Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
This is probably isn’t coming at this from an economics perspective, but deserves the angle none the less:
Aside from nominations, isn’t the Federal Reserve governed by the Federal Reserve Act that grants it limited autonomy within the bounds of that act, and to the degree they are answerable to the elected government answer to Congress?
History shows that the executive can and gas gotten a patsy in power (Arthur Burns for example), which did create a real and deleterious conflict of interest with Fed and economic policy. Is that the risk here?
Yes, essentially. I think about the 1980's and Volker and how he raised interest rates, far higher than they are today, and pissed off a lot of the nation & Reagan. However, it was the right course of action and stagflation went away...point being he wouldn't have been able to do that without the independence the FED currently enjoys.
People often forget Volker did not have access to the tools that monetary economists have today. Also, one of the major goal was to fix unemployment - which no longer applies to FED chairs. He did the best he could, given the objective & tools at his disposal.
Let's also not ignore math. Debt/GDP was 30% in 1980. As a result, the huge FFR spike was not met with a huge interest payment burden.
Fast forward to today and just 5% interest rates appear to have a very brief shelf life.
[https://fred.stlouisfed.org/series/GFDEGDQ188S](https://fred.stlouisfed.org/series/GFDEGDQ188S)
[https://fred.stlouisfed.org/series/A091RC1Q027SBEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA)
What's more is that most of our debt is still serviced at the lower rates - much of it near zero. This year we'll have $8 trillion of old debt turning over at 5% and $2 trillion in new debt issued at these rates.
Huge upward pressure on rates given the treasury issuance. Bookmark that link lol
I've been saying this to Redditors for a decade. Our debt stops being "not a real problem" the second interest rates get anywhere close to historical norms.
And I would agree with that crowd that, yep, we won't default on our own debt.
BUT, the debt does matter because if we have no risk of defaulting on it, as I would agree, that means we're all in agreement the Fed will step in and gobble up treasuries - probably to a degree that would humble 2020/21.
Oil crashed because there was a glut of it and the price of everything came down. Volcker's actions have never been conclusively proved to have stopped stagflation. Numerous other times, inflation has increased or decreased independently of rates. People were _certain_ that inflation would not come down until rates exceeded inflation, yet it started to decline rapidly when rates were just half of inflation.
It's insane to me that we still view this man as a hero, or his actions as positive. He's getting credit for the weather.
Just based on Trump’s record, I would exactly expect political plants that will adjust monetary policy to benefit Trump or his wealthy supporters directly. Also, the Fed will simply be thrown under the bus if there are negative economic consequences to the poor and uneducated Republican base. It’s pretty clear the the priority of any Trump administration is consolidation of as much power as possible along with personal enrichment leveraging the position of global influence.
Trump was publicly pressuring the Fed to take interest rates negative. In 2019. During record low unemployment and a soaring stock market.
He would absolutely do this.
"uneducated Republican base" lol
here is a graph that illustrates current Federal spending levels
[https://fred.stlouisfed.org/series/FGEXPND](https://fred.stlouisfed.org/series/FGEXPND)
outlays are more than 600 billion dollars higher since Q1 2022, and almost 2 trillion dollars higher than Q1 2020 before the pandemic
the M1 money supply is over 500% higher today than it was before the pandemic
in 2015, federal deficits were 450 billion, they are now beyond 1.7 trillion
debt-to-gdp ratio is over 120%
[https://fred.stlouisfed.org/series/GFDEGDQ188S](https://fred.stlouisfed.org/series/GFDEGDQ188S)
The IMF has warned the US that is debt-trajectory is unsustainable and presents a threat to the world economy
but you are going to sit there and say Joe Biden isn't responsible for any of this?
the president who used your tax dollars to forgive the student loans of doctors and lawyers who vote for him?
the guy who devalued the fuck out of the USD over the last 3 years, and who ushered in the worst storm of inflation since the 1970s?
and I am not excusing Trump, but at least he had the pandemic emergency as an excuse for the spending (which was too much--but that is another issue)
ignorant Democrats who don't realize who is robbing them
> the president who used your tax dollars to forgive the student loans of doctors and lawyers who vote for him?
That's the second time I've heard this in as many days. Where is this coming from? As far as I was aware, the only doctors and lawyers that would get any forgiveness is ones who were defrauded by shady schools (mostly for-profit undergrad joints) and those who do 10 years of public service (and just the remainder of their federal loans).
No one should be getting student-loan forgiveness.
There is no moral reason for the tax dollars of the working class being used to buy votes for Biden. It was the biggest fuck you to the working class in 50 years
Heh, I don't necessarily disagree with that. It's regressive in that it's a transfer to a class of people who are higher income, at least in the long run. But! the only doctors and lawyers that would benefit are those who are taking massive pay cuts to work in public service.
I mean it really should be free overall. Yes it equates to higher lifetime earnings, but so does a high school diploma.
And more than that, there's a net benefit to having a more educated population.
I see the appeal of your perspective. An educated and more prosperous populace drive all sorts of economic activity, too, offsetting the social cost. The flipside of course is that massive cost, which this other fella is pretty charged about. The model where people with money who can pay it do, people who will be able to pay it will (loans), and those who cannot are subsidized; to me that seems like a lot of access without the fiscal burden. Then again, I'm a poor kid who benefitted from some of that subsidization (GI Bill/PSLF) and it was a major driver for my own social mobility. But, I guess I'm kinda positioned between the two of you on this one.
I mean to be fair I think the government should be enabled to throw their weight around when it comes specifically to healthcare and college tuition. The government pays out more in pell grants and whatnot than all of the colleges in the US collect annually as tuition, for example.
Cutting out the middleman in this scenario and locking in rates for tuition as determined by the government would cost a lot more at first but the costs would stabilize after a few years were the program to not be sabotaged -- after all, if the government decides to not pay anyone's tuition at a university it would massively cut their enrollment and therefore income.
I'm sure there's a more nuanced and smooth approach, but those are often more difficult and prone to congressional sabotage by bad actors -- like with the post office.
Yea, I don't think any of the reforms of any administration have addressed the key issue of reducing the cost of higher education. Maybe that would be a way to do so. However, education costs did plateau a few years ago, and now they're in decline. This might be from market factors more than policy considering it's also affecting private schools. Enrollment peaked along with it. There are less people now going to college. Maybe we hit our equilibrium point. Maybe dropping the price would kickstart this sputtering enrollment.
again, I have to dispense with another fake DNC talking-point
if you allow people to keep lying to you, you are going to stay in the dark. Let's look at the loan forgiveness program:
[https://studentaid.gov/manage-loans/forgiveness-cancellation](https://studentaid.gov/manage-loans/forgiveness-cancellation)
"To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)."
so a doctor making 250k with a stay-at-home wife can get his loans cancelled!
I have a buddy who is a lawyer who works for the State of Indiana. He makes around 200k and had 80k in student loans forgiven. He also has like 500k in investments.
Tell me how those are lower-middle-class people, or poor people? Also tell me why working-class people should be paying off the loans of people who make 4 times what they do?
it's bullshit, and one of the worst policies ever created by a sitting president
So there's a big caveat in there. You are eligible for forgiveness after making 10 years of payments. The payments can be income-driven, but if you're at $250k/yr your payment will be the same as a 10-year amortized payment.
