businesses now have no idea what Donald Trump's policy tweets will be on a daily if not a monthly basis. How do you revamp your supply chain if the countries you settle on may be the next country on Trump's hit list.
12
Tons of money is available in the market right now, and businesses don't need the Fed to lower its rate. Politics should stay away, and let the markets adjust to demand. Lowering rates only creates a greater false economy. Why can't central banks understand that? It is like summer is around the corner, okay, time to increase the price of gasoline. Really. How much longer must we have this political play influence the market. Do you think by lowering the Fed rate that exports will increase? Pitiful. It is not difficult to understand why our universities are still graduating students in the field of economics based on 1920s theology.
12
Trump has set the tone of mistrust, power games and protectionism. Economy is built upon human trust. The end game of his economic ploys and rhetoric are the same as those on immigration - utterly destructive. You can tweak interest rates all you want. The fact of the matter is people like Trump and those who mimic him are undermining the basis for cooperation, trust and working economies.
19
@1blueheron - you have to consider that Trump may be bolstering a bit about how rates need to be cut, knowing all along that they are going to be cut regardless of his input. That way he can claim a victory by telling his faithful that “I had to force the Fed, that terrible, outdated body of elites, that believe they know better than the American people, to cut interest rates”. Or, simply claim outright that “I cut interest rates”.
2
@Floyd Honestly - I think more along the lines of Canadian economist Michel Chossudovsky, who in the 2008 crash - said the elite wanted a depression so that they could be up the nation cheap and privatize it - own us. I think Trump is on a crash, burn and buy trajectory.
15
A few moments ago Mexican central bank has just announced a rate cut from 8.25% to 8.00% its the first time since 2014.
6
Maybe Trump should call Obama for advice. He has lots of experience rescuing America from GOP economic policies.
His experience is much more recent than when Bill Clinton had to do it.
33
Trump can't argue the United States economy has never been better, but the Fed needs to stimulate monetary policy by cutting rates.
That is inconsistent, but no one ever accused him of being consistent, informed or competent. Six bankruptcies attest to his business prowess.
To debase and insult the Chairman of the independent Federal Reserve Bank is outrageous. But the country has normalized so many of his repulsive tactics.
Interest rates are not too low given 3.7% employment, massive fiscal stimulus through deficit spending, and core inflation ticking up above the Fed's target at 2.2% annualized last month.
The strongest policy measure to help improve the US and global economy would be to dump Trump in the next election.
41
@David Parsons
Sorry, 3.7% unemployment
Unemployment, as in Trump and his family of nepotists should soon be unemployed.
3
The greedy will finally reap what they have sowed.
5
Trump does what Peter Navraro says. He's an eccentric, ignored economist who ponders to Trumps uber America delusions. Trump is clueless but happy that his tariffs ringing the Treasuries cash register, paying for his destructive income tax cuts with the tariffs passed on to the consumer. A Macabre scheme. He doesn't understand or care. Steady ahead as the country sinks.
20
Since the 2008 financial collapse, the largest financial implosion since the Great Depression, the US FED, ECB and BOJ have injected $ trillions into their respective economies to stabilize/inflate equity markets, prop up [still] insolvent banks, and prevent defaults on corporate debt. As a result, global debt levels have exploded to circa $250 trillion. US Government debt now exceeds $22 trillion and growing $1 trillion/year and does not include municipal, corporate or consumer debt, while mortgage debt now exceeds its 2008 peak. Thus, despite a decade of Central Bank largess, the global economy is faced with slack demand and excess industrial capacity and appears to be staring at a recession. Central Banks are at it again- lowering rates and expecting things to be different this time. One sign of insanity is doing the same thing over and over again and expecting a different result- Albert Einstein.
23
I seem to recall that the great writer and historian Barbra Tuchman in her Pulitzer Prize winning book ,'The Guns of August', mentioned how in the run-up to the the uber-travesty that was WWI, the Great Powers spent an inordinate amount of time and energy in attempting to manipulate their own currency and economies in order to weaken their rivals- Which ultimately only resulted in a series of very self-destructive trade wars.
