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Old 10-11-2018, 06:10 PM
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The Fed will yield to Trump

The Fed went off the rails years ago, but they still have a bit of sense and realize it is time to start raising rates.

Trump is a nut.

He is attacking the Fed demanding more cheap money to goose the markets. It will only get worse because the stock market is due for a correction. The Fed as inflated another stock bubble and everyone knows it.

The central bank has not been subject to public political pressure like this in its history. There has largely been a bipartisan consensus that the Fed should go nuts with the presses from time to time. Nixon pressured Burns hard to goose the aggregates, but this was hidden from public view.

This is 19th century politicking. People used to have monetary policy positions (for reasons you may not know but that is another topic).

The election of 1896 was interesting. Republicans were an inflationist party since the Civil War. The Democrats were hard money, but the crank inflationist Bryan took control (not unlike Trump) of the party. McKinley adopted a sound money policy under pressure from big money, and got some Bourbon Democrat votes.

Trump is going to come out like Andrew Jackson. The lightweight academics at the Fed are not ready to go up against that. Maybe a Jamie Dimon type will step up after he is done riding this wave.

Today, there is no sound money political movement to speak of. There will be no voice of reason to challenge Trump on his insanity. Rand Paul and a few others may die on their sword, but I donít see anything stopping him. The opposition is a bunch of sanctimonious hysterics concerned about conspiracies and sideshows. This is the real deal folks. An economic crisis is coming sooner or later. How do you think the players will respond?

Resolved: The Fed will yield.
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Old 10-11-2018, 09:09 PM
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Nah.

Show Trump the tiniest bit of opposition, and he folds like a tent.
All bluster.
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Old 10-11-2018, 09:12 PM
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Nah.

Show Trump the tiniest bit of opposition, and he folds like a tent.
All bluster.
Examples?

Do you really think he will sit back as the stock market crashes and his favorite economic indicator tanks without leveling broadsides at the Fed?
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Old 10-11-2018, 09:21 PM
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Tweeting at them isn't much of a source of pressure.

I'm not entirely sure what the relationship is between the Fed and the Executive Branch, but I get the sense that outside of appointing the Chairman, the President (and everyone else) is expected to leave them alone.

I suspect that if Trump tried to somehow circumvent that, the Senate would come down on him like a ton of bricks. If there's one thing you don't muck with, when you're generally known to be an idiot, it's the Fed.
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Old 10-11-2018, 09:51 PM
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The Board of Governors will blow him off and keep on doing whatever they want to do. They don't work for him. He can't fire them. They don't need his approval to execute monetary policy. Congress doesn't even provide their budget so there's no Executive Branch ability to screw around with the money allocated by Congress.

Trump is the hungry tiger. The Board of Governors are visitors at the zoo on the other side of the bars.
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Old 10-11-2018, 11:17 PM
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OTOH he may start off a push from the rabid base to press their Congresspeople for legislation to have the Fed subordinated to the Executive. Considering the large segment of the Hard Right Wing who since the start seem to have despised the very idea of a central bank, and the segments of the right-bubbled public who view the Fed through a prism of conspiracy theory, they could very well make life a headache for the money people.

At the very least he now has a convenient scapegoat for when the boom ends and the next bust comes, if not a Democratic Congress.

Last edited by JRDelirious; 10-11-2018 at 11:18 PM.
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Old 10-11-2018, 11:36 PM
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OTOH he may start off a push from the rabid base to press their Congresspeople for legislation to have the Fed subordinated to the Executive. Considering the large segment of the Hard Right Wing who since the start seem to have despised the very idea of a central bank, and the segments of the right-bubbled public who view the Fed through a prism of conspiracy theory, they could very well make life a headache for the money people.

At the very least he now has a convenient scapegoat for when the boom ends and the next bust comes, if not a Democratic Congress.
Too many words and too boring to really get much attention with the wailing masses on the right. Unless it can be expressed on a bumper sticker or gives a hard shot to the amygdala I don't think you are going to raise popular outrage. If congress is going to take action on this its going to be from the donor side wanting to keep making short term and short sided gains, and assuming that either they can get out before the whole thing collapses or else get bailed out or ideally both.
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Old 10-12-2018, 04:50 AM
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The masses will be clamoring for government action as they always do. I fear the academics at the Fed do not have the disposition for Trump style national politics. Trump will succeed in turning this into a bumper sticker. He is a skilled manipulator of the masses.