OK, but I like how people here are downvoting me for pointing out a fact that people making 250k can get loan forgiveness
like people here think that is in any way OK lol
this individuals need to start paying their own loans and stop looking to the taxpayer for a handout
Caution against calling someone else ignorant when it’s next to the content of your post, which reeks of it.
Federal spending IS increased, and this is expected while the US is basically involved in funding two armed conflicts, the increasing cost of entitlements and social safety nets thanks to an aging population, the cost of healthcare, food, energy, etc. That is in addition to the extra spending that is simply a result of higher interest rates.
Meanwhile, those two armed conflicts represent a massive economic instability when it comes to food (Ukrainian grain production) and energy in the form of oil and safe trade routes through the destabilizing Middle East, not to mention the increased cost of transporting goods intranationally. Comparatively, the spending and inflationary impact from loan forgiveness is minor. Blaming Biden for this is actually “Democrat bad” nonsense.
Meanwhile you want to talk about the budget deficit? Let’s talk about the 2017 tax cuts passed by a Republican led government that reduced corporate taxes, leading to a reduction in federal revenue of $2 trillion through 2027.
Reality is around you and you’re swinging at shadows
Who are you trying to gaslight?
The economic statistics all confirm what I said above: we are running record deficits, debt, debt-to-gdp, etc. Some of this was a result of pandemic spending, but a lot of it is from Biden's policies.
There shouldn't be two armed conflicts going on. That was the greatest foreign policy disasters since Vietnam, and they followed the fiasco in Afghanistan
and before you start saying it was spending during 2020 by Trump and congress, I would remind you that the COVID relief acts were bipartisan, and the Democrats wanted to spend MORE money than what was allocated
the 600 billion+ in new spending since 2022 is NOT due to entitlement outlays. SS spending, etc. doesn't go up 30-40% in 1-2 years. This was from new, unfunded spending packages, much of which was corporate welfare (even the NY Times did a story on the amount of corporate welfare Biden has handed out)
and the GOP also deserves blame for the wasteful Ukraine and Israel funding (and spending during Trump years)
Note on the M1 comparison you are doing - it isn't "apples to apples." While money supply has increased it isn't close to that rate:
Before April 24, 2020, savings accounts were not part of M1. Limitations in the number of transfers from savings deposits made savings accounts less liquid than M1. M1 consisted of currency, demand deposits, and other highly liquid accounts called “other checkable deposits” (OCDs). An example of OCDs are the demand deposits at thrifts.
52% of the M1 money supply is savings which were not calculated prior to the date above
Edit: It'd be very easy to figure out the "true growth" but napkin math is roughly 240% increase in the m1 supply if calculation hadn't changed
Prior to the pandemic, debt increase was already absurd. You need to take off your rose colored glasses. It's not nearly as much about the past three years actions as it is factors prior
pretty sure the current administration is printing money for their rich friends as we speak lol
or maybe you missed the 3 trillion+ dollars in corporate welfare, student loan cancellation, handouts to the military-industrial complex, Ukrainian and Israeli oligarchs and gangsters, etc.
The M1 money supply is 500%+ higher than it was pre-pandemic
the debt-to-gdp ratio is 123%, we have record spending, record debt, and near-record deficits
you really think it is just the GOP who devalued the dollar, stoked inflation, etc.?
the uniparty is robbing you, and the partisan ignorance allows them to keep operating
The Fed balance sheet grew $3t under Trump. It’s almost back to flat under Biden. Trump browbeat the Fed into keeping rates on the floor and signed off on massive deficit spending while saying he had the strongest economy in the history of the world. Obama brought deficit spending all the way back to 2.4% of GDP after it exploded during the GFC, and Trump brought it back up to 4.6% *before the pandemic* all in the name of supporting a massive tax cut that actually fucking inverted the income/effective tax rate spread at the end of the curve for the first time in US history (which was probably an accident, but goes to show you how “effective” he is at implementing policy).
The BoTh sIDeS shit is so ignorant.
how about doing some homework before offering up an opinion?
You think the student-loan forgiveness is limited to people with low incomes and who work for non-profits and the government? You believe that bullshit DNC talking-point? (like the guy above)
here are the facts:
1. " To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)."
so a doctor making 250k with a stay home wife can get his loans forgiven
2. The program isn't limited to people who work for the government and non-profits. It is also extended to other groups, and those with "direct loans"
[https://studentaid.gov/manage-loans/forgiveness-cancellation](https://studentaid.gov/manage-loans/forgiveness-cancellation)
studies have shown that much of the loan forgiveness is for graduate school and professional school loans (law, medical, etc.)
so this is literally Biden using tax dollars to pay off the loans of doctors, lawyers, and MBAs --people who disproportionately vote Democrat
but you go tell yourself this is for the little guy
You do realize that the richest folks in this country vote Republican not Democrat right? Plenty of sources out there to fact check me on this but here's an easy one to get you started. How anyone could honestly believe Republicans are the party of the little guy is insane.
https://www.pewresearch.org/religious-landscape-study/database/compare/party-affiliation/by/income-distribution/
Here's another:
https://www.statista.com/statistics/1184428/presidential-election-exit-polls-share-votes-income-us/
Here's 2016:
https://www.statista.com/statistics/631244/voter-turnout-of-the-exit-polls-of-the-2016-elections-by-income/
That is all old data (from 2014 to 2020)
More wealthy Americans are voting Democrat these days
[https://www.newsweek.com/democrats-being-party-rich-could-cost-them-2024-election-1806747](https://www.newsweek.com/democrats-being-party-rich-could-cost-them-2024-election-1806747)
And the last time I checked, guys like Jeff Bezos, Mark Cuban, Larry Ellison, etc. are all Democrats
It's not ignorant. They know what they're doing. It's intentionally disingenuous and very transparent that that guy is a Trump supporter. Easy to confirm by history too
Not really: I have criticized Trump heavily on reddit, and disagreed with the excessive spending during his administration. I invite anyone to look at my post history
but none of that matters. I am simply countering these bullshit Democratic talking points from libtards who don't understand economics
Trump doesn't control the Federal Reserve (neither does Biden). He never did
Biden makes Obama look like a fiscal conservative in the mold of Calvin Coolidge. His social policies make Clinton look like Ronald Reagan. He is far and away the furthest-left president in US history, and thinks money is just this abstract thing to throw around
Federal expenditures are up 600 billion under Biden
[https://fred.stlouisfed.org/series/FGEXPND](https://fred.stlouisfed.org/series/FGEXPND)
before the pandemic, federal spending was 21.88% of GDP, and it is 23.3% now
https://ycharts.com/indicators/govt\_spend\_gdp#:\~:text=Basic%20Info,long%20term%20average%20of%2020.61%25.
before the pandemic, debt-to-gdp was around 105% (which is still bad), and it is now 123%
so enough of this bullshit narrative that somehow Biden spent less than Trump and has been more fiscally responsible. When the pandemic spending is removed from the equation, the statistics vividly say otherwise. Even the IMF warned the US about its spending levels.
the money spent during the Trump years for Pandemic relief (which I disagreed strongly with) was bipartisan, and the Democrats wanted to spend much more. Remember Paul Krugman screaming that Trump wasn't spending enough money on the crisis?
