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Started By
Message
re: Trump hits Fed Rate again in this morning's twitter
Posted on 7/19/19 at 10:49 am to wutangfinancial
Posted on 7/19/19 at 10:49 am to wutangfinancial
I completely agree.
0
Posted on 7/19/19 at 10:59 am to funnystuff
quote:
Amongst other things, a key reason is that I want us to have some buffer room above 0 so that we can use expansionary monetary policy the next time a recession hits. Rates close to 0 force our hand during recessions, giving the fed no ability to counter the downturn. (Note: I’m not at all a fan of the negative interest rate advocates, so I’m treating 0 as the lower bound).
As a very rough rule of thumb, I don’t want rates below 2% when the economy is strong because I want us to be able to use expansionary monetary policy when the economy inevitably weakens. And trump’s economy is damn strong. We can live with 2.5% during a strong economy so that we have the tools available to combat a weak economy.
You are assuming the FED controlling the FED Fund rates still has the same effects on economic productivity as it did 20 or 50 years ago.
Latest studies show the contrary. Look them up and see the results. The markets have evolved AND the world’s monetary structure has changed. Plus, the US fiscal situation is much different.
Posted on 7/19/19 at 11:25 am to funnystuff
quote:
Dumb. This is one of the few areas where trump gets it dead arse wrong.
Broke bitch telling a billionaire how to make money. Now that's funnystuff!
Posted on 7/19/19 at 11:35 am to LsuFan_1955
quote:Well IIRC, he is an economist. So it's sort of the nature of the beast.
Broke bitch telling a billionaire how to make money. Now that's funnystuff!
Posted on 7/19/19 at 11:36 am to Alltheway Tigers!
Y’all can’t argue it both ways. If you’re arguing that lowering the FFR during a recession doesn’t provide an economic safety net anymore, then lowering it during an expansion (like right now) won’t cause an economic boost either. So what would be the point of trump even arguing that we lower the rate in the first place?
That said, if your implication is that the fed can’t mitigate the impact of a recession through the FFR, you’re just simply wrong. Yes, monetary structure and fiscal policy have changed. But no, monetary policy is not impactless. Not even close to it.
That said, if your implication is that the fed can’t mitigate the impact of a recession through the FFR, you’re just simply wrong. Yes, monetary structure and fiscal policy have changed. But no, monetary policy is not impactless. Not even close to it.
Posted on 7/19/19 at 11:43 am to funnystuff
IMO I think (hoping for his sake) he’s wanting to lower rates so it’ll lower the value of the dollar. This would put more pressure on China to make a deal.
Posted on 7/19/19 at 11:43 am to NC_Tigah
Posted on 7/19/19 at 11:45 am to funnystuff
75% of this board has no idea what you are even arguing or why. 20% have a clue but they think the Fed is out to get Trump and only wanted to help Obama, and that's not fair. And of that 95%, they have no idea that a downside of Trump's trade war is lower global growth. But they also want to end the Fed.
Posted on 7/19/19 at 11:46 am to seawolf06
Yes exactly. End the Fed but pls have them print more money to stimulate the economy first.
Posted on 7/19/19 at 11:49 am to NC_Tigah
You are wrong on that, sir. If we had tighter fiscal policy, you would be correct, however we do not. The corporate and government debt that has been issued after 20 years of low rates will be a permanent drag on growth for the rest of my life. The should have never stopped raising and QT. Our currency is at risk because of the Fed and Congress has radicalized fiscal and monetary policy.
Also, not one person in favor of a rate cut has mentioned the Treasury market drying up. Which is the entire reason the Fed is being so dovish. It has nothing to do with the trade war and economic growth, but liquidity in primary markets.
Also, not one person in favor of a rate cut has mentioned the Treasury market drying up. Which is the entire reason the Fed is being so dovish. It has nothing to do with the trade war and economic growth, but liquidity in primary markets.
This post was edited on 7/19/19 at 11:53 am
Posted on 7/19/19 at 1:16 pm to funnystuff
quote:
the next time a recession hits.
I'm not quite sure you understand how a recession starts
quote:
Unemployment is particularly high during a recession.
We have record employment.
Our last recession began when rates were at 3.5%, we are currently at 2.5%. The recession ended in when rates got to .25%, and we haven't had another one in 10 years because people had access to money!
The recession prior to that rates were at 5%, It didn't end until rates got down below 2%
Don't want another recession? Keeps rates under 2%
Posted on 7/19/19 at 1:27 pm to Lou Pai
quote:That may be.
