“I personally think the Fed should drop rates... You would see a rocket ship.” -Trump He’s actually right. If the fed dropped interest rates the stock market would soar. It would be like free cheap money for all the corporations which would use it to reinvest in themselves, acquire other companies, attempt riskier bets, increase hiring and grow across the board which would led to further growth in the economy. Now whether this is good for the economy in the long term or not (basically we are continuing to inflate the bubble) is up for debate. But it is definitely good for the short term and will help Trump’s re-election chances. Basically as long as the economy is doing good in 2020 Trump is going to win re-election by a landslide. One way to keep inflating the bubble and prop up the stock market is to lower rates, and he knows this. I’m not a Trump supporter or anything, I’m just stating the facts. Quote source: https://www.bloomberg.com/news/articles/2019-04-05/trump-says-fed-should-cut-rates-and-stop-shrinking-balance-sheet
Lol
This is correct but very short sighted. The Fed needs a margin of safety to bring interest rates down when recession hits. What would the Fed do when recession hits and interest rates are very low? Nothing. It would be crippled. It is like you are saying that if we keep interest rates down then all recession possibilities would vanish. Not true. In addition, very low interest rates in relatively strong economy means more people borrowing more money and maybe too much spending. This needs to be under control as this itself can cause economic crash. Trump maybe gets the basic idea but is absolutely ignorant about the details. That’s why presidents consult scientists and economy professors and academics. Trump thinks he knows it all lol
Lowering interest rates will just continue the massive stock and housing bubble we currently see, as people can’t find anywhere else to invest their money
“It is like you are saying that if we keep interest rates down then all recession possibilities would vanish. Not true.” I never said that. You are the typical arrogant armchair-economist keyboard warrior Googler who thinks he knows everything.
Try to read something other than Paul Krugman's columns from time to time.
Agreed, economists have these "masters of the universe" egos but many successful economists are failed physicists, mathematicians, electrical engineers, etc. Most economists have no understanding of the laws of nature like control theory and feedback control and think they can play god with nature .... redefine up and down, etc.
I don’t read any of his work
Not sure what your point is? That he is smart enough to know that a short term strong economy is good for his election chances? Everyone knows that :|
I don’t think the libs know that
It would sore. But creat inflation. Only thing fed should do is to understand the issue with China. Trump can’t challenge them with higher rates here so keep them the same for now while he negotiates. Later raise rates
sore->soar. And you’re right. The Fed’s goal is to control inflation.
They pretend to want price stability but in fact they create constant inflation so that the government's debts are devalued at savers' expense.
The fed should raise rates higher. Back in 1950's you could get a 20oz fountain drink for like 20 cents. Nowadays soda is $1 to $2 lowest price when bought in singles. Also bread and other daily insubstitutables were super cheap. Raising rates will help us decrease inflation. There was once a time that making $100K was a phenomenal salary. Yeah, back in 1995 that was an excellent salary, even year 2000, but now? No way! Wouldn't reversed inflation be better? Disclaimer: I do not have an economics degree so I can't say if there are any negative effects of reverse inflation.
Inflation is good for a healthy economy. In san diego , a bag of potato still costs 1.99$ at my local grocery store. It was like $1 when i came to USA. Whivh i think is a reasonable inflation . What your talking about is the housing bubble . It goes up because of supply and demand in desirable locations
That’s called deflation. Japan is going through this right now and has for the past 20 years. Apparently they don’t like it.
Corporations are using liquidity to do buybacks. Not really job creation.
Then why does google headcount keep increasing every quarter? (Yes I know it’s not all because of cheap money. Mainly it’s because google has money in da bank to hire and grow)
Is this based on your Ph.D studies in economics or are you just oversimplifying something that you don't really understand?
All PHD Econ grads are losers that couldn’t make it in CS. I mean seriously if you major in Econ as an undergrad where can you find a job? Facebook does not hire Econ majors, they are useless, Facebook wants cs majors. Therefore Econ majors need to continue with further education and do a PhD. But everyone knows Econ, communication and international relations are the easiest majors at any school. The dumbasses and people that don’t work hard major in these. Econ PhDs are idiots. Just look at the government, full of them. This is based on 1000+ hours of reading financial books, blogs, and podcasts for the past 15+ years.
OP is right you know. I've met PhD economists who are often too over specialized within a narrow area of economics. Their grasp on the entire system is often as good as a well read non-PhD.
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The fed should remain separate from the Presidents office. I think the Fed raisong rates is good now considering the amount of jobs we have been adding , people have a paychrck to support their expenses. If they lower the rates, then the Fed wouldnt have anything else to rely back on in case of a recession
The Fed should be no more.
@google. Care to explain ? I am always of the opinion that The Fed Res. Should always be out of political influences. They were created in the first place to resolve the liquidity crisis and are now overseeing bank actions as well.