I don’t think the Republican senate has enough sound money stalwarts to do battle with Trump over this. The Democrats? They will make noises about Fed independence and corruption of institutions but nobody cares about principle in an economic crisis. The banks will once again go to the government with their hand out, and cheap money will be among their demands I don’t see where the big push back will come from. There will be no Ned-Beatty-in-Network style talk from the bankers.
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Old 10-12-2018, 05:10 AM
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It's also worth noting that Trump is basically now a lame duck President. He's stopped making big news simply because everyone is too tired of him and he's about to have half of Congress unwilling to give any consideration at all to any of his stupid shit.

The Adminstration is starting to actually have some small, quasi-reasonable accomplishments and Trump can't even get any real recognition for it that isn't the social equivalent of a pat on the head.

Obviously Trump will do everything he can to maintain the spotlight, even if it means trashing the whole Executive branch, but I think (I think) that Congress can and will hem him in on that and that we'll basically not notice.
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Old 10-12-2018, 06:01 AM
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..the academics at the Fed ...
What is this term intended to imply? An education with no real world experience? I'm guessing here, help me out.
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Old 10-12-2018, 06:39 AM
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What is this term intended to imply? An education with no real world experience? I'm guessing here, help me out.
It means they have no real-world experience, that they've never turned in a hard day's work and looked back, tired but proud, at the results of their labor, like Trump once saw his landscaper doing.
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Old 10-12-2018, 06:54 AM
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We think (or hope) that adults in the White House are keeping the short orange finger away from the nuclear button; the adults are probably also trying to keep that finger away from the monetary button. Careful FedRes policy has maintained American prosperity for 40 years (even the huge credit crisis of 2008 caused only a relatively brief setback) and I think almost everyone appreciates that and wants it to continue.

This smart pro-business FedRes policy has been one of two pillars of American monetary power, and thus the stability of the world economy. The other pillar is the dollar's inherent strength as a reserve currency, and the huge global reach of American economic, cultural and military power.

Trump seeks to attack both these pillars. He may not be able to usurp FedRes independence, but he can ó and has ó attack(ed) the dollar without FedRes cooperation. His tariff wars and obnoxious talk are reducing respect for America and the American dollar. The GOP decision to run up treasury debt dramatically creates pressure on the dollar to inflate or be devalued. (I asked one of SDMB's top GOP supporters to name any economist who supported the tax cut ó HD was unable to come up with a single name.)

Some years ago, when McConnell was trying to force Obama's government to fail, there was talk of Obama minting a trillion-dollar platinum coin to bypass Congress. This idea was booed down by D and R alike. Trump and the present GOP may well decide to bypass the Fed with some silly mechanism like a trillion-dollar coin. 38% of the country would cheer. Certainly the Congress which put an hysterical hyper-partisan drunkard on the Supreme Court would have no objection.
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Old 10-12-2018, 07:13 AM
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... like Trump once saw his landscaper doing.
Beautiful!
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Old 10-12-2018, 08:13 AM
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First off, Trump is smart. I know we don't like to think so and for a long time I didn't believe it myself, but it's true. Amoral and narcissistic, but smart. He recognizes that humanity is base and addicted to 'bread and circuses' and he exploits that like a freaking surgeon. He recognizes that rules are just things that we say and that they can be bent and twisted or even broken to get what he wants. That has actually led to quite a few successes from his point of view.

Because he is smart, I think that he fully recognizes what Fed non-independence would do. He doesn't want his assets completely devalued and the dollar not the world currency. He also recognizes that the bull market wasn't going to last forever, so he is looking for a scapegoat. I fully expect him to rail against the Fed and talk about how horrible it is and how it's destroying the wonderful economy that he built. I also fully expect him to do nothing about it of substance and complain that 'the swamp' has his hands tied. The Feds independence is too valuable to him for him to screw with it, so he might complain, but it's virtue signalling to his base rather than notice of intent.
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Old 10-12-2018, 08:18 AM
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First off, Trump is smart. I know we don't like to think so and for a long time I didn't believe it myself, but it's true. Amoral and narcissistic, but smart. He recognizes that humanity is base and addicted to 'bread and circuses' and he exploits that like a freaking surgeon. He recognizes that rules are just things that we say and that they can be bent and twisted or even broken to get what he wants. That has actually led to quite a few successes from his point of view.

Because he is smart, I think that he fully recognizes what Fed non-independence would do. He doesn't want his assets completely devalued and the dollar not the world currency. He also recognizes that the bull market wasn't going to last forever, so he is looking for a scapegoat. I fully expect him to rail against the Fed and talk about how horrible it is and how it's destroying the wonderful economy that he built. I also fully expect him to do nothing about it of substance and complain that 'the swamp' has his hands tied. The Feds independence is too valuable to him for him to screw with it, so he might complain, but it's virtue signalling to his base rather than notice of intent.
Trump is a genius in his own respects, and that is true. But outside of his very narrow genius, he ain't smart. Compared to Trump Jr., yes, he's smart. But that's not a meaningful statement.
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Old 10-12-2018, 08:35 AM
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His only intelligence is in knowing how to resonate with people who are no more smart than he is.
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Old 10-12-2018, 08:36 AM
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Originally Posted by WillFarnaby View Post
Examples?

