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.
That would solve a lot of the problem.
Interest rates on new mortgages would rise;
and who knows, maybe they would become geographically dependent.
“total US corporate profits 2.6T/yr. 8% of that would be $200B.”
It would revenue-wise be like an 8% sales tax but is collected as value is added at various stages of production rather than merely at the retail stage.
WIKI
A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)) is a consumption tax that is levied on the value added at each stage of a product’s production and distribution. VAT is similar to, and is often compared with, a sales tax.
VAT can be accounts-based or invoice-based. All VAT-collecting countries except Japan use the invoice method.
Using invoices, each seller pays VAT on their sales and passes the buyer an invoice that indicates the amount of tax paid excluding deductions (input tax). Buyers who themselves add value and resell the product pay VAT on their own sales (output tax). The difference between output tax and input tax is the amount paid to the government (or refunded, in the case of a negative amount).
it is difficult to evade
In France it is the largest source of state finance, accounting for nearly 50% of state revenues.
https://en.wikipedia.org/wiki/Value-added_tax
During Covid M1 went up about $18 trillion. That’s how they financed it.
“inflation is lower now than it has been for 14 of the last 22 years.”
I’ll take your prices as correct but the above statement is still true. Inflation is always with us unless we are in recession or depression. Our job is to outrun it. I did it by running three one-person businesses at the same time for years. I knew a “job” meant a “failure to thrive”. It takes a lot of work and written financial plans for 1 year, 5 years, 10 years and 20 years+ to beat inflation and become financially independent. I read long ago that there’s a coincidence to consider: 1. A very low percentage of people will be financially independent at retirement. 2. A very low percentage of people write, follow and pursue a written long-range plan to become solvent.
I think there’s a cause and effect there.
“the money it brings in: over 176 billion euros in 2023 – over half of France’s tax revenue”
https://www.rfi.fr/en/france/20240410-vat-turns-70-and-still-brings-in-much-of-france-s-tax-revenue
The inflation rate has been a fraud ever since Bill Clinto changed the COLA computation by allowing substitutions in 1993. I could be wrong on the date, but the change in methodology gave them the ability to manipulate it.
Dartmouth College studied the old and new methods in 2008, before Obama, and after 8 years of Clinton and 8 years of Bush. It showed that after 16 years, Social Security benefits would have been 80% higher under the old method.
There may be a lull in rent increases as landlords finish recovering from Covid era deadbeats.
Interest rates price in past government irresponsibility.
Lots of people got 3% or less when Biden inflation was far higher.
Interest rates should price in the possibility of future inflation.
I’ve seen strong union gains at UPS, Southwest Airlines, Starbucks and Costco.
I also see Democrats increasing trying to buy votes by forcing employers to pay more - $30/hour for selling drinks and snacks at California airports.
President Trump gets to have his say in the matter.
Your experience doesn’t appear to be the norm.
A record number of consumers are making minimum credit cards payments as delinquencies also rise
CNBC ^ | 1/23/25
Posted on 1/23/2025, 10:06:20 AM by EBH
Consumer stress has intensified, with an escalating share of credit card holders making only minimum payments on their bills, according to a Philadelphia Federal Reserve report.
In fact, the share of active holders just making baseline payments on their cards jumped to a 12-year high, data through the third quarter of 2024 shows.
The level rose to 10.75% for the period, part of a continuing trend that began in 2021 and has accelerated as average interest rates have soared and delinquencies also have accelerated. The increase also marked a series high for a data set that began in 2012.
Along with the trend in minimum payments came a move higher in delinquency rates.
The share of balances more than 30 days past due rose to 3.52%, an increase from 3.21%, for a year-over-year gain of more than 10%. It also is more than double the delinquency level of the pandemic-era low of 1.57% hit in the second quarter of 2021.
The news counters a general narrative of a healthy consumer who has kept on spending despite inflation hitting a more than 40-year high in mid-2022 and holding above the Fed’s 2% target for nearly four years.
(Excerpt) Read more at cnbc.com ..
It doesn’t matter if it comes from revenue. The profit margin is only 8%. You’re erasing all of it.
Trump has no authority to decree interest rates.
We’ll have to agree to disagree. The reason for the crash was more business than politics. In the ‘90s, mortgage companies did not care so much about risk because they were bundling mortgages and selling them, so they were passing the risk on to the next company. Then, the Fed Reserve dropped the interest rates in the early 2000s, so housing prices shot up, and many homeowners started borrowing against their home equity, and then the bubble burst.
Good stuff, thanks. Let’s look at these two, the rest are pretty obvious:
“Lots of people got 3% or less when Biden inflation was far higher.”
I don’t know what this means but I know that most people misunderstand inflation and inflation rates and what they mean.
“Interest rates should price in the possibility of future inflation.”
That’s the idea, and I don’t blame the FED for often failing, I don’t think the predicting ability required exists. The only hope is that the FED will bring about less extreme gyrations in inflation and employment than we would have without a FED. If the FED can act as a computer does on an engine to produce the best power at various RPMs that would be ideal, but I live with the fact that there is no certainty possible, especially in short time frames.
Mortgages are governed by states, not the feds except for fairness, truth in lending, fair housing and FHA and VA mortgages.
Any federal action would apply only to new originations: the terms of existing loans are subject to the whims of policy makers.
“You’re erasing all of it.”
A business can choose to unincorporate and dodge the tax.
The bigger the business, the riskier that will be.
Service businesses will become smaller, more plentiful and more competitive.
Instead of paying $200/hour for a plumber, you might pay $80/hour.
Houses will cost less. Cars will cost more.
Overall, very little inflation.
Who’s going to take a financial hit?
Mr. Big Contractor - perhaps from $1.2 million/year to $120,000/year.
Not sure how an incorporated giant un-incorporates and why management would choose that rather than passing the tax along to customers via inflation.
I like that people are trying mind experiments after they realize what $37T means, but best not to self delude.
The only imaginable way to address $37T is confiscation of assets out of estates, and accelerate those estates via mass executions. Not for cause. Randomly.
Could imagine concentrating the executions on “the rich” but ask GPT how much wealth is in the top 3% of US citizens. Those people will have to be executed and their estates confiscated to reach $37T. If you were to say, evenly distributed, then you’d be dealing with 60% of the population as a whole since most wealth is so narrowly concentrated.
If he is able to do that then inflation will go even higher than it is now. That will just push too much liquidity into the system, we need the reverse of that. It will just fuel more debt and and deficits.
The Treasury has been financing at short term rates for the last 4 years and we have to roll over something $10 to $15 Trillion on debt this year, plus sell new debt, so lower rates might not work.
Your numbers ring true. Frankly, for me it was a struggle to even pose the questions I had.
Your bottom line rings true as well. If it’s Russia’s oil that’s the saving grace for the West’s future, I suppose WEF apparatchiks and other megalomaniacs think of their treachery over the West and into Russia as moves to save the West. They’re thinking that in baiting Russia to overreach it’s capabilities, the megalomaniacs can then barge into Russian lands to “secure” the future of the West. What saviors they are. The evil and probably horrific consequences of such a theft are the least of the WEF’s (etc.) concerns.
The WEF type people want to steal Russia’s oil. Trump wants to be on good terms with Russia to make deals:
For respectful Trump, maybe his moves are all to ultimately be in a favorable trading position, where deals can be made without being extorted and without useless destructive confrontations.
For his disrespectful detractors, their moves are probably to ultimately have possession and control by any means necessary, vicious deception or violent destruction, of any and all world resources they wish to lord over. “You will own nothing and you will be happy.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.