(National Sentinel) Losing: There can be no doubt that the economic policies of POTUS Donald Trump and the GOP Congress have been fantastic for America.
Job growth is so good the unemployment rate is as low as its been since 1969 (3.7 percent). Because of such a low unemployment rate, the country is at full employment making it difficult for companies to find qualified workers; as a result, wages are now increasing as well.
The stock market continues to soar. The Trump administration just wrapped up a renegotiation of NAFTA, replacing it with the United States Mexico Canada Agreement that is fairer to America while requiring wages for workers in other countries to rise as well (take that, #NeverTrumpers).
Clearly, America is experiencing what we used to call “boom times.”
So, why does the Federal Reserve continue to raise interest rates? Because doing so saps economic growth.
It’s not rocket science. “Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder,” writes Ethan Pope at Foundations for Living, discussing the Federal Funds Rate, which is the interest rate (controlled by the Fed) that banks charge each other on overnight loans. “This is usually the rate that the Fed keeps adjusting,” he noted.
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Why does the Fed want a slower economy?
The Gateway Pundit reports:
Increases in the Fed Funds Rate increase the cost of borrowing and the largest borrower in the world is the US government. With $20 trillion in debt, a 2% increase in interest payments equals $400 billion in annual interest payment increases or nearly a half a trillion dollars!
President Obama benefited from the lowest possible interest rates possible for seven of his eight years and in spite of this, nearly doubled the US Debt from $10 trillion to nearly $20 trillion. With no rate increases in interest rates, President Trump would arguably have a balanced budget to date. (Although the short term implications may not dictate this, the long term implications are clear.)
POTUS Trump is well aware of this, and he’s spoken about it — well, criticized it — before.
Trump said he’s concerned that the timing may be poor and that it will put the U.S. at a “disadvantage” while the Fed’s counterparts like the European Central Bank and the Bank of Japan maintain loose monetary policy.
The president acknowledged that his comments are unusual but said he doesn’t care.
“Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”
“I don’t like all of this work that we’re putting into the economy and then I see rates going up,” he said.
The government having to pay higher interest rates on the debt is the key: Already the price tag for interest payments is higher than the budgets of most U.S. states combined.
In Boston this week, Fed Chairman Jerome Powell, whom POTUS Trump appointed, said rate hikes right now are a good thing.
The markets responded almost immediately — to the negative — nearly vanquishing yet another Trump-related rally.
“The only thing stopping President Trump from balancing the US Budget and keeping the economy on fire is the Fed’s rising rates. Trump’s right again and again – the Fed’s actions show it favors the left,” TGP observed.
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