Do you really think he will sit back as the stock market crashes and his favorite economic indicator tanks without leveling broadsides at the Fed?
Everyone knows he'll level broadsides at anyone he feels he can blame. What you haven't explained is why the Fed would care.

Lots of people and entities have been blasted by Trump and have laughed it off because they weren't in a position where they had to "yield" to him.
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Old 10-12-2018, 08:47 AM
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He's not smart in terms of actual governing, but he's damn smart when it comes to using the levers of power.

I agree with the OP: Trump's gladiator politics will pressure institutions such as the Fed to bend, and he can blame the Fed when the economy goes south. That'll become another one of his conspiracy theories: I was doing so well and then the deep state, globalists at the Fed undercut me.
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Old 10-12-2018, 08:52 AM
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The best I can grant Trump is "cunning".
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Old 10-12-2018, 08:53 AM
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Everyone knows he'll level broadsides at anyone he feels he can blame. What you haven't explained is why the Fed would care.

Lots of people and entities have been blasted by Trump and have laughed it off because they weren't in a position where they had to "yield" to him.
It might seem like lunacy, but the federal reserve could actually be abolished. Yes, it would be economic suicide, but we're now at a point where public trust in institutions is extraordinarily low, and populism is the political trend of this decade. There are millions of people who permanently lost faith in the so-called experts after the crash of 2008 and see the Fed as a convenient target. Obviously, we're nowhere near talk of abolition now, but it's in the realm of the possible under the right circumstances. If Trump can successfully lay blame at the Fed's doorstep, he could exert enough pressure on the fed that they could be bullied into making decisions that are more political than rational.
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Old 10-12-2018, 09:03 AM
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OP, can you flesh out what this "yielding" will consist of?
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Old 10-12-2018, 09:14 AM
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It might seem like lunacy, but the federal reserve could actually be abolished.
Donald Trump cannot do that, and the loyalty of his GOP minions stops at the loss of their portfolios.

I know it seems like the guy is invincible, but his ability to get actual legislation and policy enacted has been pretty chancy. You'll note the lack of a wall.
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Old 10-12-2018, 09:31 AM
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Do you really think he will sit back as the stock market crashes and his favorite economic indicator tanks without leveling broadsides at the Fed?
When his broadsides is limited to tweets and rants at rallies, it is equivalent to yielding. Like with his wall and the federal budgets. Once upon a time the wall was going up on day one, paid by Mexico, and he'd never sign a budget he didn't like again. Now it's all "We'll see. I don't want to rock the boat for these guys before the midterms. We'll see."
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Old 10-12-2018, 09:37 AM
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Iím assuming it means that within the next year, the Fed will cut rates in the absence of an economic downturn. (Because if growth takes a bad turn, they would be expected to drop rates anyway.)

Is this a fair summary? And, would you like to place a wager on this? Maybe $500?
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Old 10-12-2018, 09:51 AM
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Donald Trump cannot do that, and the loyalty of his GOP minions stops at the loss of their portfolios.

I know it seems like the guy is invincible, but his ability to get actual legislation and policy enacted has been pretty chancy. You'll note the lack of a wall.
I'm not saying he's invincible, but he's a populist at a time of great political uncertainty, and what has for long been unthinkable can no longer be considered so. For the record, I don't think abolishing the fed would be considered as a serious move, but political manipulation of the fed is easier than people think.

He doesn't actually need to get a lot in the way of legislation; the presidency has been delegated extraordinary powers over the years. He's using them much more deftly than people give him credit for. Again, how did he get a party that has been consistently pro international trade since the end of WWII to do an about face on global trade? Sure, there are many republicans privately grumbling about it, but that's all they're doing: grumbling. They're not challenging him.

Last edited by asahi; 10-12-2018 at 09:52 AM.
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Old 10-12-2018, 10:08 AM
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First off, Trump is smart. I know we don't like to think so and for a long time I didn't believe it myself, but it's true. Amoral and narcissistic, but smart. He recognizes that humanity is base and addicted to 'bread and circuses' and he exploits that like a freaking surgeon. He recognizes that rules are just things that we say and that they can be bent and twisted or even broken to get what he wants. That has actually led to quite a few successes from his point of view.

