Trump wants a Direct Role in Determining Interest Rates

Well, if Trump (whom according to many here is a blustering idiot) was begging for a rate cut and it took the Fed 3 weeks to do the rate cut that they could have easily done sooner than Trump began talking about it (because they are economic geniuses), then I'd say Trump was way out in front of the Fed. Ideally, the Fed would have made that emergency cut before Trump ever had time to talk about it to the media, but they didn't and that's my whole point. The Fed waits until it's obvious to everyone and their grandma that a change in rate is needed and then they do it. Often by the time they react to a situation, the damage has been done. Much the way they reacted too slowly to stop QE when it was obvious the economy was roaring coming out of Covid. Instead, they kept printing money with a 0 rate which led to massive inflation.

It's a really odd position to take that the Fed are economic geniuses and nobody should tell them what to do when they have time and again been way too late to the punch and in many cases, have caused economic calamity.

 

Let's just let him set the rates by decree and on a whim. What could possibly go wrong? There are reasons the FED is meant to be independent.

 

It wasn't only Trump. I think every Wall Street money manager was in full-on WTF?? mode before Powell finally cut the rate a half a point. And even that was too little as we would later see.

 

You are asking for an impulsive Fed. I can’t think of a worse proposal.

 

Yeah, that wasn't my proposal. But thanks for playing.

 

Your prior posts say otherwise.

 

Even if I thought Trump would do a great job with interest rates, and I don't, I still wouldn't want him to have that power. Because if he has that power, then so does the next president, and most of our presidents don't had enough experience and knowledge to do that job. And they have some huge conflicts of interest during their first term.

 

IMO, it is not so much about experience & knowledge. It is a severe horizon problem - the country is a going concern, prez terms are 4 years. It is also an incentive problem. The FED is tasked with price stability & employment goals. The prez is trying to either win the next election or help her party win the next election. Or, as a lame duck, sabotage the incoming party/prez.

 

of course not. We don’t need political motivation controlling the fed. Especially trump.

 

Guess who calls the shots in Turkey?

Turks Are Running Out of Cash—and Patience

Turkey has, and has had for quite some time, an inflation problem. Last October, inflation hit a 24-year high of 85.5 percent on an annualized basis, meaning prices nearly doubled. This year, inflation has tempered from very high to somewhat high and is heading back toward being unsustainable. The kind of inflation that Turkey has on a monthly basis causes spasms of panic in the United States or Western Europe on an annual basis. In June, inflation was close to 40 percent year-on-year. In July, it was nearly 50 percent, and in August, it was nearly 60 percent. Investment banks and the government are in agreement that inflation will likely hit 65 percent by the end of the year. Ankara optimistically hopes to halve the inflation rate by next year.

The reason inflation went haywire is because of Turkish President Recep Tayyip Erdogan’s belief that low interest rates would somehow cap inflation. The reason it might yet come under control is because of his belated jettisoning of that very approach, experts said, marked by a sudden U-turn in monetary policy.

For a long time, Erdogan insisted that Turkish Central Bank interest rates be kept relatively low, in order to keep credit flowing and the economy humming, even though that was a recipe for inflation. Ahead of the general elections this May, Erdogan raised Turkey’s minimum wage and tapped Central Bank foreign currency reserves to prop up the lira to help stabilize the currency. It was a short-term gambit.

 

Why not give the power to Trump only and then remove it after he leaves office?

 

Not sure if anyone can remember so far back, the last time we had a compliant Fed that lowered interest rates for political reasons was back in 1972 when the then Chairman of the Federal Reserve Arthur Burns juiced up the economy to help Richard Nixon's 1972 reelection campaign. The net effect was a decade of stagflation.
How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes - American Economic Association

Giving Trump control of interest rates would have same effect.

 

Trump says he ‘made a lot of money’ so he should have a say in when you get a rate cut | CNN Business

Trump said he is more qualified than fed members because he made a lot of money.

 

This is another one of those issues on which Trump is such a nonsensical buffoon that both his ideas, and anyone supporting them, deserve not to be discussed but only mocked. If the country and press had done that from the beginning, he'd still just be throwing things and tweeting about Obama's birth certificate.

 

Hi.

I have an undergrad degree from UF in international business and economics.
I have thoughts about ANY politicians controlling interest rates:

 

Trump is the king of Moral Bankruptcy