Trump's plan to raise interest rates could be a disaster for America

a reply to: kurthall

His approval rating is more than 2X bushes when he left office.

Yeah, that was not a very high bar for him to jump over there.

Gas almost $5 per gallon!

Thats weird, it was about 1.50 here in LA.

For every "good" accomplishment you list I bet I can name at least two bad ones.

originally posted by: Cancerwarrior
a reply to: kurthall

His approval rating is more than 2X bushes when he left office.

Yeah, that was not a very high bar for him to jump over there.

Gas almost $5 per gallon!

Thats weird, it was about 1.50 here in LA.

For every "good" accomplishment you list I bet I can name at least two bad ones.

I live in LA when Bush left office I was paying around $4.50 a gallon, where do yo get $1.50?

a reply to: CB328

You really have no idea what you are talking about.

First off, the fed was already planning on raising interest rates after the election no matter who won - its in the wikileaks that they would intentionally hold off to help Hillary. They have publicly been stating they wanted to start raising it for the last year but have decided to wait, to blame the coming economic disaster on the next president.

Second, Trump does not control the interest rate - the Fed does.

Third the interest rate has been way to low since 2001, as a result an unbelievable amount of debt has been built up that will have to be defaulted. The amount of debt at every level (personal, federal, state governmental, business) is basically the highest it has ever been, rates can't be lowered anymore and doing so no longer stimulates the economy because everyone's ability to borrow is about maxed out.

What the fed has done is criminal - no matter who won this election we were headed for a severe recession at best and most likely a depression because of their meddling.

Fourth the low interest rate which is unsustainable has destroyed many pensions ability to meet their obligations - well actually most are structured for like continuous 8% returns which is not doable, but the continued low rates has made that much worse, so many people are going to get significantly less than they were promised.

It really is an incredible shame that the vast vast majority of American citizens have no idea how screwed this country is economically. It was not discussed in the election because the only solution is to have a collapse and you can't say that to the public.

Basically through artificial means the Fed has kept the rates low - way way to long for short term gain, all the while digging a bigger and bigger hole for the future. Well the time is just about up and we are going to have to pay for it.

Low interest rates have benefited only the mega banks and wall street while pillaging individual savers and retirees for 8 years now. Interest rates need to rise for the sake of the working poor and retirees.

originally posted by: kurthall
Let me say this once again!! When Obama took office...

Gas almost $5 per gallon!

More like $4

Then fracking brought it down, then the Middle East brought it down even further. No Obama. He is on record saying that he liked the $4 per gallon, just wished it had increased slower.

Housing crisis in full swing( you know the one Trump said Obama caused LMAO)

Not just Obama. The Democratic wing of Congress obstructed GOP attempts to reign in the CRA and Fannie/Freddy

Jobless rates at an all time high since the GREAT DEPRESSION!

And the job participation rate is the lowest since the 70s. New jobs are either part time without benefits, or created in red states like Texas with (R) governors. Lots of times both apply.

Osama Bin Laden still at large

Yeah killing him solved the Islamofascist problem but good.

Millions uninsured

Millions are still uninsured. Millions more are being paupered by new premiums and deductibles.

Man people, it looks to me like things are a hell of a lot better now, hmmmm,

Not really.

The National Debt has doubled with no real improvement.

Russia, China and Iran are emboldened.

Wall Street has been propped up on electronic cash, a bubble waiting to pop.

Common Core is ruining our kid's education.

High-paid, technically skilled American citizens are losing jobs to H1-B visa loopholes.

Americans are forced to buy services they don't need and/or can't always afford, or be fined.

Regulations have been added to increase the cost of doing business.

More businesses are closing their doors than opening.

The USA hasn't seen 3% GDP growth in at least 8 years.

The VA is still failing our vets.

There's more, but I have to go to lunch.

Was Obama really THAT BAD?? Not perfect for sure, but come on people wake up!

Yes, he has been terrible.

His approval rating is more than 2X bushes when he left office.

Go go media distortions and ommisions!

So now Donald is going to undo what PROGRESS has been made!

Progress. LOL.

I certainly hope Trump gets us out of his death spiral we are progressing into.

Instead of taking what Obama was doing wrong and making it better, let's just **** it all up!!!!!!

Obama has f'd the country just fine on his own, thank you.

Trump does not control the interest rate - the Fed does

The President appoints the head of the Fed who controls the interest rates- it's not that hard.

Yes, low rates have been good. They have enabled people to buy houses and cars which is what pulled us out of the great recession. Our economy is 70% consumer spending, so if you jack up rates and people spend less the economy will slow down.

Raising rates will redistribute money from working people to the banks. How could that possibly be a good thing?

Of course rates can't stay so low forever, but it needs to be done very slowly and in small increments to prevent another recession.

originally posted by: CB328

The President appoints the head of the Fed who controls the interest rates- it's not that hard.

