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Embattled Federal Reserve chairman tells White House officials he'll meet face-to-face with Trump
Daily Mail UK ^ | December 27, 2018 | Francesca Chambers

Posted on 12/27/2018 11:52:59 AM PST by COUNTrecount

Embattled Federal Reserve chairman tells White House officials he'll meet face-to-face with Trump in bid to end feud that left stock markets reeling over fears president will fire him

Dow Jones closed up 1,086.25 points, or 4.98 per cent, on Wednesday

It was the stock index's largest single-day points gain in U.S. history

Follows biggest-ever Christmas Eve plunge for markets on Monday

White House officials tried to soothe fears over Trump's fury at Federal Reserve

He's upset about rate hikes and reportedly said he wanted to fire the fed chair

Federal Reserve Chairman Jerome Powell is now telling the White House that he'd be willing to meet with President Trump to discuss their differences

The president and the federal reserve chairman have been on an untenable collision course that has delved into the murky waters of whether the nation's chief executive has the authority to fire the head of the United States' central banking system.

Federal Reserve Chairman Jerome Powell is now telling the White House that he'd be willing to meet with President Trump to discuss his concerns about the independent agency's rate hikes, the Wall Street Journal reports.

A face-to-face chat with Powell could quell some of the president's anger about the Fed policies that Trump blames for the dramatic stock losses an instability in the market, despite a sustained unemployment rate of 4.1 percent or less over the last 14 months.

'A meeting between the two should be helpful,' Larry Kudlow, head of the president's economic, told the Journal. 'Right now, their relationship is like a stock looking for a bottom. There’s only upside.'

(Excerpt) Read more at dailymail.co.uk ...


TOPICS: News/Current Events
KEYWORDS: fed; fedchair; fedchairman; jeromepowell; trumpfed
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To: central_va
During the Carter years workers still had a lot of union political power to increase wages along with inflation.

This is why the economy grew in leaps and bounds in the Carter years -- right?

Dude -- the Carter years were a period of economic malaise, not massive growth. In fact, the term "stagflation" was coined to describe the unusual combination of economic conditions back then: anemic growth combined with very high inflation.

It says a lot about your perspective that you'd look back on those times as a standard to follow. Who cares about what most Americans are experiencing, as long as union workers have a lot of political power to buy off politicians and keep themselves paid well while everyone else is getting screwed?

Do you even belong on this website?

121 posted on 12/28/2018 8:36:11 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: Alberta's Child

Big Investers confuse RoR, Fed rate and Inflation.

An investment paying 6% within 9% inflation is bad.

An investment paying a lessor 2% in 1% inflation is good.

The best investment environment is lower taxes and less regulation. However on top is the rigging factor.

Many investors benefitted in the Obama years, but homeless camps sprung up so it could not last forever, because soon you too could be homeless.

That was the rigging factor. The Fed’s propped up the market, at a cost of ever increasing homelessness.

Many Big Investors vote Never Trump because they vote for no change. They should be voting for sound economics instead.


122 posted on 12/28/2018 8:53:50 AM PST by TheNext (Participation Award Winner = CoC)
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To: Alberta's Child
Ok do you agree that only one of these three statements is true.
  1. Lowering Federal funds rate stimulates GDP growth
  2. Raising Federal funds rate slows GDP growth
  3. Lowering or raising federal funds rate has no effect on GDP.

    If you agree pick one. If not explain please.


123 posted on 12/28/2018 8:59:43 AM PST by central_va (I won't be reconstructed and I do not give a damn)
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To: Alberta's Child

Re: post #71

Very nice how you put the numbers together; really makes your point.


124 posted on 12/28/2018 9:01:47 AM PST by MichaelCorleone (Jesus Christ is not a religion. He's the Truth.)
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To: TheNext
You're looking at investments in silos without considering other comparative advantages and disadvantages.

Let's suppose you have $100 million to invest and you have an option to either buy long-term U.S. Treasury bonds or S&P 500 stocks. Let's suppose the inflation rate is 2% -- matching the long-term FED target.

If you buy $10 million in U.S. Treasury bonds that pay even a high (compared to recent years) return of 5%, you have a gross return of $500,000 but your actual return is much smaller.

1. You immediately lose $200,000 to inflation. Your $10 million is only worth $9.8 million after one year.

2. If you're investing $10 million you are likely in the highest tax bracket, so you're paying an income tax rate of 37%. So you lose $185,000 just in Federal income taxes (we'll ignore any state tax implications here).

So your $10 million earned you a net of $115,000 ... a 1.15% return even though you invested in a "safe" investment with a nominal return of 5%.

If you invest in an S&P 500 index, you'll earn an average 2% dividend return over the long term ... and over the same long term you'll see an average appreciation of at least 8% in the value of the stocks. Let's assume these are your returns for the first year.

1. Your $10 million earns $200,000 in dividends. It sees an $800,000 increase in value.

2. Your dividend is subject to a special tax rate of 20%, so you pay only $40,000 in income taxes on the $200,000 in dividends.

3. If you sell the asset after one year, you pay a capital gains tax of only 20% on the $800,000 gain. So that's another $160,000 in taxes.

Add these up and you get an 8% return on this investment.

Go through these numbers again and ask yourself why anyone who is in a position to invest $10 million with some risk exposure would ever buy the U.S. Treasury bonds -- even at a high rate of 5%.

