Donald Trump Likes Low Interest Rates But Says He'd Replace Yellen

Fortune ^ | April 19, 2016 | Stephen Gandel

[expat_panama]

Whether or not we prefer some other nominee, our investing choices have to include the fact that Trump's very likely to be the next president nine months from now.  That said, we need to also realize that six months ago the headline was Trump Says Yellen Keeping Rates Low To Protect Obama 10/18/2015 .

[dp0622]

Before the fed reserve, who set interest rates?

or was it always around?

AUD keeps moving up against USD.

the plan has Failed. let’s suffer for about two years and get the pain over with FOR REAL this time.

[norwaypinesavage]

Low interest rates are great for real estate developers. They’re not so great for retirees, especially those who spent a lifetime of work saving for retirement, and now get zilch interest.

[expat_panama]

Happy Mid-week everyone!   Gold'n'silver continue well (now at $1,249.53 and $17.03) while stocks closed yesterday mixed a fraction of a % in rising trade volume.  Forward looking futures traders see stock indexes up a bit +0.17% and metals up a LOT +3.00%!  

This morning's announcements: MBA Mortgage Index, Existing Home Sales, and Crude Inventories.

New FR econ threads:

• Nordstrom is cutting hundreds of jobs, confirming a terrifying new trend among wealthy shoppers
• Simple Math Shows America Is Headed for an Economic Disaster
• Rich States, Poor States: 9th Edition
• If anything, globalization increased the cost of meat in America
• If I were a shill for industry ...

Enjoy!

[VitacoreVision]

Replace Yellen?

I have a better idea: Abolish the Federal Reserve.

[knarf]

The money quote;

"As he’s said in the past, Trump tells Fortune that he would “absolutely” support proposals that would take power away from the Fed, and allow Congress to audit the U.S. central bank’s decision making."

Trump has been .. and is .. a threat to "the way things have always been done" and though I (personally) may not be able to see clearly the future Trump proposes, I DO see clearly the past and what a future with IT in control can and will do to America.

[Zuse]

When interest rates rise, the entire debt built up by B0 Stevedunhambarrysoetorobathhousebarryhusseinsoebarkah will come crashing down. He won’t be around long enough to get the blame for it.

What B0 wants is negative interest rates so he can cash in on having a huge debt — a whole new way to create imaginary money!

[expat_panama]

...rates are great for real estate developers. They’re not so great for retirees...

Retirees may complain a lot when rates go down so they'll continue to demand even more gov't welfare to be paid by the young.  They need to realize though that the value of whatever interest they're getting depends only part on the amount of interest and also part on what inflation's done to their buying power.

imho American old people are doing fine --no matter how much they complain.

[taildragger]

"When interest rates rise, the entire debt built up by B0 Stevedunhambarrysoetorobathhousebarryhusseinsoebarkah will come crashing down."

Yes, what they did is brilliantly devious. So lower rates and "twist" the yield curve down ( so that building a "bond ladder" now looks stoopid, but let that go ) so that you sell all your debt short term at horribly low rates for the T-Bill holder. In the mean time the Global markets ( remember the German Bank that downgrades us?, Not anymore! they took them out of the equation! ) do not hound you for your indebtedness as you print more, spend more ( HHS is where I think it is going IMHO ) and Wall St has to say "Yes Sir can I have another".

When it whip-saws and someone says you have to cut expenses ( 30 to 50% IMHO ) to get your house in order, the game of Musical Chairs stops.

IMHO this is the issue of our lifetime, aka DC's downsizing etc to live within it's means, and whether Trump gets to it is a different issue, frankly I don't think anyone in DC wants to go their, and America is too dumbed down to have that come to Jesus discussion as sober Adults. Look at Ryan being a shill for the immigration lobby which leads me to believe he knows SSI cash flow is worse than they will admit. They need anyone contributing, citizen or not...

[mac_truck]

Low interest rates are great for real estate developers. They’re not so great for retirees, especially those who spent a lifetime of work saving for retirement, and now get zilch interest.

Low interest rates are also good for property values, which should be more valuable to retirees than the interest on their savings.

[arthurus]

Donald Trump does not understand basic Economics. He understands Finance which is a different thing. He says he will get the proper experts, the best minds in their areas to advise hijm when he is President. The problem is that he does not recognize the existence of the area of Economics. He will get the best minds available in Finance, thinking that is Economics, and thus elevate a sub category of Economics over Economics which is essentially what the nation has been doing since FDR with the exception of the time of Reagan’s term. Hussein’s reign has seen that approach pushed to unprecedented levels.

[yuleeyahoo]

Isn’t Yellen in office until 2018? I do believe that the Chair can not be replaced at whim.

[Bloody Sam Roberts]

Replace Yellen?

The president of the United States cannot remove the chairman of the Fed.

The Chair of the Federal Reserve Board of Governors, nominated by the president, is limited to four year terms. After he/she is confirmed the president has no authority to remove him/her unilaterally.

[taterjay]

Property is worth 0 if you don’t intend to sell it.

[norwaypinesavage]

"Low interest rates are also good for property values"

That's the problem. You have to sell the property in order to gain the value. Then you don't have it any more, and you can't make any money on the principle you gain, so you loose principle. You can't eat property values.

[DoodleDawg]

In the space of one article Trump contradicts himself at least twice and shows he has little understanding of the Fed, the economy, or the national debt.

[Lurkina.n.Learnin]

“I have a better idea: Abolish the Federal Reserve”

What do you propose in it’s stead?

[dp0622]

Agreed.

[expat_panama]

Yeah, Feb. 2018 right at the beginning of Trump’s second year of eight. Just the right amount of time for everyone to get used to things.

[DoodleDawg]

Isn’t Yellen in office until 2018? I do believe that the Chair can not be replaced at whim.

As Fed chair she serves until October 2018. But she remains on the Board of Governors; that appointment is for a 14 year term. And no, Trump can't fire her. Though in his defense he was speaking about not reappointing her at the end of her term rather than firing her.