75% of this board has no idea what you are even arguing or why
If so, count me in the 25%.
I understand, but given the global environment, I simply respectfully disagree.
In fact, IMO the Fed should have raised rates 2 yrs before it did. However, when it did tighten, it moved too far too fast. Current Fed Governors even admit that.
quote:As the post-WWII superpower, the US provided the world with advantageous trade deals.
they have no idea that a downside of Trump's trade war is lower global growth
For 30 years that was necessary and justifiable.
However, we subsequently inexplicably continued asymmetric soft policy.
Do you have any idea what the 40+ additional unnecessary years of soft trade deals did to US growth?
Nearly 20yrs ago, we gave China the privilege of WTO complete with 'developing country' status. China now claims its special and differential treatment is a ‘fundamental right’, and says it will not cede to US demands to mature its status. What impact has the resultant asymmetric Chinese trade relationship and IT theft had on US growth over the last decade?
quote:Me thinks you generalize far too much.
But they also want to end the Fed.
Posted on 7/19/19 at 1:31 pm to funnystuff
Like I said, you're using old money policies, to determine how you alter the course of a recession.
Posted on 7/19/19 at 1:37 pm to League Champs
quote:Yeah, I don't agree with that as a generality at all. Given this Administration's economic policies, we could and probably would continue to struggle against Fed headwinds w/o a recession through at least 2020.
Don't want another recession? Keeps rates under 2%
My question is why in the world, when we do implement decent policy and get an economic rebound as a result, must the Fed ride the brakes? If inflation was picking up, there'd be justification. But it isn't.
Posted on 7/19/19 at 1:38 pm to NC_Tigah
quote:
Nearly 20yrs ago, we gave China the privilege of WTO complete with 'developing country' status. China now claims its special and differential treatment is a ‘fundamental right’, and says it will not cede to US demands to mature its status. What impact has the resultant asymmetric Chinese trade relationship and IT theft had on US growth over the last decade?
Underrated comment. I've been so against trade with China. Their government is extremely dangerous. They have assets everywhere throughout Africa and Asia. Their influence needs to be crushed by competition from other developing nations.
Also they haven't been compliant at all with their reporting to the IMF. They are still a paper tiger at best. This is why they have "developing nation" status. Their currency is so fricked. Nobody on this planet trades or uses Yuan for commerce. It's like 4% of total global transactions outside of the country of China
Posted on 7/19/19 at 1:49 pm to 14&Counting
Which is a good reason to never listen to any president when they talk about rates.
Trumps best interests are a hot economy now and carrying over in the next 15 months. The American people’s best interest is a strong economy w little to no disruption for the next several years/decades.
I’m not necessarily saying the two are mutually exclusive, Trump is hoping they aren’t, but they are different POVs.
Trumps best interests are a hot economy now and carrying over in the next 15 months. The American people’s best interest is a strong economy w little to no disruption for the next several years/decades.
I’m not necessarily saying the two are mutually exclusive, Trump is hoping they aren’t, but they are different POVs.
Posted on 7/19/19 at 2:04 pm to wutangfinancial
quote:Two points:
You are wrong on that, sir. . . The corporate and government debt that has been issued after 20 years of low rates will be a permanent drag on growth for the rest of my life.
(1) Trump's tax and reg cuts were designed to be stimulative. As such the tax cuts would more than pay for themselves via increased revenue. Revenue directly translates to deficit reduction and reduction of debt growth. If the Fed puts brakes on growth in response, the taxcuts simply drive debt.
(2) Given current deficits, an extra 50 basis points over what IMO should be a 2% target rate, drives cost of carry an additional $5Billion/yr.
Obviously, both are debt drivers.
Posted on 7/19/19 at 2:14 pm to mwade91383
quote:Trump's interests should not drive the Fed. Good policy should. Given both domestic and global environments, the Fed moved too high too fast last Fall. Trump called it correctly in December. He continues to call it correctly today.
Trumps best interests are a hot economy now
IMO the Fed corrects its error and cuts at least 25BPS at the end of the month, +/- another 25BPS cut mid-Sept.
Posted on 7/19/19 at 2:19 pm to NC_Tigah
quote:
IMO the Fed corrects its error and cuts at least 25BPS at the end of the month, +/- another 25BPS cut mid-Sept.
Why not just make 1 cut of 50bps then?
I agree that we began raising rates too late and I follow what you’re saying about raising too quickly. But if that truly is the case then 25bps cut now won’t give them enough data to justify another 25 in September. So why not cut 50 now, wait and monitor?
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