That's true but many object to the fact she clearly represents continued deflation:
Posted on 04/20/2016 4:35:09 AM PDT by expat_panama
The GOP frontrunner says low interest rates are good for America, even if the Fed Chair isn’t.
Donald Trump likes Janet Yellen’s low interest rates, but not the Federal Reserve Chairwoman herself.
“I think she’s done a serviceable job,” Trump tells Fortune. “I don’t want to comment on reappointment, but I would be more inclined to put other people in.”
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.
That said, Trump seems to like what the Fed is doing with monetary policy.
“The best thing we have going for us is that interest rates are so low,” says Trump, comparing the U.S. to a homeowner refinancing their mortgage. “There are lots of good things that could be done that aren’t being done, amazingly.”
In fact, if the Fed were to raise interest rates now it could be disastrous, Trump says, because the country would be forced to pay higher interest rates on our debt, and that would be very “scary” for the economy.
“People think the Fed should be raising interest rates,” says Trump. “If rates are 3% or 4% or whatever, you start adding that kind of number to an already reasonably crippled economy in terms of what we produce, that number is a very scary number.”
It’s not certain that raising the fed funds rate would result in higher borrowing costs for the U.S. government—Treasury yields might fall if higher rates cause the economy to tip into recession—but other Republican candidates, like Ted Cruz, have said that low interest rates are hiding the cost of the nation’s debt. And if you were to raise interest rates that would force the government to stop spending, and cut the deficit.
But Trump doesn’t seem to be focused on that. Instead, Trump says he would like to take advantage of lower interest rates in order to refinance the debt and spend more money to rebuild the military and the country’s infrastructure. Trump did acknowledge that he thought we need to reduce our debt, but it was one of a number of things he thinks we need to do.
“The problem with low interest rates is that it’s unfair that people who’ve saved every penny, paid off mortgages, and everything they were supposed to do and they were going to retire with their beautiful nest egg and now they’re getting one-eighth of 1%,” says Trump. “I think that’s unfair to those people.”
And while Trump boasts about making America great again, he no longer has a plan, or a desire, to make the country debt free. In an interview with The Washington Post earlier this month, the GOP frontrunner said he’d be able to get rid America’s more than $19 trillion national debt “over a period of eight years.”
But Trump softened that stance in an interview Tuesday afternoon at his offices at Trump Tower.
“You could pay off a percentage of it, depending on how aggressive you want to be,” he says. “I’d rather not be all that aggressive. I’d rather not have debt but we’re stuck with it. If I had a choice of taking over debt free or having $19 trillion – which by the way is going up to $21 trillion very soon because of the omnibus budget, which is a disaster. If I had my choice I’ll take no debt every time.”
Trump made the comments about Yellen, the Fed, and the national debt to Fortune in a wide-ranging interview on his business career and how that would translate to his potential presidency. Fortune will publish a transcript of the interview later this week, accompanying a cover story in the magazine on how Trump runs his business, and what it says about how he would lead the country.
There've been good signs in that regard, namely his shift away from bashing low interest rates and the way he only gives lip service to his Fed-control rhetoric. Sure, his followers can say "abolish the Fed" but Trump knows that then he'd have to come up w/ some other way to either "coin money and regulate the value thereof" or abolish the U.S. Constitution.
That's what Trump said last year and has backed off from since. imho O doesn't even understand interest rates --much less have a preferece, he just wants to spend money and while higher rates would make it more difficult it sure wouldn't stop him. Trump talks balanced budgets, and when (not if) rates go back up the intrest payments will top a $T every year.
That'll be quite a balancing act he'll have to come up with...
What do you propose in it’s stead?
That question always seems to end the discussion some how...
Strictly speaking that's the job of Congress and the Treasury Department. The Fed's responsibilities are a bit broader than that and apply to the country's monetary policy as a whole as well as the banking industry.
Actually, it's just Congress. So Congress complies by creating the Fed. Before President Trump signs an "Abolish the Fed" law, he needs to see how Congress intends to comply w/ Article I Section 8 fifth paragraph so it doesn't get declared unconstitutional by Obama.
Lets follow the Constitution and give the power to coin money back to the U.S. Treasury and re-institute the Gold Standard (or some type of standard.)
...
Lurkina.n.Learnin:
“I have a better idea: Abolish the Federal Reserve”
What do you propose in it’s stead?
...
I haven’t met a senior yet who would trade a 15-20% decline in their property value for a 2-3% interest on their savings.
You could look at purchasing an insurance annuity with some of your savings, or even a reverse mortgage if you’re sure you won’t be moving. Both of these will provide a steady stream of income.
Moving out on the risk scale a bit, there are a number of reliable monthly dividend real estate investment trusts (REIT) and closed end funds (CEF) that can beat the rates on Treasury notes.
I just don’t think higher interest rates are gonna happen in the foreseeable future, there’s too much debt in the world for that to happen.
That's true but many object to the fact she clearly represents continued deflation:
She wasn't poor before ZIRP, she had moved into a new, smaller home, and had money for luxuries like eating our with her friends every week, going shopping for whatever she wanted, giving her grandchildren money for birthdays and Christmas. Now, we have to help her with gifts, even though she is reduced to giving them things like her jewelry and collectibles. She started off just fine in 2008, and now is poor, and getting poorer every day.
An easy money populist.
Cruz says he wants to consider that, my hope is that after he's done being considerate he forgets gold and gets serious.
Sure, we could peg the dollar to say, today's 1/1,249.53th of an oz. but we had both the gold standard and the fed for decades until everyone got sick of double digit inflation one year and double digit deflation the next. So much for gold's "stable prices" --but even w/ the goofy volatile price gold standard most dollars were still created in banks not the treasury. This is the way it's been for centuries, it's not just now and not just a 'Fed' thing.
Congress originally created the FR in order to have a lender of last resort to banks that had been following all the rules and could still fail anyway --the problem being that as JPMorgan told 'em the U.S. economy had gotten just too big and the free market place could no longer perform that function.
So our bottom line is: no Fed = no last lender = no dollars = Congress fails to meet its constitutional mandate.
Sounds like as w/ all us old people she’s made some good choices and some stupid ones —and her best choice seems to be to have raised a loving and supportive family ;)
Somehow I can’t see how her problem right now is interest rates and not taxes. I mean let’s say interest rates go up like they were in ‘07. That adds $1T/year to the federal budget alone in interest payments along w/ $trillions/year more in state/local budgets. Property taxes would soar far more than any CD payment.
Of all the problems we’ve had since ‘08, CD returns should be pretty low on our list.
The power to coin money was never taken away from the Treasury. As for the gold standard that would be a decision for Congress.
The Fed sets the target on the Fed Funds rate, the overnight loan rate between banks.
Long rates are normally set by the market, by the bond vigilantes.
“I have a better idea: Abolish the Federal Reserve.”
That won’t accomplish anything. Banks still need a lender of last resort.
Prior to 1913 the largest American money center banks tried to perform the same role during panics. You’d be transferring monetary policy back to the largest banks and they won’t want it.
thanks!!
" Trump then went to Fordham University, a Jesuit school in the Bronx, for two years, before transferring to the University of Pennsylvania and studied economics for two years, graduating in 1968 with a bachelor’s degree. He took undergraduate classes at Penn’s famed Wharton School of Business."
Yeah, how could he possibly know anything about economics with a degree from U Penn and classes at Wharton? /s
Can they every Drastically differ?
let’s say overnight is a quarter point. Could 1 year ever be 4 points or 10 years 6 points?
Hard to respond to such a simplistic illogical comment.
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