And that along with these endless trade wars, Tuchman detailed how the world wide social-economic changes which were occurring within the Great Powers own respective countries (which were brought on by the pressures from
their own restive populations to change the ways of the corrupt and debauched old guard) resulted in an entirely preventable stumbling into the horrors of WWI (and WWII Btw). Deja Vu?
29
@Birddog Insightful. Thank you.
10
@BirddogThe only way to have prevented WWII was for all the concerned parties to ignore Hitler's and Stalin's invasions of Poland in September 1939 and to let the Polish people be exterminated, in accordance with Hitler's well-known Obersalzberg exhortations to his military leaders a few weeks earlier. It also requires that the world stand by after Aktion Barbarrosa in June 1941 when Germany invaded Soviet-occupied Eastern Poland and the western Soviet Union. That raises the question, should the rest of the world have accepted the loss of even more millions of Slavic lives as a necessary price to pay for avoiding a new world war, and, equally importantly, who is to say that Hitler might not have stopped there and launched attacks against China and the USA, so that WWII would have occurred anyway. only with different timelines?
3
@CuriousDave
The Guns of August is about WWI, not WWII.
6
"Race to the bottom" pretty much sums things up.
32
@FarmCat
Never forget that the race started long before Trump. The all out assault by the filthy rich against the rest of us began in earnest under Saint Ronnie.
We stood by and let it happen. Our 401(K) looked good---while it lasted. Sad.
18
The Foreign Central Banks are responding to the recent lowering of interest rate of the Federal Reserve - they have to in global economy to keep their countries competitive
The Fed's lowering was seen widely outside the US as the starting shot of a free for all.
But in defence of the Federal Reserve - it does not operate in a vacuum. The EBC, under "whatever it takes" Draghi preceded the Federal Reserve by setting interest rates, de facto , negative. The WSJ has more details
You can now, in Europe, get a mortgage at negative rates (yes, the bank will pay you interest if you borrow).
If that strikes you as absurd, you are right - this monetary policy can not last
===
https://www.wsj.com/articles/the-undeclared-currency-war-how-the-ecb-is-forcing-the-feds-hand-11564490313
12
@WoofIt may not last, but, as we saw with China recently, it may be replaced by other measures to keep countries' exports competitive - such as currency devaluation. The Chinese have ued that as a tool for decades and now that the U.S. has said "enough!" everyone gets upset, even though most of the world's countries have used devaluation themselves at one time or another when it suited them.
4
Trump will do whatever short-term fix is available to keep the economy going, or appearing so, until the day after the election. Beyond that he doesn't care.
44
One thing that can cause a recession is a long economic expansion. During the expansion, too many people build credit card and other debt, such as new vehicles.
At some point, they have trouble making the payments and that causes them to cut back on spending. There is a tipping point where so many have to cut back on spending that demand is reduced to the point people begin to be laid off.
That reduces spending even more.
When this happens, government should step in and cut taxes and borrow money to stimulate the economy. The fact is, Republicans and Trump did that when the economy was roaring back in December 2017. That increased the deficits and National Debt.
Back then, just one and a half years ago, they should have been reducing the deficits so they could stimulate the economy when the recession came. They did things the exact opposite of what should have been done.
66
@Tahuaya Armijo Tax cuts were more important to the Republicans, they only care about deficits when they don't control the White House.
39
@Tahuaya Armijo Another thing that can cause a recession is a wildly incompetent President trying to start a trade war with China because he thinks it makes him look "tough."
10
This is rather concerning because as rates get cut, the return on government-backed bonds goes down. Yesterday, specifically in the United States, the bond market surged, as it usually does when people lose faith in the stock market, with prices going through the roof and yields in the opposite direction. More people are investing in bonds that are now worth less.
19