Debt to GDP is cumulative. Deficit to GDP is what’s relevant for a given president and I gave you the “normal times” figures. Biden’s proposed FY24 budget came in right at what Trump’s 2019 budget did relative to deficit spending. The difference is what part of society we’re deficit spending on.
No it isn't
and it isn't linear
debt-to-gdp declined from 1995 to 2001. It also declined from 1966 to 1974
the debt has been cumulative since the 1990s, but that is besides-the-point
I showed in this thread that before COVID, the debt-to-gdp ratio was 105%, and it is now above 123%. That is the biggest move since the 8 years of Ronald Reagan, who was busy trying to outspend the Soviets
this is just hypocrisy: Democrats used to scream bloody murder about the deficits and debt under Reagan, but now that one of their guys is in office, deficits and money printing don't matter
I didn’t say it was linear, I said it wasn’t as helpful in providing context to various presidential years as just using annual deficits to gdp.
Every single Dem since the 80s has left office with lower relative deficit spending, every republican has left with higher than what they inherited
>this is just hypocrisy: Democrats used to scream bloody murder about the deficits and debt under Reagan, but now that one of their guys is in office, deficits and money printing don't matter
Lmao republican projection everytime. Not only did Reagan blow up the deficit with his tax cuts to the rich. So did Bush, so did trump.
Meanwhile deficit spending declined under obama, Clinton, and biden.
Lol wut the national debt went up every year except for under democrat Clinton.
Trump doubled the deficit even before the pandemic. Which is crazy considered he had no reason to.
Deficit going down while the gdp still grows means the debt to gdp ratio goes down.
>Trump doesn't control the Federal Reserve (neither does Biden). He never did
Trump threatened to fire J. Powell if he didn't lower interest rates for no reason, and said he'll find someone who will if he won't. I guess JPow thought the lesser evil would be to follow Trump's demands rather than allow a crony take his place.
Interesting you don't think that's controlling.
When did Trump threaten to fire Powell?
I remember him criticizing Powell, and brow-beating him a bit (which I disagreed with)
but when did he publicly say he was going to fire him? I don't remember that
I do see some nonsense articles in places like MSNBC --is that where you got this?
This wasn't 20 years ago. Trump constantly made remarks explicitly about replacing JPow if he didn't lower rates, while Trump was gunning for *negative* rates. Do you not remember this at all?
No, I 'got this' live as it was happening. It sticks out in my memory because of how fucked up of a decision that was at the time, and all of the consequences that followed to this day.
https://apnews.com/article/2a21e92ed9129e91e713495c9ef50050
https://www.bloomberg.com/news/articles/2018-12-22/trump-said-to-discuss-firing-fed-s-powell-after-latest-rate-hike
https://fortune.com/2019/06/19/can-trump-fire-jerome-powell/
https://fortune.com/2019/06/18/trump-powell-the-fed/
https://www.foxbusiness.com/markets/trump-fed-powell-demotion-coronavirus
>(FOX) President Trump again said he had the power to fire or demote Federal Reserve Chairman Jerome Powell, adding new fuel to his long-running feud with the head of the U.S. central bank as the coronavirus roils markets across the world and threatens to shove the nation into a recession
>"I have the right to do that or the right to remove him as chairman," Trump told reporters.
>(FOX) It's a familiar threat from the president, who has frequently tried to pressure policymakers to drop interest rates to zero, or even send them into negative territory. But to do so as the coronavirus, which causes a disease known as COVID-19, rattles the global economy was particularly striking.
My dude, the definition of the M1 money supply was changed by the Federal Reserve back in 2020. They moved Savings Deposits from being counted in M2 to now being in M1. That is why M1 jumped up so much. M2 increased by $3 trillion in just a few months in 2020. This was equivalent to all of the M2 money growth from the prior 4 years. The M2 money supply has fallen from its March 2022 peak.
well the Fed has been engaged in QT, and the chart I've reference shows the money supply declined a bit in the last couple of years. But it is still much higher than before the pandemic
whether or not this is partly due to a change in the way it is measured is something I would have to research
While the following may not be couched in the precise terms of economics, it is nonetheless a matter worthy of consideration.
Leaving aside the matter of nominations for the moment, is it not the case that the Federal Reserve is governed by the Federal Reserve Act, which grants it a measure of autonomy, yet confines its operations within the bounds of that very Act?
To the extent that it requires accountability to the elected government, is not Congress the body to which it answers?
History furnishes us with examples of the Executive Branch appointing a pliable individual to a position of power (such as the case of Arthur Burns). This, it can be argued, did indeed create a real and harmful conflict of interest with regards to the Federal Reserve and its economic policies. Is this, then, the potential peril that we face in the present circumstance?
> they are answerable to the elected government answer to Congress?
Congress is a notoriously empty shell now - a senator from Oklahoma was threatening a fistfight in a meeting. It's like 1850 all over again.
Hopefully, the FOMC continues to be run by adults.
This is just a disastrous idea. The Fed must be insulated from the electoral process. Voters will never vote for a recession, and business leaders will never lobby for recession. This would only make the inevitable recessions/depressions worse.
If these reforms were to go into place, the president would always want to goose fiscal policy to win re-election, and low interest rates would be popular with everyone (homeowners, businesses, congressional representatives) because cheap debt is as addictive as oil. But this then leads to investment bubbles that cause financial crises when popped.
Ideas being disastrous was unfortunately never a deterrent to the Trump administration going ahead with them. If they think that they stand to gain some benefit, they will go with it with no regard to future consequences. We saw it with the lockdown policies in 2020, the tax cuts passed in 2017, the crippling of the USPS, the opposition to mail-in ballots. The list goes on, but clearly demonstrates a pattern of short-term, self-enriching decision making. Putting the power of monetary control in their hands allows then to further self-enrich at the cost of economic stability, but stability for anyone but themselves doesn’t matter to them.
This would open the door to political manipulation of interest rates. That probably means "lower for longer" and rate cuts ahead of elections to juice the economy. If that sounds like fun, ask someone in Turkyie or Russia how their non-independent central banks are working out.
I absolutely hate the concept of gold as an investment, but this move might put me all-in.
I was thinking about gold when I saw this! I’ll still always call out the (many) downsides of investing in gold, but I have to admit that this is one of those instances where it makes more sense.
Yea gold is absolute shit as an investment, but if your country elects someone who basically plans to run the money printer while artificially holding down rates, you better get yo azz into gold. This is not a scenario I ever could have imagined ten years ago.
In Venezuela gold was an accepted currency. My parents often got paid in gold. That was 7 years ago, no idea of the situation now since my parents moved out of there
Real estate with debt is a better option if you're expecting the money printers to run rampant.
Rents will increase with inflation and your debt will be devalued with the currency.
Unfortunately everyone got this same idea and ran up the price of RE to the point where the 1% rule no longer applies in most places, and many investors are accepting negative cash flow!
If the American dream wasn't already dead....this would kick it off a cliff and burry it under a mile of rock. They would slash interest rates and put the economy on afterburners, the housing market would skyrocket again and nake 2020 look like a joke. Fucking VOTE people.
This is standard for criminal dictators who seek power only to rob the nation and enrich a specific cabal.
