Fed Up Friday: President-Elect Trump has World Markets on Edge
The results of Tuesday’s election stunned the world much like Brexit did this summer. Markets dipped, and then recovered quickly to close at record highs following election night. The Fed however, could see big changes coming their way.
As Trump Becomes President-Elect, Here Come Fed Reforms
As we revealed in our infographic on Trump’s Fed views on Monday, his campaign wasn’t shy about their concern with the current Fed structure. Now that the election is complete, and Trump’s stunning victory rattled many in the nation, we can look back on what he’s said about monetary reform as a guideline for the next several months.
Among his most drastic proposed changes were possibly repealing Dodd-Frank, auditing the Fed, and more.
ECB Closely Monitoring US Post-Election Markets
Europe’s Central Bank aims to stay vigilant on their policies, as Trump’s election victory sent waves through the market this week. According to the ECB, they may break out their “Brexit model” to react to whatever changes arrive in the markets during the coming weeks. Much like what the US Fed has been attempting, the ECB has been aiming for near 2% inflation to prop up Europe’s own struggling currency.
Markets around the world seem to be expecting a period of “medium-term uncertainty” in the markets as everyone feels out the next US president.
Greenspan Predicts “False Dawn” for Markets, says Dodd-Frank a Mistake
In an interview with CNBC yesterday, former Fed Chairman Alan Greenspan spoke up about his major concerns with our current economic policy. Not only did he call Dodd-Frank a “disastrous mistake,” he expressed a major concern that stagflation would be entering the markets and create sluggish growth for the long-term.
His opinion is that the rising cost of entitlements like Social Security and Medicare are out of control, and that nothing else matters if those aren’t put under control.
Trump’s Economic Advisers Aim to Shift Monetary Policy
Trump advisers told Financial Times that the next Commander and Chief plans to shift the monetary policy of the US toward fiscal measures. One of his top advisers and chief of Colony Capital, Thomas Barrack, stated a shift in the mix of policies was in order to spur new growth. “There needs to be change,” he said this week, “we need something other than central bank intervention to deliver growth.”
The Trump administration looks to fuel the new economy with fiscal policy reform as well as investment in infrastructure, as he said in his acceptance speech Wednesday morning.