Powell admits Trump was right

Vambram said:

In my opinion, the Fed should have already lowered prime interest rates.

Click to expand...

Here are the Federal interest rates since 1955.


Interest rates have generally been lowered during periods of recession and during the Covid-19 pandemic.

• In 1980, President Reagan began his term with an interest rate of 13.82%.
• By the start of Reagan's second term in 1984, it dropped to 9.4%.
• When President H. Bush took office in 1988, the rate was 6.58%.
• President Clinton started in 1992 with a rate of 4.6%; at the beginning of his second term in 1996, it was 5.6%.
• In 2000, President W. Bush's first year, the rate stood at 6.4%.
• After a brief period of reduced rates to boost the post-9/11 economy, the interest rate rose to 5.25% in 2007.

Over the past 75 years, economists, presidents from all political parties, and every Federal Reserve Chair have believed that high interest rates during periods of economic strength are beneficial for the American economy. President Trump is is the only president and his administration thinks lower interest rates similar to those seen after the Great Recession is good idea.

I'll choose the last 75 years of US history, which saw unprecedented wealth creation and not President Trump’s idea. What about you?

DaisyDay said:

Rude, much?

Click to expand...

It's not rude. The article literally says OPINION in a bold, red box at the top of the article.

Richard T said:

The PCE the Fed's preferred inflation measure comes out this Friday. That could be somewhat of a preview. I guess the latest .9 percent PPI should be disregarded? (Over a 10% annual rate, if it were to persist)Powell is a dove and was wrong before of as they said inflation was "transitory." Raising taxes and eventually prices from tariffs is interesting because it does two things. It raises consumer costs and workers will try to demand more wages, this will allow inflation to linger longer and likely it could multiply for some time.

However, the second thing tariffs do is reduce demand because consumers now have less money. This will likely occur more slowly. Deficient demand will work the opposite way for prices. Some of this lack of demand is that the US tariffs will be hurting the world economy. So less world demand, inefficient cost shifting between countries and reduced domestic spending power is going to likely pack a punch. Powell has to try and thread the needle. Likely he is going to lower 1/2 point (one or two meetings) and pause. Inflation will likely show up to justify this. But soon we will see a crash, (maybe very soon, the stock market is at record highs).

Other things to watch for.

The Fed keeps track of the demand for all it's auctions. The latest demands were quite week. Lowering rates will make this problem worse. So you actually could see short-term rates go lower but long-term rates increase. https://www.barrons.com/articles/treasury-30-year-bond-auction-yields-f32727f4
The Fed could buy longer term maturities directly but their balance sheet money printing will spook investors if they even hint at that.
The bond market took the last hit of inflation. Many lost serious money buying a long maturity bond that paid just 3%. I doubt we will ever see
long term rates that low again. Why? Because no one wants that debt when the government is increasing their spending. Even with the tariff revenue the deficit is climbing. Things are getting unsustainable and the Federal Reserve is really in no position to help that much.

Stagflation which is very new to most is likely for some months. Inflation plus low or negative growth. Powell will be defenseless. raise rates and hurt the eocnomy more, lower rates and the long end of the curve may not even move. He is lucky he is retiring soon.

Click to expand...

As someone who supports free markets, free trade, globalization, and capitalism, I find it puzzling that some conservatives who voted for Reagan, Bush, Romney, or McCain also support President Trump’s tariffs. It appears that some voters may have consistently supported Republican candidates over the past 50 years without fully considering their economic policies, or they may be supporting President Trump simply because they voted for him. The economic policies of Reagan, Bush, or Romney differ significantly from President Trump's approach, as they represent opposing philosophies. In fact, President Trump’s stance on trade is similar to Senator Bernie Sanders, a self proclaim socialist.

probinson said:

It's not rude. The article literally says OPINION in a bold, red box at the top of the article.

View attachment 369212

Click to expand...

Yes, it is rude to imply that she only knew it was an op-ed because AI said so.

I remember Navarro's attacks on Fauci. They were just as fact lacking.

DaisyDay said:

Rude, much? The AI sums it up succinctly. Not everyone knows who/what Peter Navarro is, but for those of us who do:

Click to expand...

Green Bay Sweep convicted felon Navarro. That sums up this thread in itself.

Always in His Presence said:

It is a quotation from the linked article - feel free to contact the author.

Sorry you didn't like the authors opinion.

Click to expand...

It appears that you prefer not to assume responsibility for the content you share here, which is noteworthy.

Always in His Presence said:

Yet this is Trump's and tariffs fault?

Click to expand...

"This" being the recent uptick in inflation, yes.

"Turning to inflation, higher tariffs have begun to push up prices"

Jerome Powell @ Jackson Hole

Say it aint so said:

No one is taking advantage of the US no different than the gas station is taking advantage of you because you buy gas. He claims America is being taking advantage of, and points to the trade deficit. The trade deficit which has just increased under his watch; ever since his increase on the island where only Penguins exist.

Click to expand...

Your post is incorrect.

I asked Gemini AI "Should the Federal Reserve reduce the prime interest rate?"

Gemini gave the pros and cons of doing so.


The decision for the Federal Reserve to reduce interest rates, which would lead to a corresponding decrease in the prime interest rate, is a complex one with significant implications for the entire economy. It is not a simple "yes" or "no" question, as the appropriate action depends on a variety of economic indicators.