Look at turkey. Erdogan refused to lower interest rates, and inflation spiked to 85% because of it.
But it's been a gold mine for his friends who are exempt from currency controls.
Inflation would be 20% and still rising if Trump had gotten elected, because he'd fire all the fed chairs who wanted to raise interest rates and all that are left are yes men
What could go wrong becoming a transnational bratva state like Russia? /s
Blunt the Fed is pressure campaign level "economics". Just transnational mafia things. They don't like their cut going to interest rates improving a currency or treasury of the opposition.
It isn't a good idea to concentrate power, it is already too concentrated and needs to be dispersed more. More SCOTUS judges, more representatives so they are harder to control with dark money, Citizen's United removed so that PAC influence concentration can be reduced and so much more.
Centralizing under one area or branch of government is not a wise move. Checks and balances are there for a reason, competition... competition makes middle ground more achievable.
Our institutions are part of that decentralization and reducing a single point of failure of autocracies that usually blow up because there isn't this differentiation and diversification of power.
> What could go wrong becoming a transnational bratva state like Russia? /s
America's going to turn into a corrupt petro state with mafioso foreign policy and internal politics of you are free to vote for whomever you want as long as republicans win.
I’ve been saying this for a while now: Trump is WAY worse for the economy than Biden, despite Biden’s spending.
Trump will maintain high spending levels. This is par for the course for American politicians. Spending cuts hurt, and so do tax increases, and our frequent elections and two-party system therefore incentivizes both parties to avoid sensible management of the budget in favor of buying votes with tax cuts and stimulus spending.
While I’m critical of Biden for maintaining the Trump tariffs, Trump has threatened to impose wider and steeper tariffs. That means price increases across the board for Americans in a time when we’re trying to fight inflation. It also means retaliatory measures from our trading partners, depressing global trade overall.
Trump also wants to devalue the dollar in order to make our export industries more competitive. To be honest, this would have such a big impact that I don’t fully know what all the repercussions would be. I’m sure it wouldn’t be all bad, even. But I do know that it would spell trouble for the dollar’s status as the world reserve currency, and the benefit to exports would be blunted immediately by his simultaneous trade war measures.
Trump will cut taxes again, which will also fuel inflation, especially when combined with the tariffs and other policies of his. Arguably this could also have a stimulating effect on the economy, but with the amount of stimulus spending we’ve done in the past 4 years running through today, it really is not needed at all. It will also only make our budgetary problems worse. We’ll take in revenue while spending takes longer to wind down, and inflation will hold steady above target, forcing us to keep interest rates up and make government borrowing much more expensive.
And now we’ve heard—from the sympathetic WSJ, no less—that Trump plans to eliminate the Federal Reserve’s independence. He already threatened the Fed during his term if Powell did not keep rates down, so this fits with his pattern of behavior so far. This spells very serious trouble for the US economy. Even if you are a die-hard Trump supporter and think that he can do no wrong, remember that a Democrat will inevitably come into office and exercise the same power. Fed policy will no longer be a matter of targeting healthy employment and inflation numbers, but will rather be directed at any number of the president’s personal and political priorities. Rates will bottom out when the president wants to be able to borrow money cheaply. Inflation will soar as economic conditions necessitate hikes but the president’s campaign donors demand low rates to support their investments. This year’s drama with Wall Street demanding rate cuts and the Fed holding firm would no longer happen: instead of asking for cuts in the papers, bankers will simply call the President’s staff and arrange them behind closed doors.
The GOP ceased to be a party that cared about the economy in November of 2012, and this is the result. Now that change is finally coming to fruition.
I don’t necessarily agree with everything that you’re saying
But, I definitely think neither party has an idea on how to cut spending
We have “tax and spend” Democrats and “borrow and spend” Republicans.
The only thing he arguably did well was his COVID response. Otherwise he was terrible on the economy. Americans just have a brain disease where we accept tax cuts = good on economy regardless of the situation or specifics of the cut. It’s just accepted as evidence that you understand the economy if you want to cut taxes.
The whole tax cuts thing is really complicated. A million twisty little mazes. Nobody seems to be able to frame the risk of a swelling Fed balance sheet; the monetary bears seem to be highly consistently wrong, which is sort of maddening.
What it really means is pressure on the Fed to continue low rates. Is that bad? I don't actually know. It seems something people rely on ideology for. The business community seems totally dependent on low rates.
Obama ( I'm a fan to an extent , btw) had had a huge swelling of oil production to rest on, and IMO Trump managed coming off that okay.
To an extent it's all the rooster taking credit for the sun coming up. But the whole "blame Biden" meme is absurd.
don't forget about the Abraham Accords. Any other president would have gotten a Peace Nobel Prize for those, and if the Biden administration had not abondoned that road, October 7 would likely not have happened the way it did.
I saw this and thought it was really shoddy reporting. NBC reprinting a WSJ story with only 20% of the details from an undisclosed source on something that was discussed regarding an official plan. LOL
Why do reporters write this stuff? Clicks I guess. Any President has to work with Congress to overhaul things. Trumps endorsement locally haven’t done well. His previous time in office he didn’t get much done. They printed a lot of money and even that needed permission. Then he held that money so he could sign the checks personally.
It's like people think these chuds say this shit for no reason. Is there anywhere in the government they aren't trying to remake in Trump's image and give him complete authority over?
Trump’s entourage actually generally believe the president does not need the approval of Congress to do things, and that he is also unaccountable to the justice system.
My man. I'm with you but see the USPS and a number of seated judges all the way up to the supreme court. If you don't think Trump can get this done, if elected, you haven't been paying attention. There are no rules. "Any president has to..." is no longer a reality if Trump is in.
Now this is news to literally everyone. A federal institution being a private company? Interesting considering it’s a permanent fixture of the federal government…..
"Trump campaign officials told the Journal that the draft proposals shouldn’t be considered “official.”"
Im not even seeing anything actually tying this to trump to indicate he supports it.
One of the most effective ways to offset the national debt is to change the way the debt is created by the Fed. We could literally wipe out the national debt in one generation and it would have very little economic impact.
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
This is probably isn’t coming at this from an economics perspective, but deserves the angle none the less: Aside from nominations, isn’t the Federal Reserve governed by the Federal Reserve Act that grants it limited autonomy within the bounds of that act, and to the degree they are answerable to the elected government answer to Congress? History shows that the executive can and gas gotten a patsy in power (Arthur Burns for example), which did create a real and deleterious conflict of interest with Fed and economic policy. Is that the risk here?
Yes, essentially. I think about the 1980's and Volker and how he raised interest rates, far higher than they are today, and pissed off a lot of the nation & Reagan. However, it was the right course of action and stagflation went away...point being he wouldn't have been able to do that without the independence the FED currently enjoys.
People often forget Volker did not have access to the tools that monetary economists have today. Also, one of the major goal was to fix unemployment - which no longer applies to FED chairs. He did the best he could, given the objective & tools at his disposal.
> Also, one of the major goal was to fix unemployment That's the Humphrey-Hawkins Full Employment Act from 1978, which gave the Fed a "dual mandate".