Because he is smart, I think that he fully recognizes what Fed non-independence would do. He doesn't want his assets completely devalued and the dollar not the world currency. He also recognizes that the bull market wasn't going to last forever, so he is looking for a scapegoat. I fully expect him to rail against the Fed and talk about how horrible it is and how it's destroying the wonderful economy that he built. I also fully expect him to do nothing about it of substance and complain that 'the swamp' has his hands tied. The Feds independence is too valuable to him for him to screw with it, so he might complain, but it's virtue signalling to his base rather than notice of intent.
Trump's only intelligence is manipulating the American id. He has no vision whatsoever. This is a man who literally believes (and this is when I realized he really was not intelligent) that greenhouse gases from aerosols couldn't possibly get to the atmosphere if you kept the door to the room closed while you were spraying. He would have no vision to see the implications of a non-independent fed. He would only react if he thought his base would blame him for the economic implications rather than the fed.
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Old 10-12-2018, 10:18 AM
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He's not smart in terms of actual governing, but he's damn smart when it comes to using the levers of power.
I don't think he is. He's a monkey pressing all the buttons, flicking all the switches, and pulling all the levers. He occasionally makes something happen, but he doesn't understand cause and effect.
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Old 10-12-2018, 10:31 AM
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Again, how did he get a party that has been consistently pro international trade since the end of WWII to do an about face on global trade?
The Republicans haven't really been asked to do a lot in this regard, though. Everything that has actually happened amounts to executive orders. Congress will pass NAFTA2 because it's pretty much NAFTA.

Getting rid of the Fed would be the biggest legislative alteration to the United States since basically ever. It's literally a bigger deal than the Civil Rights Act.

I agree that Trump is, in a limited way, dangerously cunning, but I think you're misattributing the direction of his cunning. Big important things like getting rid of the Fed, a thing he honestly does not fully comprehend, aren't his thing. He'll happily rail against it to score points with Trumpists the same way he rails against Barack Obama but does not actually plan to have his arrested, or blather about countries he really doesn't want to go to war with. Trump is, for all his power, remarkably petty; he is in fact so petty that it costs him money. He hads put a lot of effort into scamming the taxpayer by forcing government employees to stay at his properties, for instance, though that's probably not in the top ten profitable ways he could scam the taxpayer. Where Trump is truly dangerous is in subverting democratic norms. In this regard, though, he's just another Republican; they're all like that. Far more damage is being done at the state level by Republicans who are now pretty much openly taking the vote away from racialized Americans. Trump contributes to that, but in a sort of stochastic, general way.

Actually getting large, specific things done is something he usually fails at. He has failed to get the wall built despite the fact that would probably be the most influential win he could possibly get. He failed to get the Norks to denuke. He failed to get Congress to kill ACA in a big sweep. He and his Trumpists have had success largely where they can peck away at things by driving the bar down to the ground, but that's not really an option with the Fed, certainly not in the timeframe in which he'll be President.
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Last edited by RickJay; 10-12-2018 at 10:38 AM.
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Old 10-12-2018, 11:11 AM
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What is this term intended to imply? An education with no real world experience? I'm guessing here, help me out.
Most of the Fed staff are academic economists I believe. They are not political figures or business leaders. They build economic models.
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Old 10-12-2018, 11:24 AM
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We think (or hope) that adults in the White House are keeping the short orange finger away from the nuclear button; the adults are probably also trying to keep that finger away from the monetary button. Careful FedRes policy has maintained American prosperity for 40 years (even the huge credit crisis of 2008 caused only a relatively brief setback) and I think almost everyone appreciates that and wants it to continue.

This smart pro-business FedRes policy has been one of two pillars of American monetary power, and thus the stability of the world economy. The other pillar is the dollar's inherent strength as a reserve currency, and the huge global reach of American economic, cultural and military power.

Trump seeks to attack both these pillars. He may not be able to usurp FedRes independence, but he can ó and has ó attack(ed) the dollar without FedRes cooperation. His tariff wars and obnoxious talk are reducing respect for America and the American dollar. The GOP decision to run up treasury debt dramatically creates pressure on the dollar to inflate or be devalued. (I asked one of SDMB's top GOP supporters to name any economist who supported the tax cut ó HD was unable to come up with a single name.)

Some years ago, when McConnell was trying to force Obama's government to fail, there was talk of Obama minting a trillion-dollar platinum coin to bypass Congress. This idea was booed down by D and R alike. Trump and the present GOP may well decide to bypass the Fed with some silly mechanism like a trillion-dollar coin. 38% of the country would cheer. Certainly the Congress which put an hysterical hyper-partisan drunkard on the Supreme Court would have no objection.
Perhaps Krugman would be among the 38%. Oh never mind Trump is doing it.

