Posted on 04/14/2019 11:46:37 AM PDT by Moonman62
If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4% instead of 3%...with almost no inflation. Quantitative tightening was a killer, should have done the exact opposite!
I do not agree with our honorable President. Interest rates of 2-3% are really very low, and anything lower is dangerous.
"No controlling legal authority"
Rates aren’t low compared to the yield curve which is the correct measure. Rates are too high.
So why during Obama years was the rate at zero?
We need a stimulus in stand by for the next recession. If interest rates remain perpetually low, there will be no ability to drop rates and goose a faltering economy.
That said, if you balance the growth that we seem to be giving up now against the future benefit, we’re getting to a point where growth foregone is greater than the benefit we might get later.
If you can’t make money in a profitable business when rates are 2-3%, the problem is not the rates - it’s you. Once rates get below a certain number, they prevent growth rather than stimulate it. Investors will borrow money at near 0%, and put it into stocks paying 3%, and arbitrage their way to wealth. Why bother conducting business when you can just move money around on a computer screen?
That’s what happened during the Obama years. Higher rates will force businesses to actually try to make and sell goods, rather than just cooking their books.
My 401k is at plus 17.5% ytd. The market is hotter than a firecracker and has got me a wee bit nervous. Never take market advice from me whatever you do.
Our President is very correct. The opposition of all sorts is doing everything they can do to wreck his plans for this nation.
The only ‘advice’ I ever take is reading the 10-K and the last quarter’s conference call transcript. If I think a company is good at the price, then I buy it.
You are 100% correct. It’s not the Fed’s job to buy billions of dollars of U.S. government debt to keep interest rates artificially low just because Congress and the White House have no fiscal restraint.
I disagree. I don’t think the Fed went too far. I think it might have gone just far enough, which I think the stock markets are now showing.
The markets are nearly back to vaules of one year ago, but the P/E ratios are all at much better - closer to historical P/E ratios, than they were a year ago. Growth ahead, to what extent it comes, will be more stable with stocks, by P/E ratio measures, less in bubble territory. The end of year declines were needed corrections in my view.
We have no need to feed another bubble with too much Federal Reserve quantitative easing. That is how we got into trouble last time.
This is not about Trump. It’s just about good or bad economics. Bubbles are not good economics, no matter how much the GDP grows during them (and then contracts when they burst) nor is it about who is sitting in the White House. Trump is being advised wrong in my view, or he’s ignoring good advice.
The economy is doing fine and the stock market is more stable than a year ago. There is in all that no cause for complaint.
I like the Twitter post because it gives Democrats something else to drive them nuts, but President Trump is absolutely wrong about this.
President Trump was elected to be the champion of the Deplorables, the forgotten middle class. The middle class cannot be restored unless there's the "power of compounding" for accumulating safe savings for future needs. Interest on savings should be at least 4%. Interest on loans should be high enough to make people think twice about borrowing.
fed inflation trump bump
Facebook is worth more than $450 billion but has never paid a single penny in dividends. That’s all you need to know about just how fake so much of our economy has become.
Printing money is what causes inflation. I heard that many higher ups, when they negotiate their remuneration, specify that their package is increased proportionally to the increase in the money supply. What do they know that we don’t?
Printing money is what causes inflation.
...
Printing money when the economy stops growing is what causes inflation.
Economic growth does not cause inflation. President Trump is right. The Fed is wrong and has been for decades.
How about letting a faltering economy just work the cobwebs out and let the recession that WILL happen run its normal course instead of gerrymandering it?
President Trump is right. Economic growth does not cause inflation.
The Fed has cost us economic growth, greatly increased the interest we pay on Obama’s debt, and has hurt the balance of trade.
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