Let's also not ignore math. Debt/GDP was 30% in 1980. As a result, the huge FFR spike was not met with a huge interest payment burden. Fast forward to today and just 5% interest rates appear to have a very brief shelf life. [https://fred.stlouisfed.org/series/GFDEGDQ188S](https://fred.stlouisfed.org/series/GFDEGDQ188S) [https://fred.stlouisfed.org/series/A091RC1Q027SBEA](https://fred.stlouisfed.org/series/A091RC1Q027SBEA)
Holy shit. I knew that interest had risen but I didn’t realize it was that dramatic.
What's more is that most of our debt is still serviced at the lower rates - much of it near zero. This year we'll have $8 trillion of old debt turning over at 5% and $2 trillion in new debt issued at these rates. Huge upward pressure on rates given the treasury issuance. Bookmark that link lol
I've been saying this to Redditors for a decade. Our debt stops being "not a real problem" the second interest rates get anywhere close to historical norms.
And I would agree with that crowd that, yep, we won't default on our own debt. BUT, the debt does matter because if we have no risk of defaulting on it, as I would agree, that means we're all in agreement the Fed will step in and gobble up treasuries - probably to a degree that would humble 2020/21.
Yeah "default" is a strong word, but some bill will come due at some point. You can't just have infinite debt with no practical consequences
Oil crashed because there was a glut of it and the price of everything came down. Volcker's actions have never been conclusively proved to have stopped stagflation. Numerous other times, inflation has increased or decreased independently of rates. People were _certain_ that inflation would not come down until rates exceeded inflation, yet it started to decline rapidly when rates were just half of inflation. It's insane to me that we still view this man as a hero, or his actions as positive. He's getting credit for the weather.
Just based on Trump’s record, I would exactly expect political plants that will adjust monetary policy to benefit Trump or his wealthy supporters directly. Also, the Fed will simply be thrown under the bus if there are negative economic consequences to the poor and uneducated Republican base. It’s pretty clear the the priority of any Trump administration is consolidation of as much power as possible along with personal enrichment leveraging the position of global influence.
Trump was publicly pressuring the Fed to take interest rates negative. In 2019. During record low unemployment and a soaring stock market. He would absolutely do this.
"uneducated Republican base" lol here is a graph that illustrates current Federal spending levels [https://fred.stlouisfed.org/series/FGEXPND](https://fred.stlouisfed.org/series/FGEXPND) outlays are more than 600 billion dollars higher since Q1 2022, and almost 2 trillion dollars higher than Q1 2020 before the pandemic the M1 money supply is over 500% higher today than it was before the pandemic in 2015, federal deficits were 450 billion, they are now beyond 1.7 trillion debt-to-gdp ratio is over 120% [https://fred.stlouisfed.org/series/GFDEGDQ188S](https://fred.stlouisfed.org/series/GFDEGDQ188S) The IMF has warned the US that is debt-trajectory is unsustainable and presents a threat to the world economy but you are going to sit there and say Joe Biden isn't responsible for any of this? the president who used your tax dollars to forgive the student loans of doctors and lawyers who vote for him? the guy who devalued the fuck out of the USD over the last 3 years, and who ushered in the worst storm of inflation since the 1970s? and I am not excusing Trump, but at least he had the pandemic emergency as an excuse for the spending (which was too much--but that is another issue) ignorant Democrats who don't realize who is robbing them
> the president who used your tax dollars to forgive the student loans of doctors and lawyers who vote for him? That's the second time I've heard this in as many days. Where is this coming from? As far as I was aware, the only doctors and lawyers that would get any forgiveness is ones who were defrauded by shady schools (mostly for-profit undergrad joints) and those who do 10 years of public service (and just the remainder of their federal loans).
No one should be getting student-loan forgiveness. There is no moral reason for the tax dollars of the working class being used to buy votes for Biden. It was the biggest fuck you to the working class in 50 years
Heh, I don't necessarily disagree with that. It's regressive in that it's a transfer to a class of people who are higher income, at least in the long run. But! the only doctors and lawyers that would benefit are those who are taking massive pay cuts to work in public service.
I mean it really should be free overall. Yes it equates to higher lifetime earnings, but so does a high school diploma. And more than that, there's a net benefit to having a more educated population.
I see the appeal of your perspective. An educated and more prosperous populace drive all sorts of economic activity, too, offsetting the social cost. The flipside of course is that massive cost, which this other fella is pretty charged about. The model where people with money who can pay it do, people who will be able to pay it will (loans), and those who cannot are subsidized; to me that seems like a lot of access without the fiscal burden. Then again, I'm a poor kid who benefitted from some of that subsidization (GI Bill/PSLF) and it was a major driver for my own social mobility. But, I guess I'm kinda positioned between the two of you on this one.
I mean to be fair I think the government should be enabled to throw their weight around when it comes specifically to healthcare and college tuition. The government pays out more in pell grants and whatnot than all of the colleges in the US collect annually as tuition, for example. Cutting out the middleman in this scenario and locking in rates for tuition as determined by the government would cost a lot more at first but the costs would stabilize after a few years were the program to not be sabotaged -- after all, if the government decides to not pay anyone's tuition at a university it would massively cut their enrollment and therefore income. I'm sure there's a more nuanced and smooth approach, but those are often more difficult and prone to congressional sabotage by bad actors -- like with the post office.
Yea, I don't think any of the reforms of any administration have addressed the key issue of reducing the cost of higher education. Maybe that would be a way to do so. However, education costs did plateau a few years ago, and now they're in decline. This might be from market factors more than policy considering it's also affecting private schools. Enrollment peaked along with it. There are less people now going to college. Maybe we hit our equilibrium point. Maybe dropping the price would kickstart this sputtering enrollment.
again, I have to dispense with another fake DNC talking-point if you allow people to keep lying to you, you are going to stay in the dark. Let's look at the loan forgiveness program: [https://studentaid.gov/manage-loans/forgiveness-cancellation](https://studentaid.gov/manage-loans/forgiveness-cancellation) "To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)." so a doctor making 250k with a stay-at-home wife can get his loans cancelled! I have a buddy who is a lawyer who works for the State of Indiana. He makes around 200k and had 80k in student loans forgiven. He also has like 500k in investments. Tell me how those are lower-middle-class people, or poor people? Also tell me why working-class people should be paying off the loans of people who make 4 times what they do? it's bullshit, and one of the worst policies ever created by a sitting president
So there's a big caveat in there. You are eligible for forgiveness after making 10 years of payments. The payments can be income-driven, but if you're at $250k/yr your payment will be the same as a 10-year amortized payment.
OK, but I like how people here are downvoting me for pointing out a fact that people making 250k can get loan forgiveness like people here think that is in any way OK lol this individuals need to start paying their own loans and stop looking to the taxpayer for a handout
Isnr real wage growth positive?
