Trump says he wants to influence interest rates. Can he?

22 comments

1. There is no one willing to stop him from trying.

2. Of course he can, which of his lackey appointees will stop their dear leader ?

3. Of course he can, but only in one direction. If he enacts policies which kick of massive inflation, the Fed would assuredly respond with interest rate hikes.

   Can he enact policies which would cause the Fed to lower interest rates? Possibly, but those would assuredly be responsible fiscal policy which is an anathema to Trump.

4. Only if he’s willing to cross some uncomfortable lines.  It’s really going to test the whole “CEO vs president of USA” analogy that’s haunted him since 2016.

   Trump has struggled when building consensus, listening to advisors, and knowing when he’s the who needs to bend.

5. Sounds like Trump wants to play with the monkey paw.

6. I absolutely support 19th century chaos. Think of all the people who would be groveling on the street to those who matter. The main difference now from before the Fed was created was that the dollar was backed by gold. The Pandora’s box is already open to backing it by bitcoin. Keep those computers humming. Imagine if Ukraine did the same. Worst case scenario.

7. The short answer is no, the longer answer is also no. Jerome Powell has said he won’t resign so at least for a few more years (until his term expires in 2026) the Fed will remain impartial. Now, could Trump actually do something policy wise that is sound and cause rates to go down? Sure….but pigs might also fly.

8. Can’t see why not, just like we all should have a saying on it.

9. Bond vigilantes going to come out in force

10. Yes, he just has to promote a yes man for the next governor. In theory the senate can block him but I am not holding my breath.

    Even Powell didn’t put much of a fight last time. He seemed to be more willing to put a fight this time, but his mandate expires in 2026.

11. Presidents have the power to impose tariffs. Congress can’t really stop it without bipartisan action.

    Will Trump do tariffs day one?

    That’s the question you need to answer first. A Biden administration would have continued to lower rates. The timing of Trump’s tariffs means a lot. Will he lower rates and let the economy grow BEFORE THE TARIFFS? Because he can’t lower them after the tariffs, or at least it would be super bad to do it. I would expect the tariffs to be put in place fast.

    So will Trump initiate tariffs right away? How long is the process? Once it’s all signed, how long does it take to get into place? How soon do prices go up? Will there be a huge run on food and electronics before inauguration? All these questions need to be answered.

12. Powell is not Volcker he has and will cave at political pressure.

13. Is anyone shocked?

14. Obama: “I’ll mint a trillion dollar platinum coin unless I get the interest rates I want.”

    <3

    Trump: “I think I should have a little influence on interest rates.”

    FASCIST! THREAT TO OUR DEMOCRACY!

15. During his first term, Trump was a champion of “quantitative easing”, which is a bullshit term for print and spend, and resembles Modern Monetary Theory.
    https://www.thetrumparchive.com/?searchbox=%22quantitative%22

    The way it works is, the government prints money to buy government debt instead of leaving the debt in debt markets competing with other debt and driving up interest rates. It has struck me as being a kind of Ponzi in that new money is continuously needed to roll over debt and incur new debt. The difference between a traditional Ponzi and this policy is, with a conventional Ponzi, the new dries up, whereas, if the printer is the source of the new money need never dry up.

    In economic parlance, this policy is called *fiscal dominance*, where monetizing government debt supersedes things like fighting inflation and managing employment.

    We saw an example of that in 2021. Larry Summers wrote a big editorial in the Washington Post that indicated that a stimulus 3 times as big as the projected GDP shortfall would ignite inflation at a lever we hadn’t seen in a generation. The Fed was printing $120 billion per month to buy debt from debt markets in order to keep a cap on interest rates.

    They all read the editorial, so all they had to say was, “looks like the inflation Larry predicted has started”. Well, if they are printing money and inflation has taken off, then fiscal dominance is the policy. Because they wanted to pretend that inflation/employment was the mandate, they carried on with the “transitory” lie.

    Trump would make fiscal dominance the explicit policy.

16. 2018

17. The Fed has a mandate to react to monetary pressures. The new administration could certainly cause the Fed to adjust rates by causing fiscal changes.

    E.G. 

    Cut government spending and the fed may have to lower interest rates.

    Or

    Cut taxes and the Fed may raise rates to compensate. 

18. To me it sounds like Trump really wants to force through his tariffs, which he must know are inflationary.

    The natural consequence of high inflation, is to turn up interest rates. But high interest rates are not popular among voters.

    Having Trump directly control interest rates would be the decimation of a safety feature – you could very well end up in a position where the interest rate is not set by fiscal soundness or responsibility, but to the whims of someone obsessed with ratings and public perception.

    And let’s not forget, Trump has previously talked about weaking the dollar. How would he achieve that? Quantitative easing is one way. It ties with his plans to motivate domestic production, and less imports / more exports.

    In any case, hopefully there will be adults in charge.

19. Of course he can. He implements sweeping tariffs, and the fed raises interests rates in an attempt to curb inflation.

20. If only there were some historical precedent that might indicate whether or not Trump’s political pressure might be able to sway Powell on interest rate decisions…

21. The man has literally survived both political and physical assignation attempts and you’re asking whether he can influence interest rates? The better question is how much he can influence them. Right now the answer is moderately.

22. He send Twits to control it. Much more effective than Fed

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