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OP, can you flesh out what this "yielding" will consist of?
They will slow down rate increases in the face of a stock market downturn.


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Iím assuming it means that within the next year, the Fed will cut rates in the absence of an economic downturn. (Because if growth takes a bad turn, they would be expected to drop rates anyway.)

Is this a fair summary? And, would you like to place a wager on this? Maybe $500?
They will delay rate increases in the face of a stock market downturn. Of course this could be the Greenspan Put at work, so maybe Trumpís effect will be hard to gauge.
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Old 10-12-2018, 11:26 AM
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I disagree with this part.
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Originally Posted by senoy View Post
First off, Trump is smart. I know we don't like to think so and for a long time I didn't believe it myself, but it's true. Amoral and narcissistic, but smart. He recognizes that humanity is base and addicted to 'bread and circuses' and he exploits that like a freaking surgeon. He recognizes that rules are just things that we say and that they can be bent and twisted or even broken to get what he wants. That has actually led to quite a few successes from his point of view.

Because he is smart, I think that he fully recognizes what Fed non-independence would do.
However, I agree with this part.
Quote:
He doesn't want his assets completely devalued and the dollar not the world currency. He also recognizes that the bull market wasn't going to last forever, so he is looking for a scapegoat. I fully expect him to rail against the Fed and talk about how horrible it is and how it's destroying the wonderful economy that he built. I also fully expect him to do nothing about it of substance and complain that 'the swamp' has his hands tied. The Feds independence is too valuable to him for him to screw with it, so he might complain, but it's virtue signalling to his base rather than notice of intent.
Yep, see T-Rump's ineffectual wailing and tweeting about the unbuilt wall, the still-ongoing "witch hunt" by Mueller, and his lack of confidence in still-Att'y-Gen'l Sessions. As you say, pure virtue signaling to his base.
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Old 10-12-2018, 11:42 AM
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For those of you who think Trump is dumb, if you were a narcissist who only craves the spotlight and power, what exactly would you do differently than he has done? You can say, "Well, he didn't get the wall built." But I'm not so sure he wants one. It's a rhetorical device that fires up his base. Witness the fact that he said Spain should build a wall across the Sahara. Obviously Trump knows such a thing is impossible for about a million reasons, but it plays well with his base. His ideology is simply the veneration of himself and he's really, really good at it. Again, I was doing the same thing with him. I was saying "He's an idiot plundering through the China shop." but I was judging his motivations as I would judge a typical politicians motivations, i.e. he has some ideological agenda he wishes implemented and wants to achieve that. That's like judging the intelligence of a dolphin by how well it climbs trees. He has no ideology. He simply wants to be applauded and in the center of everyone's mind. When you watch some sort of thing in the world steal attention from him, you'll immediately see him escalate with another 'stupid' thing. We look at him like we would any other politician and ask why he would take focus away from some sort of pending legislation, but that's assuming he cares about it at all. He doesn't care about repealing Obamacare. Why would he? He's rich and insulated from it and you're not telling me that he cares about its impact on his constituents. He opposes it because it's the biggest thing to oppose at the moment and opposing it puts eyes on him. When it's not the biggest thing, he switches to whatever is the biggest thing, that's why he has wasted so much time and energy on freaking kneeling in the NFL. There's no ideological reason for it, but it does mean that he's in the center of every spotlight. He's very smart and very good at what getting what he wants. He just doesn't want what the rest of us do.

Last edited by senoy; 10-12-2018 at 11:43 AM.
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Old 10-12-2018, 11:43 AM
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They will delay rate increases in the face of a stock market downturn. Of course this could be the Greenspan Put at work, so maybe Trumpís effect will be hard to gauge.
I would say that prediction isn't all that falsifiable, because it is to vague.
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Old 10-12-2018, 11:48 AM
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Originally Posted by senoy View Post
For those of you who think Trump is dumb, if you were a narcissist who only craves the spotlight and power, what exactly would you do differently than he has done?
I wouldn't have tried to end a popular health care program for some vague but terrible plan. I wouldn't have cut taxes on millionaires. I wouldn't have said things to split our NATO alliance. I wouldn't have said Kim Jong Un is a good guy. I wouldn't have invited Kanye to the Oval Office. Is that enough for you?


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Witness the fact that he said Spain should build a wall across the Sahara. Obviously Trump knows such a thing is impossible for about a million reasons, but it plays well with his base.
It is not obvious that he knows that is impossible. It is not obvious if he knows where the Sahara is.

