The Fed is Working Against Trump (Video)
The Fed is Working Against Trump Video – Bill Still
Synopsis: The Federal Reserve is joining the Deep State by not doing President Trump any economic favors. This week, the Fed voted to raise the benchmark interest rate again by another one-quarter of a percent – the third rate increase this year – and indicated that they may raise it yet again before year’s end.
The biggest immediate impact of the rate rises is it will tend to slow the housing market – a market crippled in 2008 – that has only lurched back to life last year. But the latest figures show US housing starts are now down 5.5% – having fallen for the last 3 months – the very months when they should be rising.
According to a rather sarcastic story in Bloomberg, the Fed isn’t sure why inflation is staying so low – but it is going to raise rates anyway, risking a recession.
Why? Because raising rates decreases the amount of money in the country. Lowering rates stimulates the economy by pumping more money into the overall economy.
Why make any changes? The Fed should be happy with the current conditions – record low inflation and record low unemployment figures. In fact, the only major economic negative is the GDP number, which came in at 1.2% in the first quarter – about half of the previous quarter. But guess what, raising interest rates throws an additional negative factor on growth. Why do it, then?
Look at this chart of U.S. inflation. The Fed’s inflation target has been 2% the last 8 years, but the Fed’s monetary policy hasn’t even been able to hit that for over 5 years – with the one exception – the post-Trump election spending bounce.
How about our economic peers?
This week, the Bank of England voted to keep its interest rates at their record low of .25%, despite British inflation rising to a 4-year high. The same for Japan – no changes. On Thursday, the Swiss announced that it would maintain it’s “ultra-loose” interest rates held below zero percent. China is even lowering its interest rates.
No, the only logical reason for the Fed’s rate raising policy is – sadly – a political one. The effects of these rate changes are not felt for 18 to 24 months. Let’s see now, where will we be 2 years from now, summer of 2019? Oh yes, we will be 7 months out from the first presidential primaries when President Trump will be seeking re-election. If it’s just up to the Fed, the economy at that