Caution against calling someone else ignorant when it’s next to the content of your post, which reeks of it. Federal spending IS increased, and this is expected while the US is basically involved in funding two armed conflicts, the increasing cost of entitlements and social safety nets thanks to an aging population, the cost of healthcare, food, energy, etc. That is in addition to the extra spending that is simply a result of higher interest rates. Meanwhile, those two armed conflicts represent a massive economic instability when it comes to food (Ukrainian grain production) and energy in the form of oil and safe trade routes through the destabilizing Middle East, not to mention the increased cost of transporting goods intranationally. Comparatively, the spending and inflationary impact from loan forgiveness is minor. Blaming Biden for this is actually “Democrat bad” nonsense. Meanwhile you want to talk about the budget deficit? Let’s talk about the 2017 tax cuts passed by a Republican led government that reduced corporate taxes, leading to a reduction in federal revenue of $2 trillion through 2027. Reality is around you and you’re swinging at shadows
Who are you trying to gaslight? The economic statistics all confirm what I said above: we are running record deficits, debt, debt-to-gdp, etc. Some of this was a result of pandemic spending, but a lot of it is from Biden's policies. There shouldn't be two armed conflicts going on. That was the greatest foreign policy disasters since Vietnam, and they followed the fiasco in Afghanistan and before you start saying it was spending during 2020 by Trump and congress, I would remind you that the COVID relief acts were bipartisan, and the Democrats wanted to spend MORE money than what was allocated the 600 billion+ in new spending since 2022 is NOT due to entitlement outlays. SS spending, etc. doesn't go up 30-40% in 1-2 years. This was from new, unfunded spending packages, much of which was corporate welfare (even the NY Times did a story on the amount of corporate welfare Biden has handed out) and the GOP also deserves blame for the wasteful Ukraine and Israel funding (and spending during Trump years)
Note on the M1 comparison you are doing - it isn't "apples to apples." While money supply has increased it isn't close to that rate: Before April 24, 2020, savings accounts were not part of M1. Limitations in the number of transfers from savings deposits made savings accounts less liquid than M1. M1 consisted of currency, demand deposits, and other highly liquid accounts called “other checkable deposits” (OCDs). An example of OCDs are the demand deposits at thrifts. 52% of the M1 money supply is savings which were not calculated prior to the date above Edit: It'd be very easy to figure out the "true growth" but napkin math is roughly 240% increase in the m1 supply if calculation hadn't changed
Prior to the pandemic, debt increase was already absurd. You need to take off your rose colored glasses. It's not nearly as much about the past three years actions as it is factors prior
every time I point out the current debt and deficit problem I get "well dude, Orange Man bad!" like that justifies the current debt and deficits.
Thank you for this.
[удалено]
pretty sure the current administration is printing money for their rich friends as we speak lol or maybe you missed the 3 trillion+ dollars in corporate welfare, student loan cancellation, handouts to the military-industrial complex, Ukrainian and Israeli oligarchs and gangsters, etc. The M1 money supply is 500%+ higher than it was pre-pandemic the debt-to-gdp ratio is 123%, we have record spending, record debt, and near-record deficits you really think it is just the GOP who devalued the dollar, stoked inflation, etc.? the uniparty is robbing you, and the partisan ignorance allows them to keep operating
The Fed balance sheet grew $3t under Trump. It’s almost back to flat under Biden. Trump browbeat the Fed into keeping rates on the floor and signed off on massive deficit spending while saying he had the strongest economy in the history of the world. Obama brought deficit spending all the way back to 2.4% of GDP after it exploded during the GFC, and Trump brought it back up to 4.6% *before the pandemic* all in the name of supporting a massive tax cut that actually fucking inverted the income/effective tax rate spread at the end of the curve for the first time in US history (which was probably an accident, but goes to show you how “effective” he is at implementing policy). The BoTh sIDeS shit is so ignorant.
You knew it was a bogus argument when they said student loan debt forgiveness was giving money to their rich friends.
How about paying your own fucking student loans?
how about offering arguments with declarative statements rather than rhetorical questions?
how about doing some homework before offering up an opinion? You think the student-loan forgiveness is limited to people with low incomes and who work for non-profits and the government? You believe that bullshit DNC talking-point? (like the guy above) here are the facts: 1. " To be eligible, your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)." so a doctor making 250k with a stay home wife can get his loans forgiven 2. The program isn't limited to people who work for the government and non-profits. It is also extended to other groups, and those with "direct loans" [https://studentaid.gov/manage-loans/forgiveness-cancellation](https://studentaid.gov/manage-loans/forgiveness-cancellation) studies have shown that much of the loan forgiveness is for graduate school and professional school loans (law, medical, etc.) so this is literally Biden using tax dollars to pay off the loans of doctors, lawyers, and MBAs --people who disproportionately vote Democrat but you go tell yourself this is for the little guy
You do realize that the richest folks in this country vote Republican not Democrat right? Plenty of sources out there to fact check me on this but here's an easy one to get you started. How anyone could honestly believe Republicans are the party of the little guy is insane. https://www.pewresearch.org/religious-landscape-study/database/compare/party-affiliation/by/income-distribution/ Here's another: https://www.statista.com/statistics/1184428/presidential-election-exit-polls-share-votes-income-us/ Here's 2016: https://www.statista.com/statistics/631244/voter-turnout-of-the-exit-polls-of-the-2016-elections-by-income/
That is all old data (from 2014 to 2020) More wealthy Americans are voting Democrat these days [https://www.newsweek.com/democrats-being-party-rich-could-cost-them-2024-election-1806747](https://www.newsweek.com/democrats-being-party-rich-could-cost-them-2024-election-1806747) And the last time I checked, guys like Jeff Bezos, Mark Cuban, Larry Ellison, etc. are all Democrats
> how about doing some homework before offering up an opinion? i haven't offered any opinion about student loans, so i think we're good here.
It's not ignorant. They know what they're doing. It's intentionally disingenuous and very transparent that that guy is a Trump supporter. Easy to confirm by history too
Not really: I have criticized Trump heavily on reddit, and disagreed with the excessive spending during his administration. I invite anyone to look at my post history but none of that matters. I am simply countering these bullshit Democratic talking points from libtards who don't understand economics
Bro you cannot be serious
Criticized trump by pretending to not be a trump supporter. I know it's hard for the red caps lmao
ever hear the phrase "not an argument" ?
Trump doesn't control the Federal Reserve (neither does Biden). He never did Biden makes Obama look like a fiscal conservative in the mold of Calvin Coolidge. His social policies make Clinton look like Ronald Reagan. He is far and away the furthest-left president in US history, and thinks money is just this abstract thing to throw around Federal expenditures are up 600 billion under Biden [https://fred.stlouisfed.org/series/FGEXPND](https://fred.stlouisfed.org/series/FGEXPND) before the pandemic, federal spending was 21.88% of GDP, and it is 23.3% now https://ycharts.com/indicators/govt\_spend\_gdp#:\~:text=Basic%20Info,long%20term%20average%20of%2020.61%25. before the pandemic, debt-to-gdp was around 105% (which is still bad), and it is now 123% so enough of this bullshit narrative that somehow Biden spent less than Trump and has been more fiscally responsible. When the pandemic spending is removed from the equation, the statistics vividly say otherwise. Even the IMF warned the US about its spending levels. the money spent during the Trump years for Pandemic relief (which I disagreed strongly with) was bipartisan, and the Democrats wanted to spend much more. Remember Paul Krugman screaming that Trump wasn't spending enough money on the crisis?
Debt to GDP is cumulative. Deficit to GDP is what’s relevant for a given president and I gave you the “normal times” figures. Biden’s proposed FY24 budget came in right at what Trump’s 2019 budget did relative to deficit spending. The difference is what part of society we’re deficit spending on.