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He has no ideology. He simply wants to be applauded and in the center of everyone's mind.
This is true.

Quote:
He's very smart and very good at what getting what he wants.
He isn't smart, he just has one skill: to rile people up and divide them. Just because someone has a skill does not mean they are smart. Clearly, he isn't very good as business, and he is worse at governing, as evidenced by the fact that he's managed to make himself a consistently unpopular president. He isn't even very good at getting what he wants, either.
  #35  
Old 10-12-2018, 12:05 PM
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I wouldn't have tried to end a popular health care program for some vague but terrible plan. I wouldn't have cut taxes on millionaires. I wouldn't have said things to split our NATO alliance. I wouldn't have said Kim Jong Un is a good guy. I wouldn't have invited Kanye to the Oval Office. Is that enough for you?
So, keeping in mind that your goal is to be the center of attention. Your goal is for the 'ratings' to be high and everyone to be paying attention to you, exactly what would you have done differently?
  #36  
Old 10-12-2018, 12:20 PM
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They will slow down rate increases in the face of a stock market downturn.
How many rate increases would you expect if they weren't yielding to Trump? From what I've read:
Quote:
The forecasts show Fed officials expect about three rate rises in 2019 and one more in 2020, which would lift the bank's important federal funds rate to about 3.4% that year.
So what exactly is going to happen instead of that?
  #37  
Old 10-12-2018, 12:50 PM
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So, keeping in mind that your goal is to be the center of attention. Your goal is for the 'ratings' to be high and everyone to be paying attention to you, exactly what would you have done differently?
That is not my goal. That is probably Trump's goal, but that doesn't mean I have to accept it as a valid one. But even if you take that as a starting point, Michael Avenotti probably also wants to be the center of attention, and if he were President, he wouldn't be best buds with Kim Jong Un and putting 2 year olds in cages.
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Old 10-12-2018, 12:58 PM
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I would say that prediction isn't all that falsifiable, because it is to vague.
I disagree. Hasn't the Fed basically announced rate increases through 2019? If they don't follow through, well there ya go.
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Old 10-12-2018, 01:02 PM
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So, keeping in mind that your goal is to be the center of attention. Your goal is for the 'ratings' to be high and everyone to be paying attention to you, exactly what would you have done differently?
I would have stuck with the outrageous and avoided the stupid. The two are not synonymous and Trump isn't mixing them because he thinks it works better than sticking to just outrageous, he's mixing them because he's a one trick pony and can't tell them apart.

You don't think Trump would have gotten even better poll numbers and support from establishment republicans if there wasn't so much evidence of him being plain old dumb?
  #40  
Old 10-12-2018, 01:04 PM
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I disagree. Hasn't the Fed basically announced rate increases through 2019? If they don't follow through, well there ya go.
Because we can say with a pretty high degree of confidence that the Fed would freeze or cut rates if the economy turns south, as that's what everyone expects them to do. I suppose there's a scenario in which the economy continues to grow, but the stock market goes soft, and the Fed cuts rates... but that's a pretty poor basis for a bet.

I'm still open to any suggestions on how this prediction of Trump managing to strong-arm the Fed into cutting rates could be turned into a fair bet.
  #41  
Old 10-12-2018, 03:49 PM
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The Board of Governors will blow him off and keep on doing whatever they want to do. They don't work for him. He can't fire them.
It is unclear if he can fire them.

Quote:
... each member shall hold office for a term of fourteen years from the expiration of the term of his predecessor, unless sooner removed for cause by the President.

SOURCE: Section 10. Board of Governors of the Federal Reserve System (bolding mine)
I can not find anything on who gets to say what is sufficient "cause" to remove them but I am sure Trump can gin something up if he feels like it.

Since it is vague I expect the administration will say Trump can fire whoever he wants.

With Kavanaugh and Roberts on the supreme court and believing in a unitary executive it is unlikely they'd try to stop Trump if he starts firing governors.
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Last edited by Whack-a-Mole; 10-12-2018 at 03:51 PM.
  #42  
Old 10-12-2018, 03:59 PM
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Wrong thread...
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  #43  
Old 10-12-2018, 05:08 PM
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Originally Posted by Try2B Comprehensive View Post
I disagree. Hasn't the Fed basically announced rate increases through 2019? If they don't follow through, well there ya go.
The Fed doesn't announce future rate decisions. They hint. They suggest. They equivocate. They make you read between the lines.

Because they're walking a narrow path. They want the markets to know where things are going so there aren't surprises, but they don't actually want to be locked into anything, because they want to be able to make adjustments as current events require.

I agree that so far the claim about what the Fed will do is far too vague to be falsifiable.

