Posted on 01/23/2025 9:24:22 AM PST by Miami Rebel
President Donald Trump said Thursday he would apply pressure for interest rates to fall, paving the way for a possible confrontation with the Federal Reserve as its first rate decision of the year approaches.
Speaking at the World Economic Forum in Davos, Trump told an assembly of global leaders that interest rates both in the US and internationally were too high and that he would call for an instant move toward lower rates.
“I’ll demand that interest rates drop immediately,” he said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”
Trump said during last year’s presidential campaign that he believed he should get a say in interest rate decisions as president and said the Fed’s chair Jerome Powell has “gotten it wrong a lot” on rate calls.
The Fed is due to announce its first decision on interest rates of the year next week (January 28-29), with market expectations for multiple rate cuts in 2025 scaled back to just one – and Fed governor Michelle Bowman said its December rate drop marked the “last step” in its “policy recalibration,” suggesting the central bank could be about to hit pause.
Trump, who appointed Powell, has clashed with the Fed chair and compared him to a “golfer who couldn’t putt.” Powell, for his part, quashed speculation in November that he would be fired and said the president removing the Fed chair was “not permitted under the law” and that he wouldn’t leave of his own accord.
Numbers aren’t being fudged, billionaires and multimillionaires are the ones that report those numbers. Full employment is real, The $6 trillion Money Market Funds is real, the 67% level of home ownership is real. The record home equity is real. The upper half of society is doing well, if it wasn’t jobs would be a big problem.
The working class is struggling with inflation and the middle class won’t live within its means so it struggles too. People equate past inflation to the economy, which is wrong. Inflation is around 3%, it’s only been that low for 8 of last 22 years. It’s the PAST inflation that has everyone upset.
One of the greatest life lessons is that you can’t change the wake of the boat!
So Trump’s only true leverage is on long term debt, by way of pressuring Congress to spend within their means? IOW, if some national debt is retired, not rolled over, then some of those “zero discretion” notes aren’t renewed. The institutions that “must” hold these now more scarce notes have to take what they can get - the note issuer (us) has the advantage and will re-price them for a lower return, a lower interest rate?
But Trump does not seem keen on lowering the national debt. Puzzling.
Leave the interest rate where it is; stop fiddling with it.
Going to be tough enough, slowing down the increasing rate of inflation.
Better to stop fiddling around with creating roadblocks for the flow of natural gas.
I think we all know the answer to that question.
How far does he want the rates to drop? Remember, when the Fed Reserve dropped interest rates in the early 2000s, house prices skyrocketed, homeowners kept borrowing against their homes, and then everything crashed.
Ahh someone who understands the numbers.
Get Congress to spend within their means? That’s a 2 Trillion spending cut (the total deficit), out of 6 Trillion, and 1 Trillion of that spending is interest on the debt. So a 2 Trillion cut is not out of 6 trillion, it is out of 5 Trillion. 40% of the budget.
Ain’t gonna happen.
This is why we get headlines of reporters who grab proposed plans (of about 2 weeks ago) to cut XX trillion from the deficit or spending or whatever OVER 10 YEARS.
It has all gone too far. There is no solution. It is papered over and has been for about 15 years. What is going to kill it all is the day our oil is essentially exhausted.
Russia’s won’t be. They have sooo much surface area. We will as to buy some. They will say they are willing to sell, but not for pieces of paper with ink on them.
It’s growing, and it’s very obvious it’s growing. Also, inflation is lower now than it has been for 14 of the last 22 years. The govt won’t make you rich unless you are already doing well. We have to do that first part ourselves. Mom can’t do it, boss can’t do it, only we can do that. Example for a working person: “What am I doing to better my knowledge and abilities so I can take my supervisor’s job when it opens?”
“What do I need to learn in order to start my own business?”
The first step is to realize it’s all up to us, not the govt, our bosses or Mom and Dad.
“How far does he want the rates to drop? Remember, when the Fed Reserve dropped interest rates in the early 2000s, house prices skyrocketed, homeowners kept borrowing against their homes, and then everything crashed.”
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The big driver of the 2008 crisis was all the lax requirements to get a mortgage, which was driven by the centrally planned economies of Clinton and Bush, in an effort to get more people into home ownership.
NINA loans (no income, no assets) and BS appraisals (overvaluing homes allowing for more and bigger equity loans) led to the crisis. Too many unqualified buyers got into a mortgage, then those mortgages were bundled and sold as “high-quality” mortgage-backed securities (MBS). Derivatives were created based on these MBS, and risk was leveraged out the wazoo.
When poorly qualified homeowners started to default on their mortgages in record numbers, the whole system collapsed.
“There is no solution.”
I have proposed a value added tax payable by corporations. At 8%, it would raise about $1.6 trillion/year.
Unincorporated businesses would be exempt. This exemption would keep prices from rising much in the service and housing rental sectors of the economy.
I think I saw this in some FR post somewhere, maybe from you.
ChatGPT — What is the average post tax profit margin of US corporations?
About 8% overall. Held up to that level by tech 15-20%. Retail and consumer goods (food) 4-5%. Oil and energy entirely price dependent and not quotable.
A no growth economy would pay into the debt. But if you’re going to condemn companies to a generation of that, why not declare the debt paid by decree and defund any court that would hear lawsuits complaining.
Entitled to high fixed income rates? That's the first time I've heard that.
SOOOOOOOOO A FED CHAIRMAN CAN SERVE FOREVER? NO TERM LIMIT?
To lower inflation, shouldn’t interest go up?
btw more from GPT . . . total US corporate profits 2.6T/yr.
8% of that would be $200B. Not even a dent in the interest, let alone the debt itself
He just wants something from the Fed, so he’s opening up negotiations.
“ Interest rates should be decided by the market.”
1,000 percent agree.
Get inflation down and rates will follow
“inflation is lower now than it has been for 14 of the last 22 years.”
Seeds at Walmart that were $1.44 are now $1.96.
Eggs - need I say.
Starburst had a recent price rise.
SwissMiss had a recent price rise.
Cottage cheese at Aldi went up some.
My water base rate went up.
They have been capping the rates by purchasing the excess, so it doesn’t move them into h8gher rates.
That’s why the Fed is sitting on a trillion dollars in unrecognized losses on government securities.
If you mark all the bonds held by the Fed to market value, the loss on paper is over $1 trillion. That’s more around 23 times the value of the central bank’s stated capital.
If you look at the increase in M1 and M2 it is obvious that they are printing money to purchase the National Debt.
That’s pretty good data, but the Fed balance sheet is $6T and dropping since QT is ongoing.
So the $37T debt accrues interest only on $31T, since the $6T is refunded (hmmm not 100% sure of that, some of the $6T may be MBS rather than gov’t paper). Regardless, if it was all gov’t paper, $31T at 3.5ish% composite interest rate is still over $1T in interest.
And you watch. When the debt ceiling debacle arrives soon, we will be told to celebrate $100B in spending cuts OVER TEN YEARS in order to authorize either a ceiling suspension of X years or a ceiling increase of something like $5T.
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