Yes, low rates have been good. They have enabled people to buy houses and cars which is what pulled us out of the great recession. Our economy is 70% consumer spending, so if you jack up rates and people spend less the economy will slow down.

Raising rates will redistribute money from working people to the banks. How could that possibly be a good thing?

Of course rates can't stay so low forever, but it needs to be done very slowly and in small increments to prevent another recession.

What part about Trump not controlling it do you not understand?

You don't understand what's happening with the rates remaining too low for too long so you shouldn't try to tie that in with your further misconceptions about Trump controlling interest rates. You have to figure inflation into the equation which means each dollar earned buys less. Uncontrolled inflation hurts the poor and working class more than a quarter point interest rate jump.

Yellen is quite possibly going to increase rates before Trump even takes office. Which if you were paying attention would not be news to you. They've been hinting at it for a while.

Trump's plan to raise interest rates could be a disaster for America

You know that 'wealth gap' Trump critics are always whining about ?

Those rates effect every financial instrument there is.

That artificial manipulation of interest rates is why your checking,savings, money markets,cds,bonds pay exactly JACK SQUAT.

Raising the rates would be a disaster for Wall Street for about a New York minute. Then it would be back to business as usual.

Which is a good thing.

Bursting of bubbles, and a market correction for over valued stocks.

Yellen is quite possibly going to increase rates before Trump even takes office

Of course I am aware of that, they have been talking about it for a year or too. But that doesn't change the fact that Trump said the Fed is keeping the rates too low, he wants to replace Yellen with another chairman who will raise interest rates, and that will hurt consumers.

He is unhappy that the low rates have been keeping people from hating Obama, so obviously it is a strategy that works well for the majority of people, as opposed to jacking up the rates which will enrich a few people at the expense of everyone else.

originally posted by: CB328
The President appoints the head of the Fed who controls the interest rates- it's not that hard.

The chairman is appointed to 4 year terms, and Yellen was appointed in 2014 - so she has 2 more years. Therefore he has no control for 2 more years even under your assumption - but it is not solely up to the chairman to set rates anyway, there is an entire committee that votes.

Yes, low rates have been good. They have enabled people to buy houses and cars which is what pulled us out of the great recession. Our economy is 70% consumer spending, so if you jack up rates and people spend less the economy will slow down.

No - low rates for extended periods are not good, and high rates for extended periods aren't good. Low rates cause excessive borrowing - borrowing is pulling demand from the future forward. It gives people more ability to spend today - but it removes their ability to spend in the future - because they have to pay back the money they have already borrowed or it has to be defaulted which hurts who they borrowed it from. If people are allowed to borrow more than they can pay back - which in many cases is where we are today, there will be a ton of defaults, which will have dramatic devastating effects on the economy.

Low Rates also remove the ability for people and companies to build capital - capital is what is required to grow an economy - It is money not required to be paid back and it is the healthy way for new businesses to be started and businesses to expand. The low interest rates also hurt retirees, and therefore they become more dependent on the government for welfare etc. This is especially important as the average age of our population is rising and more stop working.

There is no free lunch - the only way that the value represented by a countries money is actually created is either through peoples labor or through natural resources dug out of the ground.

The fed the government and everyone else can jack around with money and interest rates all they want - but the true value of US production does not change by manipulating the money supply or interest rates.

You act like there is a choice to keep rates low forever. There is not. The market has only allowed it up to this point because virtually every other 1st world country has been doing the same thing by keeping rates low way too long, therefore there is no other safe place for investors to put their money. It is a race to the bottom - and it will likely be catastrophic. It just means the entire world economy is going to implode and not just the US.

Raising rates will redistribute money from working people to the banks. How could that possibly be a good thing?

No, if anything it does the exact opposite. Banks make very little from loaning money anymore. The low rates have allowed the banks to borrow way beyond their ability to pay back to invest in the market and crazy financial instruments such as derivatives. A 3% loss can make most of the major banks insolvent because most are now leveraged 30 to 1 or more. They are the reason the rates have remained low - this cheap leverage has allowed them to make billions. What it has also done is allowed them to threaten the world that they are too big to fail - which has blackmailed the world central bankers to continue to keep rates too low for anyone's longterm future, but their greed is overpowering any common sense.

The banks will also have to pay out higher interest rates to their depositors. Encouraging people not to borrow is what is the healthy thing to do. Most people have almost zero savings and need fiscal responsibility forced on them because quite frankly they are too stupid to see how they are ruining their financial future - just like the FED. There is a lack of borrowing already because there is no growth - there is no growth because there is no capital.

What you need to understand is that the economy is cyclical - it always has been and always will be, and the feds drastic efforts to keep us with low interest rates for a decade and a half just means the snap back will be equally as forceful in the opposite direction.

Of course rates can't stay so low forever, but it needs to be done very slowly and in small increments to prevent another recession.