Last edited by iamthewalrus(:3=; 10-12-2018 at 05:09 PM.
  #44  
Old 10-12-2018, 05:18 PM
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I thought -- rather naively -- that the title of this thread was some kind of breaking news announcement about unprecedented executive-branch interference in Federal Reserve monetary policy. Glad to see that it was pure fantasy.
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Originally Posted by senoy View Post
First off, Trump is smart.
This is the first time I ever stopped reading a post after the very first sentence. Really. Never happened before.
  #45  
Old 10-12-2018, 05:29 PM
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Originally Posted by iamthewalrus(:3= View Post
The Fed doesn't announce future rate decisions. They hint. They suggest. They equivocate. They make you read between the lines.

Because they're walking a narrow path. They want the markets to know where things are going so there aren't surprises, but they don't actually want to be locked into anything, because they want to be able to make adjustments as current events require.
It's called forward guidance and yeah...they signal to the markets what their intentions are so the markets are not surprised thus causing unwanted jitters in the market when the news drops. They aren't coy about it. It is not reading between the lines. It is a policy they follow.
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  #46  
Old 10-12-2018, 05:32 PM
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Matthew Yglassias:
But while I think Trump is probably correct about the Fed, his actions as president seem to call into question whether he thinks he is correct about the Fed. There are, right now, three vacancies on the Federal Reserve Board of Governors and three Trump nominees making their way through the confirmation process.

One of them, Michelle Bowman, is a Kansas bank regulator with no known views on monetary policy. The second, Nellie Liang, is a well-qualified, longtime staff economist at the Fed whose views are almost certainly in line with the existing Fed consensus. And the third, Marvin Goodfriend, is a longtime inflation hawk who thinks the Fed has been raising rates too slowly rather than too quickly.

So if Trump actually wants to see a more growth-oriented monetary policy, he should probably cool it with the name-calling, withdraw Goodfriend, and instead put forward someone who agrees with him.

The problem is that when you have a president who doesnít really understand any area of public policy or care to take the time to learn about it, itís difficult for him to be effective, even when his instincts make some sense.
https://www.vox.com/policy-and-polit...fed-loco-crazy


Oh yeah, the OP. Presidents have disagreed with the Fed before. But they keep their mouths shut, because they think that jabbering would be counter-productive: they felt that the Fed would feel obliged to increase rates to demonstrate to the bond markets their independence from politics.

In this instance, I'd say that all of this will be forgotten in December, and the Fed will raise rates according to schedule. Caveat: Fed policy is data dependent: if the data changes, so does their policy.

I'd expect another rate increase in March 2019 or June 2019. Or both. Once inflation adjusted rates hit about 1/2 of a percentage point, I'm not sure what happens. I'll rely on Tim Duy for insight.
  #47  
Old 10-12-2018, 05:46 PM
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Most of the Fed staff are academic economists I believe. They are not political figures or business leaders. They build economic models.
The staff are academics, somewhat, sort of, and entirely for some. The Board of Governors of the Federal Reserve, not as much so.

Fed chair: "Prior to his appointment to the Board, Mr. Powell was a visiting scholar at the Bipartisan Policy Center in Washington, D.C., where he focused on federal and state fiscal issues. From 1997 through 2005, Mr. Powell was a partner at The Carlyle Group."
https://www.federalreserve.gov/about...ard/powell.htm

Richard H. Clarida, Vice Chairman: "Prior to his appointment to the Board, Dr. Clarida served as the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University, where he taught from 1988 to 2018. From 1997 until 2001, Clarida served as chairman of the Department of Economics at Columbia University.

In addition to his academic experience, Dr. Clarida served as the assistant secretary of the U.S. Treasury for Economic Policy from February 2002 until May 2003. In that position, he served as chief economic adviser to Treasury secretaries Paul H. O'Neill and John W. Snow. He was awarded the Treasury Medal in recognition of his service. Dr. Clarida also served on the Council of Economic Advisers under President Reagan.

From 2006 to 2018, Dr. Clarida served as global strategic advisor with PIMCO and was promoted to managing director in 2015."

Randal K. Quarles, Vice Chairman for Supervision: "Prior to his appointment to the Board, Mr. Quarles was founder and managing director of the Cynosure Group, a Utah-based investment firm. Before founding the Cynosure Group, Mr. Quarles was a partner at The Carlyle Group, a private equity firm based in Washington, DC."

Lael Brainard: "Prior to her appointment to the Board, Dr. Brainard served as Undersecretary of the U.S. Department of Treasury from 2010 to 2013 and Counselor to the Secretary of the Treasury in 2009. During this time, she was the U.S. Representative to the G-20 Finance Deputies and G-7 Deputies and was a member of the Financial Stability Board. She received the Alexander Hamilton Award for her service.

