The Trump tax cuts failed to boost the economy, created large dieficits, and fostered greater inequality, and largely went to stock buy backs, dividends to investors, bonuses to executives.
The constant drum beat of trade wars and imminent tariffs prompted businesses to stock on imported supplies before prices went up.
The Fed analysts see this, as well as declining business investment and consumer spending, a slowing housing market, and rising farm bankruptcies, and sends cautious signals.
And Wall Street and the investor class cheer these signs of a weakening economy because rate cuts mean they can buy more stocks with cheaper credit.
But thereâs no evidence that cutting interest rates would make a general and measurable difference to the broader economy. Yes it would enable the investor class to buy stocks on credit more cheaply, but those transactions do not âtrickle downâ to job creation or higher wages.
trumps economic policy is centered around swirling around the bathtub drain in hope that unlike history the outcome will be differentâŚand powells sustainability policies wont let that happenâŚ
And the whole point of the Fed, like the Federal Judiciary and the DOJ, is that it be independent from the President and his crass political agendas. Unfortunately, since Reagan, the GOP has largely subverted the independence of the Judiciary and the DOJ by appointing ideologues. Now, the Baboon Dressed in Silk President thinks he can make the Fed Chairman lower interest rates to favor his polling and reelection prospects.
Itâs said that Nixon got the Fed chair to lower rates in 1972, believing it would help him get re-elected, but also that the move, among other factors, helped fuel inflation.
This is a good point. Numnuts likely thinks the Fed chair changes interest rates singlehandedly, simply by deciding they should be changed - to whatever the President wants. Just like he thinks all government should be run.
I think it would be interesting to see if he does try to oust him. Courts would have to get involved, I think it would be an interesting test of the SC as it would clearly be beyond his legal rights.
Do you honestly think they even remember any of the other stock market panics/scares that have happened on their watch? 2008 wasnât all that long ago and look where they are today.
Iâm not convinced. Whoever replaces him would be compelled to cut interest rates. That might give a short term boost to the stock market, and unfortunately people equate the stock market with the economy. The slowdown may not happen until after Nov. 2020. It will happen, and a cut in interest rates will only make the landing harder - quite possibly a 2008 repeat - but if all he wants is to prop up the economy past the election, an interest rate cut may achieve that.
Also, yes the US is teetering toward instability, but where on Earth do you see a more stable economy? They are all unstable. If you pull your money out of the US market, out of US treasury bonds, where do you put it? Gold?
Unfortunately, for the uneducated stock market=economy. Orange Voldemort is only hoping to forestall the coming recession beyond the election. If an interest rate cut boosts the stock market, people feel the wealth effect, think things are rosy, and keep buying. You donât need job creation when the unemployment rate is at 4%.
Lowering interest rates would be idiotic (in my opinion), but if the only goal is to prop up the stock market past November, it may accomplish that.
In all fairness, there might have been other factors that fueled inflation in the 1970s â the OPEC oil price hikes, the wind-down of the war economy after Vietnam, the withdrawal from the gold standard which floated currency exchange rates, etc., but I believe it demonstrates that cutting interest rates for short-term partisan political gains can have longer-term ramifications.