The Fed's primary mission, known as its "dual mandate," is to achieve **maximum employment** and **stable prices** (low inflation, typically targeting 2%). A decision to lower rates is a balancing act between these two goals.

### Arguments for Reducing Rates

The Federal Reserve would typically consider reducing interest rates when faced with a sluggish or weakening economy. This action is a form of "expansionary monetary policy" aimed at stimulating economic activity. The key indicators that would support a rate cut include:

* **Weakening Employment:** When job growth slows, unemployment rises, or the labor market shows signs of instability, the Fed may cut rates to encourage businesses to borrow, expand, and hire more workers.
* **Declining Economic Growth:** A significant slowdown in GDP (Gross Domestic Product) growth or a potential recession is a major reason for the Fed to lower rates. Lower borrowing costs make it cheaper for consumers and businesses to take out loans for major purchases, investment, and expansion.
* **Low Inflation:** If inflation is consistently below the Fed's 2% target, it may signal weak demand in the economy. A rate cut would be used to stimulate spending and push inflation back up to a healthy level.

### Arguments Against Reducing Rates

Conversely, the Fed would be hesitant to reduce rates if it fears the action could lead to an overheated economy and higher inflation. This is considered "contractionary monetary policy." Factors that would argue against a rate cut include:

* **High Inflation:** If inflation is still elevated and a persistent concern, reducing rates could worsen the problem by making it even cheaper to borrow and spend, further increasing demand and prices.
* **Strong Employment:** A very strong labor market with low unemployment can put upward pressure on wages, which in turn can contribute to inflation. In this scenario, the Fed may keep rates stable or even raise them to prevent the economy from overheating.
* **Risk to Financial Stability:** Rapid rate cuts can sometimes lead to excessive speculation and risk-taking in financial markets. The Fed must consider the risk of creating asset bubbles if borrowing becomes too easy and cheap.

### The Impact of a Rate Reduction

If the Federal Reserve were to reduce the prime interest rate, the effects would ripple through the economy:

* **For Borrowers:** Lower rates would make it cheaper to finance large purchases. This could lead to lower interest rates on variable-rate credit cards, home equity lines of credit (HELOCs), and new car loans. It could also encourage more home-buying activity by making mortgages more affordable.
* **For Savers:** A rate cut is generally bad news for savers. Interest rates on savings accounts, money market funds, and Certificates of Deposit (CDs) would likely decrease, reducing the return on their deposits.
* **For Businesses:** Lower borrowing costs would make it easier and cheaper for companies to take out loans for expansion, new projects, or hiring, which could stimulate overall economic growth.

Always in His Presence said:

It is a quotation from the linked article - feel free to contact the author.

Sorry you didn't like the authors opinion.

Click to expand...

It's another FOXnews lie. Powell said nothing close to that. This is a transcript from his speech where every time he mentioned inflation in light of tariffs.

What one reads is tariffs; their inflationary effects; and the economic uncertainty they bring to bear. How in the world given what Powell actually said one comes to the conclusion that Powell is saying "tariffs don’t fuel inflation" is some FOXnews gold medal mental gymnastics.
PS. You may want to start reading your articles prior to starting threads.

Vambram said:

Your post is incorrect.

Click to expand...

Feel free to explain where the error lies?

public hermit said:

I agree that ensuring we are poor could be a strategy of an oligarchy (plutarchy?), but it does not seem like Trump or his administration have an overall strategy. The TACO trade policy is not a strategy, is it? Maybe these folks are terribly smart but just look dumb to fool us?

Click to expand...

They do have a certain kind of cleverness in understandig how to manipulate symbols and vibes. But I think it's very much in the eye of the beholder at this point whether you see that as a deep strategy. I give it 50/50 odds Trump will be impeached and removed before his second term is over. It's far from certain but Republicans don't have much of anything else to play at this point. There's the possibility they pull off the establishment of a techno-feudal regime that deals in spectacle and attention to the point people just become numb to the underlying predatory dynamics of the oligarchs.

Always in His Presence said:

What Fed must do now after Jerome Powell's Jackson Hole epiphany​

Click to expand...

Economies are squishy things and it is unclear where the absorption of the tariffs, (when they’re finally realized, after all the grace-periods have expired) will fall, will foreign manufacturers lower the cost of their wares? Will importers shave a point or two of their own profits? How much more/less will the tariffs effect imports?

Those things are still being sorted out.

Traditionally the preceding President owns the economy until the next fiscal year, so all of this goes on Biden’s page until October 1, so there’s that, too.

Always in His Presence said:

We will find out in September if the Fed lowers prime - won't we.

Click to expand...

No. Because the Fed does not control the Prime.

Vambram said:

I asked Gemini AI "Should the Federal Reserve reduce the prime interest rate?"

Click to expand...

That was silly, since the Fed doesn't control that.

NxNW said:

That was silly, since the Fed doesn't control that.

Click to expand...

Gemini strongly disagrees with you.

Vambram said:

Gemini strongly disagrees with you.

Click to expand...

Gemini is wrong then, because what the Fed sets is the federal funds rate, not the prime rate. Prime rates are set individually by lenders, and are typically based on the federal funds rate, but they're not the same thing.

Although the Federal Reserve has no direct role in setting the prime rate, many banks choose to set their prime rates based partly on the target level of the federal funds rate--the rate that banks charge each other for short-term loans--established by the Federal Open Market Committee.