Trump attacking the Fed

kitkat22

Golden Member
Feb 10, 2005
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Yes, this is CNN, but certainly valid points that warrant discussion:

https://money.cnn.com/2018/07/20/investing/trump-interest-rates-fed-tweet/index.html

The premise, the Federal Reserve yesterday announced a continued and paced increase in interest rates from ridiculously low rates over the past decade or so during the great recession. There are several ways the Fed goes about controlling money in the market, but one is through interest rates which is effectively the cost of borrowing money across banks. This is primarily intended to be market driven and the goal of the fed is to try to "align" the interest rate with market forces.

I am sure the Fed is watching Trump and realizing that inflation will be part and parcel with his "economic" policies. Based on current happenings inflation is going to happen. Demand is only increasing across the country as the economy improves, there is pent-up energy from the recession and demand for housing, construction, etc is quite high. With Trump's tariffs the cost of goods are going up. Put too much money into the system and prices will only escalate.

Trump decided to criticize the Fed for the rate increase. The Fed is intended to be excluded from politics and past presidents have left the Fed alone. I agree with the rate increase for several reasons. It allows more room for the Federal Reserve to make adjustments for the next crisis - this is planning ahead. It also tries to control a runaway economy and prevent rapid increases in interest rates once evidence of inflation does occur, and it will. We need to control the amount of money in the market and limiting "free money" could spur businesses to invest in actually hiring more and raising paychecks. Something that has been stagnant for far too long.

The sad reality, the GOP and Trump supporters do not understand the complexities of monetary policy. Even I admit, I don't fully understand it, but I do recognize that monetary policy is a long-term strategy and should not be subject to the whims of a president who can't control his mouth/tweets and with an attention span of a 2 year old.