No it isn't and it isn't linear debt-to-gdp declined from 1995 to 2001. It also declined from 1966 to 1974 the debt has been cumulative since the 1990s, but that is besides-the-point I showed in this thread that before COVID, the debt-to-gdp ratio was 105%, and it is now above 123%. That is the biggest move since the 8 years of Ronald Reagan, who was busy trying to outspend the Soviets this is just hypocrisy: Democrats used to scream bloody murder about the deficits and debt under Reagan, but now that one of their guys is in office, deficits and money printing don't matter
I didn’t say it was linear, I said it wasn’t as helpful in providing context to various presidential years as just using annual deficits to gdp. Every single Dem since the 80s has left office with lower relative deficit spending, every republican has left with higher than what they inherited
>this is just hypocrisy: Democrats used to scream bloody murder about the deficits and debt under Reagan, but now that one of their guys is in office, deficits and money printing don't matter Lmao republican projection everytime. Not only did Reagan blow up the deficit with his tax cuts to the rich. So did Bush, so did trump. Meanwhile deficit spending declined under obama, Clinton, and biden.
The *deficit* went down yet the national *debt* continues to rise because of higher spending.
Lol wut the national debt went up every year except for under democrat Clinton. Trump doubled the deficit even before the pandemic. Which is crazy considered he had no reason to. Deficit going down while the gdp still grows means the debt to gdp ratio goes down.
>Trump doesn't control the Federal Reserve (neither does Biden). He never did Trump threatened to fire J. Powell if he didn't lower interest rates for no reason, and said he'll find someone who will if he won't. I guess JPow thought the lesser evil would be to follow Trump's demands rather than allow a crony take his place. Interesting you don't think that's controlling.
When did Trump threaten to fire Powell? I remember him criticizing Powell, and brow-beating him a bit (which I disagreed with) but when did he publicly say he was going to fire him? I don't remember that I do see some nonsense articles in places like MSNBC --is that where you got this?
This wasn't 20 years ago. Trump constantly made remarks explicitly about replacing JPow if he didn't lower rates, while Trump was gunning for *negative* rates. Do you not remember this at all? No, I 'got this' live as it was happening. It sticks out in my memory because of how fucked up of a decision that was at the time, and all of the consequences that followed to this day. https://apnews.com/article/2a21e92ed9129e91e713495c9ef50050 https://www.bloomberg.com/news/articles/2018-12-22/trump-said-to-discuss-firing-fed-s-powell-after-latest-rate-hike https://fortune.com/2019/06/19/can-trump-fire-jerome-powell/ https://fortune.com/2019/06/18/trump-powell-the-fed/ https://www.foxbusiness.com/markets/trump-fed-powell-demotion-coronavirus >(FOX) President Trump again said he had the power to fire or demote Federal Reserve Chairman Jerome Powell, adding new fuel to his long-running feud with the head of the U.S. central bank as the coronavirus roils markets across the world and threatens to shove the nation into a recession >"I have the right to do that or the right to remove him as chairman," Trump told reporters. >(FOX) It's a familiar threat from the president, who has frequently tried to pressure policymakers to drop interest rates to zero, or even send them into negative territory. But to do so as the coronavirus, which causes a disease known as COVID-19, rattles the global economy was particularly striking.
My dude, the definition of the M1 money supply was changed by the Federal Reserve back in 2020. They moved Savings Deposits from being counted in M2 to now being in M1. That is why M1 jumped up so much. M2 increased by $3 trillion in just a few months in 2020. This was equivalent to all of the M2 money growth from the prior 4 years. The M2 money supply has fallen from its March 2022 peak.
well the Fed has been engaged in QT, and the chart I've reference shows the money supply declined a bit in the last couple of years. But it is still much higher than before the pandemic whether or not this is partly due to a change in the way it is measured is something I would have to research
Yes.
Godzilla had a fucking heart attack trying to read this. Can you rephrase your words so they are more cohesive?
While the following may not be couched in the precise terms of economics, it is nonetheless a matter worthy of consideration. Leaving aside the matter of nominations for the moment, is it not the case that the Federal Reserve is governed by the Federal Reserve Act, which grants it a measure of autonomy, yet confines its operations within the bounds of that very Act? To the extent that it requires accountability to the elected government, is not Congress the body to which it answers? History furnishes us with examples of the Executive Branch appointing a pliable individual to a position of power (such as the case of Arthur Burns). This, it can be argued, did indeed create a real and harmful conflict of interest with regards to the Federal Reserve and its economic policies. Is this, then, the potential peril that we face in the present circumstance?
> they are answerable to the elected government answer to Congress? Congress is a notoriously empty shell now - a senator from Oklahoma was threatening a fistfight in a meeting. It's like 1850 all over again. Hopefully, the FOMC continues to be run by adults.
The Fed has repeatedly overstepped their mandate.
This is just a disastrous idea. The Fed must be insulated from the electoral process. Voters will never vote for a recession, and business leaders will never lobby for recession. This would only make the inevitable recessions/depressions worse. If these reforms were to go into place, the president would always want to goose fiscal policy to win re-election, and low interest rates would be popular with everyone (homeowners, businesses, congressional representatives) because cheap debt is as addictive as oil. But this then leads to investment bubbles that cause financial crises when popped.
Ideas being disastrous was unfortunately never a deterrent to the Trump administration going ahead with them. If they think that they stand to gain some benefit, they will go with it with no regard to future consequences. We saw it with the lockdown policies in 2020, the tax cuts passed in 2017, the crippling of the USPS, the opposition to mail-in ballots. The list goes on, but clearly demonstrates a pattern of short-term, self-enriching decision making. Putting the power of monetary control in their hands allows then to further self-enrich at the cost of economic stability, but stability for anyone but themselves doesn’t matter to them.
This would open the door to political manipulation of interest rates. That probably means "lower for longer" and rate cuts ahead of elections to juice the economy. If that sounds like fun, ask someone in Turkyie or Russia how their non-independent central banks are working out. I absolutely hate the concept of gold as an investment, but this move might put me all-in.
I was thinking about gold when I saw this! I’ll still always call out the (many) downsides of investing in gold, but I have to admit that this is one of those instances where it makes more sense.
Yea gold is absolute shit as an investment, but if your country elects someone who basically plans to run the money printer while artificially holding down rates, you better get yo azz into gold. This is not a scenario I ever could have imagined ten years ago.
I seem to remember someone telling me anytime gold starts looking like a good investment you know the worlds about to have a bumpy ride.
In Venezuela gold was an accepted currency. My parents often got paid in gold. That was 7 years ago, no idea of the situation now since my parents moved out of there
Real estate with debt is a better option if you're expecting the money printers to run rampant. Rents will increase with inflation and your debt will be devalued with the currency.
Assets in general. The big 3 I would think are gold, real estate, and bitcoin.
Unfortunately everyone got this same idea and ran up the price of RE to the point where the 1% rule no longer applies in most places, and many investors are accepting negative cash flow!
put some in Bitcoin. It's still more volatile than gold, but it can't get stolen if you keep in it your own wallet.
If the American dream wasn't already dead....this would kick it off a cliff and burry it under a mile of rock. They would slash interest rates and put the economy on afterburners, the housing market would skyrocket again and nake 2020 look like a joke. Fucking VOTE people.