From 2001 to 2008, Dr. Brainard was Vice President and the Founding Director of the Global Economy and Development Program and held the Bernard L. Schwartz Chair at the Brookings Institution, where she built a new research program to address global economic challenges.

Dr. Brainard served as the Deputy National Economic Adviser and Deputy Assistant to President Clinton. She also served as President Clinton's personal representative to the G-7/G-8.

From 1990 to 1996, Dr. Brainard was Assistant and Associate Professor of Applied Economics at the Massachusetts Institute of Technology's Sloan School of Management."
  #48  
Old 10-13-2018, 09:17 AM
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They will delay rate increases in the face of a stock market downturn.
As Ravenman and Measure for Measure point out, the Fed will delay rate increases if the economy slumps. Yes, slumps in the economy and stock market are likely to be strongly correlated, but your getting the cause-effect relationship wrong shows confusion.

Many Yahoo'ers and YouTubers think that U.S. government policies are rigged to favor the wealthy. I agree with them BUT they usually get the details quite wrong. The FedRes strives to keep the economy strong for all Americans. That big corporations and their shareholders benefit from a strong economy is a side effect.

(For example there is an otherwise very intelligent American who lives near me and is happy to discuss the American banking kleptocracy. But he focuses attention on the 6% dividend paid on FedRes shares, a dividend on capital the banks must keep locked up. With U.S. banks raking in $60 Billion in profits per quarter, and getting a temporary Trillion-dollar bailout when they needed it, attention focuses on FedRes dividends totaling a few hundred million per quarter? Again, this is $60 Billion, Trillion, millions with a B, T and lower-case M respectively.)

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Originally Posted by WillFarnaby View Post
Perhaps Krugman would be among the 38%. Oh never mind Trump is doing it.
I also favored Obama taking measures to combat the evil-doers. What does that have to do with thread topic, which concerns the present day with evil-doers in power?
  #49  
Old 10-13-2018, 10:19 AM
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I agree that Trump is, in a limited way, dangerously cunning, but I think you're misattributing the direction of his cunning. Big important things like getting rid of the Fed, a thing he honestly does not fully comprehend, aren't his thing.
He doesn't have to go that far; he can just bully the Fed with his microphone. I think one thing that Trump has already demonstrated is the ability to use that microphone with great effect.

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Originally Posted by RickJay View Post
He'll happily rail against it to score points with Trumpists the same way he rails against Barack Obama but does not actually plan to have his arrested, or blather about countries he really doesn't want to go to war with. Trump is, for all his power, remarkably petty; he is in fact so petty that it costs him money. He hads put a lot of effort into scamming the taxpayer by forcing government employees to stay at his properties, for instance, though that's probably not in the top ten profitable ways he could scam the taxpayer. Where Trump is truly dangerous is in subverting democratic norms. In this regard, though, he's just another Republican; they're all like that. Far more damage is being done at the state level by Republicans who are now pretty much openly taking the vote away from racialized Americans. Trump contributes to that, but in a sort of stochastic, general way.

Actually getting large, specific things done is something he usually fails at. He has failed to get the wall built despite the fact that would probably be the most influential win he could possibly get. He failed to get the Norks to denuke. He failed to get Congress to kill ACA in a big sweep. He and his Trumpists have had success largely where they can peck away at things by driving the bar down to the ground, but that's not really an option with the Fed, certainly not in the timeframe in which he'll be President.
He doesn't have to be effective or competent at governing to be effective at intimidating and silencing his critics. I think this is where people tend to make the wrong assessment about Trump's capabilities. They assume that because he tends to not understand how his own government works that he can't ultimately figure out how to weaponize it. He and the Republicans are quietly changing the government so that it is increasingly capable of doing just that.
  #50  
Old 10-13-2018, 12:20 PM
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Originally Posted by asahi View Post
He doesn't have to go that far; he can just bully the Fed with his microphone. I think one thing that Trump has already demonstrated is the ability to use that microphone with great effect.



He doesn't have to be effective or competent at governing to be effective at intimidating and silencing his critics. I think this is where people tend to make the wrong assessment about Trump's capabilities. They assume that because he tends to not understand how his own government works that he can't ultimately figure out how to weaponize it. He and the Republicans are quietly changing the government so that it is increasingly capable of doing just that.
It's the way that all dictators keep power. You go after anyone who shows any disloyalty violently, to keep anyone else from getting out of line, then you prevent anyone from trusting anyone else enough to challenge you.

He's done a great job of it.
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