125 posted on 12/28/2018 9:34:43 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: central_va
I pick #3 of all those, but any of those three can be true at different times depending on other conditions.

GDP is the sum total of all economic output in the economy. Its growth is driven by increases in population and productivity, not interest rates. If I can earn a 20% return on an asset I may have no qualms about borrowing money at 10% to buy it. If I can only earn 5% then I sure wouldn't borrow at 10%.

126 posted on 12/28/2018 9:40:26 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: MichaelCorleone

Thanks! :)


127 posted on 12/28/2018 9:40:38 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: Alberta's Child
So you can't answer the question. Disingenuous. Craven...

So if the Feds raised the rate to 25% what would happen to GDP? If the Feds lowered the rate to 0% or went negative what would happen to GDP?

128 posted on 12/28/2018 10:10:53 AM PST by central_va (I won't be reconstructed and I do not give a damn)
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To: central_va
So if the Feds raised the rate to 25% what would happen to GDP? If the Feds lowered the rate to 0% or went negative what would happen to GDP?

I'd ask you to answer your own questions. What do YOU think would happen?

You might see GDP go through the roof in the first scenario, but it would all be illusory growth because inflation would destroy it.

You have a perfect example of what would happen in the latter scenario right here in the U.S. from 2009-2016. What happened to GDP over that period? It barely grew at all.

You see a comparable example in Japan, where the Bank of Japan has a short-term interest rate target of -0.1% and a long-term target of 0%. Japan's GDP is lower today than it was in 1995, and its interest rates have been around 0% for almost that entire time.

With this information in mind, let's ask a better question: Are government interest rates a cause of GDP growth/retraction, or an effect of it?

129 posted on 12/28/2018 10:45:44 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: Alberta's Child
You might see GDP go through the roof in the first scenario,

LOL! What utter ridiculous BS. A 25% Fed fund rate would slow GDP to a crawl, actually it would be shrinking a great deal. Great Depression II. You know that. You really are a brainwashed ideologue unbounded by reality.

130 posted on 12/28/2018 10:54:34 AM PST by central_va (I won't be reconstructed and I do not give a damn)
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To: central_va
You are just making sh!t up without any basis in reality.

Go back to Post #71 and do more research on the numbers posted there. The U.S. saw GDP growth in the late 1970s and very early 1980s even when the FED rates were much higher than they are today. Not only that -- but the GDP growth rates were higher with FED rates above 5% than they've been for the last ten years when the FED rates were below 2%.

I'm not even an economist and I can understand this.

131 posted on 12/28/2018 11:38:07 AM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: Alberta's Child

If you think a 25% fund rate would make the economy “go through the roof” then there is no hope for you. That is nutty.


132 posted on 12/28/2018 11:44:49 AM PST by central_va (I won't be reconstructed and I do not give a damn)
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To: central_va
If you think a 25% fund rate would make the economy “go through the roof” then there is no hope for you.

It's interesting that you have nothing to say about empirical evidence that contradicts just about everything you've posted here on this thread.

133 posted on 12/28/2018 12:06:27 PM PST by Alberta's Child ("I'm a cool dude in a loose mood! Hey -- two ginger ales for my girls!")
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To: TheNext

“Banks cannot issue their own currency.”

They did so right up to the 1930s; they created some of the most beautiful American banknotes. Click on the first link for some bank issued currency.

IIRC they still can, but it costs them to do so whereas money creation via checkbook entry costs them next to nothing. There’s not a lot of difference between a loan officer crediting your checking account with a hundred dollars or the same bank printing a $100 bill and giving it to you.

Checkbook money costs the bank nothing and can be used for further money expansion if it’s deposited... whereas paper money can’t be used for further fractional reserve lending

https://tinyurl.com/ycrqu48m

https://en.wikipedia.org/wiki/National_Bank_Note


134 posted on 12/28/2018 1:13:12 PM PST by Pelham (Secure Voter ID. Mexico has it, because unlike us they take voting seriously)
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To: TheNext

this will take you to a history of the financial panic of 1907 that led to the creation of the Fed:

https://www.federalreservehistory.org/essays/panic_of_1907


135 posted on 12/28/2018 5:07:26 PM PST by Pelham (Secure Voter ID. Mexico has it, because unlike us they take voting seriously)
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To: central_va

“The historically low interests rate we have now will not cause cost push inflation - they can’t.”

It finally dawned on me that you think that the inflation of the 1970s was caused by wage demands, a wage-push inflation, and of course it wasn’t.

It was a classic monetary inflation caused by an excessive growth of dollars after Nixon abrogated the Bretton Woods agreement in 1971 and broke the dollar’s last link with gold.

That inflation ended when Paul Volcker choked off credit creation with a 20% Fed funds rate, and Ronald Reagan slashed regulations that had been strangling economic growth.

Inflation is a monetary phenomenon, it is caused by a growth of the money supply that exceeds the economy’s growth rate.

High interest rates don’t cause inflation, and low interest rates don’t prevent it.

The inflation of the 1970s began with interest rates at around 4%. The double digit interest rates at the end of the ‘70s were a response to inflation, not the cause of it. Bond investors, the bond vigilantes, were demanding a return higher than the inflation rate.


136 posted on 12/28/2018 6:08:17 PM PST by Pelham (Secure Voter ID. Mexico has it, because unlike us they take voting seriously)
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