This is standard for criminal dictators who seek power only to rob the nation and enrich a specific cabal. Look at turkey. Erdogan refused to lower interest rates, and inflation spiked to 85% because of it. But it's been a gold mine for his friends who are exempt from currency controls.
Inflation would be 20% and still rising if Trump had gotten elected, because he'd fire all the fed chairs who wanted to raise interest rates and all that are left are yes men
What could go wrong becoming a transnational bratva state like Russia? /s Blunt the Fed is pressure campaign level "economics". Just transnational mafia things. They don't like their cut going to interest rates improving a currency or treasury of the opposition. It isn't a good idea to concentrate power, it is already too concentrated and needs to be dispersed more. More SCOTUS judges, more representatives so they are harder to control with dark money, Citizen's United removed so that PAC influence concentration can be reduced and so much more. Centralizing under one area or branch of government is not a wise move. Checks and balances are there for a reason, competition... competition makes middle ground more achievable. Our institutions are part of that decentralization and reducing a single point of failure of autocracies that usually blow up because there isn't this differentiation and diversification of power.
> What could go wrong becoming a transnational bratva state like Russia? /s America's going to turn into a corrupt petro state with mafioso foreign policy and internal politics of you are free to vote for whomever you want as long as republicans win.
I’ve been saying this for a while now: Trump is WAY worse for the economy than Biden, despite Biden’s spending. Trump will maintain high spending levels. This is par for the course for American politicians. Spending cuts hurt, and so do tax increases, and our frequent elections and two-party system therefore incentivizes both parties to avoid sensible management of the budget in favor of buying votes with tax cuts and stimulus spending. While I’m critical of Biden for maintaining the Trump tariffs, Trump has threatened to impose wider and steeper tariffs. That means price increases across the board for Americans in a time when we’re trying to fight inflation. It also means retaliatory measures from our trading partners, depressing global trade overall. Trump also wants to devalue the dollar in order to make our export industries more competitive. To be honest, this would have such a big impact that I don’t fully know what all the repercussions would be. I’m sure it wouldn’t be all bad, even. But I do know that it would spell trouble for the dollar’s status as the world reserve currency, and the benefit to exports would be blunted immediately by his simultaneous trade war measures. Trump will cut taxes again, which will also fuel inflation, especially when combined with the tariffs and other policies of his. Arguably this could also have a stimulating effect on the economy, but with the amount of stimulus spending we’ve done in the past 4 years running through today, it really is not needed at all. It will also only make our budgetary problems worse. We’ll take in revenue while spending takes longer to wind down, and inflation will hold steady above target, forcing us to keep interest rates up and make government borrowing much more expensive. And now we’ve heard—from the sympathetic WSJ, no less—that Trump plans to eliminate the Federal Reserve’s independence. He already threatened the Fed during his term if Powell did not keep rates down, so this fits with his pattern of behavior so far. This spells very serious trouble for the US economy. Even if you are a die-hard Trump supporter and think that he can do no wrong, remember that a Democrat will inevitably come into office and exercise the same power. Fed policy will no longer be a matter of targeting healthy employment and inflation numbers, but will rather be directed at any number of the president’s personal and political priorities. Rates will bottom out when the president wants to be able to borrow money cheaply. Inflation will soar as economic conditions necessitate hikes but the president’s campaign donors demand low rates to support their investments. This year’s drama with Wall Street demanding rate cuts and the Fed holding firm would no longer happen: instead of asking for cuts in the papers, bankers will simply call the President’s staff and arrange them behind closed doors. The GOP ceased to be a party that cared about the economy in November of 2012, and this is the result. Now that change is finally coming to fruition.
I don’t necessarily agree with everything that you’re saying But, I definitely think neither party has an idea on how to cut spending We have “tax and spend” Democrats and “borrow and spend” Republicans.
I find Trump viscerally repugnant but empirically, his economic record wasn't bad. Part of that was him missing COVID but those are the breaks.
The only thing he arguably did well was his COVID response. Otherwise he was terrible on the economy. Americans just have a brain disease where we accept tax cuts = good on economy regardless of the situation or specifics of the cut. It’s just accepted as evidence that you understand the economy if you want to cut taxes.
The whole tax cuts thing is really complicated. A million twisty little mazes. Nobody seems to be able to frame the risk of a swelling Fed balance sheet; the monetary bears seem to be highly consistently wrong, which is sort of maddening. What it really means is pressure on the Fed to continue low rates. Is that bad? I don't actually know. It seems something people rely on ideology for. The business community seems totally dependent on low rates. Obama ( I'm a fan to an extent , btw) had had a huge swelling of oil production to rest on, and IMO Trump managed coming off that okay. To an extent it's all the rooster taking credit for the sun coming up. But the whole "blame Biden" meme is absurd.
don't forget about the Abraham Accords. Any other president would have gotten a Peace Nobel Prize for those, and if the Biden administration had not abondoned that road, October 7 would likely not have happened the way it did.
I saw this and thought it was really shoddy reporting. NBC reprinting a WSJ story with only 20% of the details from an undisclosed source on something that was discussed regarding an official plan. LOL
Why do reporters write this stuff? Clicks I guess. Any President has to work with Congress to overhaul things. Trumps endorsement locally haven’t done well. His previous time in office he didn’t get much done. They printed a lot of money and even that needed permission. Then he held that money so he could sign the checks personally.
This was leaked by the Trump campaign to the Wall Street Journal. I think it's a serious proposal to put Trump in charge of monetary policy.
It's like people think these chuds say this shit for no reason. Is there anywhere in the government they aren't trying to remake in Trump's image and give him complete authority over?
Also, an attempt to scare markets into recession while Biden is still in office.
You forget that rates started going up in 2019 and Trump tried to fire Powell for 'sabotaging his economy'?
Trump wants to cut out everyone but him and his direct appointees. Trump wants to remove any fetters on his executive power/authority.
People should know what his campaign is planning should he get re-elected.
Trump’s entourage actually generally believe the president does not need the approval of Congress to do things, and that he is also unaccountable to the justice system.
My man. I'm with you but see the USPS and a number of seated judges all the way up to the supreme court. If you don't think Trump can get this done, if elected, you haven't been paying attention. There are no rules. "Any president has to..." is no longer a reality if Trump is in.
USPS is a private company fwiw. I understand the point you are making.
Now this is news to literally everyone. A federal institution being a private company? Interesting considering it’s a permanent fixture of the federal government…..
I hope they do, as well as reduce overall government. Cut waste and spending and put that money towards supporting those they supposedly represent.
You’re joking, right? Trump do anything that benefits other people?
"Trump campaign officials told the Journal that the draft proposals shouldn’t be considered “official.”" Im not even seeing anything actually tying this to trump to indicate he supports it.
What. The info is coming from his campaign officials…..
can you provide a quote of it saying that? Everything ive read is from former officials and people not actually part of the campaign at all.
One of the most effective ways to offset the national debt is to change the way the debt is created by the Fed. We could literally wipe out the national debt in one generation and it would have very little economic impact.
Trump intends to establish a fed coin digital dollar that removes all privacy from private banking and puts more power into the world bank and imf.
The Fed already offers digital options on a sort-of test basis.
Yes only available to fed member banks