Well I never said it should be done quickly if possible. However what you don't seem to get is the market is really the one with the power, the Fed can influence it as long as things stay calm, but when panic starts they have almost no ability to control the rate.

a reply to: CB328

I don't know anyone that wants to give up their cash, do you? And Americans are too dumb and undisciplined to save anything anyways, that's why they voted for Trump because they think he will magically save them from being losers.

Aside from the level of palpable bitterness in this post, it is also filled with economically erroneous assumptions.

We've had an inflationary economy for several years now. Food and fuel costs are high, housing is expensive, but lending is cheap which historically discourages savings. Why would anyone save money in anything other than precious metals in an inflationary environment? Also, it should be noted that capital comes from savings, not borrowing. In low interest rate environments only borrowing is encouraged and savings-therefore capital-evaporates.

Another problem with liberals is that you folks seem to gloss over all economic data in order to paint an incomplete, and in your case, bigoted pictures of the people affected by this economic ignorance. Those people voted for Trump.

You lost. Get over it.

originally posted by: projectvxn
You lost. Get over it.

"I won." - Barack Hussein Obama, circa 2009

a reply to: marg6043

he also funded alot of his projects through loans, and owes a considerable amount of money if I am to believe what I hear. if he were to raise interest rates, it makes all that debt much more expensive.

but, I don't think the president really has that much control over what the interest rate is, not unless he wants to go right to the throat and get rid of the fed..
in which case, he'd prove to me he is more intelligent that I think he is. heck, he'd be my hero!!!

originally posted by: CB328

all the extra, valueless cash that has been pumped by all the qualitative easing

I don't know anyone that wants to give up their cash, do you? And Americans are too dumb and undisciplined to save anything anyways, that's why they voted for Trump because they think he will magically save them from being losers.

That's why Trump won, because of arrogance like yours. The people got tired of hearing how smart and enlightened you are, and how dumb you say they are, so I owe you debt of gratitude for putting Donald Trump in the White House. THANK YOU!!!

a reply to: dawnstar

No, he does not, have much say so on it, unless congress decide to ban the private owned entity call the Federal Reserve and have the people run it.

After all is a reason why Wall Street have a hold and control on the Reserve.

Keeping rates low isn't a solution- it's just adding to the problem. Low fed interest rates mean the banks are borrowing huge sums of cash for nothing, then turning around and lending it out to multiple people (fractional reserve lending is terrible) at low rates.
The low rates keep the month to month payments low, allowing people to spend more money on property (more expensive cars, homes, etc)
When everyone can afford more, the "value" of something measured in dollars goes up. E.g. my home has gone up in value 20% in the last five years, without any investment.

When the value of everything goes up, everyone who owns it suddenly has more "money", and the buyers pay more "money", so there's just more. More money.
What happens when everyone has more money?
Inflation. The value of all goods as well as compensation will rise to compensate, so everyone earns more.

more, more, more. Now everyone has more money, and everything costs more- so we all pretty much break even... unless you have cash assets, in which case you just lost money - or if you rent, in which case your rent just went up because the owners property value went up.



Now, the problem:
with super low fed rates, the rate at which people get more compensation won't keep up with the rate at which the currency loses value and the cost of goods/living goes up.

found an article on this subject by the NY Times... might answer some questions about just what trump could do and how:

Paul A. Volcker, the Federal Reserve chairman, received an urgent warning two weeks after Ronald Reagan won the 1980 presidential election. Some of the president-elect’s advisers, he was told, wanted to abolish the central bank and replace it with a computer program that would manage interest rates and monetary policy.

Today, a Democratic Fed leader is once again bracing to see whether victorious and emboldened Republicans will try to overhaul the central bank.

In almost three years as the Fed’s chairwoman, Janet L. Yellen has led an aggressive campaign to stimulate economic growth. Donald J. Trump, the president-elect, has embraced criticism that the Fed is causing more problems than it is solving, and he has surrounded himself with advisers who would like to rein in the institution that has the greatest influence over the direction of the nation’s economy.

Mr. Trump can fill a majority of the Fed’s seven-member board with his own nominees over the next 18 months, including replacing Ms. Yellen in February 2018. He also could work with Congress on new constraints, including some form of an old idea on the right that a formula should dictate the Fed’s movements of interest rates.

www.nytimes.com...

Mr. Trump can fill a majority of the Fed’s seven-member board with his own nominees over the next 18 months, including replacing Ms. Yellen

I'm waiting for an apology for everyone who said I didn't know what I was talking about.

Of course he will have influence over the Fed, even if he only got to pick Yellen's replacement.

a reply to: CB328


If the interest rates go up, the housing market will crash, to many people are using the leverage to get a loan and then rent the house out . Either that or the unaffordable rents will get worse.

Not only that but consumer spending will fall which could cause a recession.