For the life of me I cannot understand why the left wants Trump to fail. He wants “more” and “better” jobs for Americans. He wants the economy to “grow at 3 plus percent.” That helps everyone from the poorest to the richest American.
But the roadblocks are constantly in the news. The latest is the Federal Reserve.
[Source: After Raising Rates Once During The Obama Years, The Fed Promises Constant Rate Hikes During The Trump Era, by Michael Snyder]
During Obama’s presidency, the Federal Reserve raised interest rates exactly one time – and near the end of his tenure. Indeed, they kept interest rates near zero. They actually considered negative interest rates, as some European nations and the Japanese actually adopted.
Historically, the U.S. economy has always slowed down whenever interest rates have been raised significantly. So what is the Federal Reserve’s current plan now that Trump is president? They have decided it would be the perfect time to start raising interest rates. The Federal Open Market Committee (FOMC) unanimously voted to raise rates by a quarter point. Stocks immediately started falling, and by the end of the session it was their worst day since October 11th. In addition to this most recent rate hike the Fed also announced that it is anticipating that rates will be raised three more times each year through the end of 2019… Let’s see, that takes us through the 2018 election cycle.
The Federal Reserve could have raised rates throughout 2016. Everyone thought they would. Why did they hold off, ask you? Because, answer I, they didn’t want to hurt Hillary Clinton’s chances of winning. The FOMC predicts the fed funds rate will be 1.4% at the end of 2017, 2.1% at the end of 2018 and 2.9% at the end of 2019, up from forecasts of 1.1%, 1.9% and 2.6%, respectively.
The Federal Reserve is supposed to be an “independent agency.” But somehow Donald Trump is going to have to fight against an economic drag with which Barack Obama did not have to contend.
As John Tamny writes, “In a recent opinion piece on the Federal Reserve for the Wall Street Journal, authors R. Glenn Hubbard, Hal Scott and John Thornton argued that the ‘Fed must above all maintain its political independence in conducting monetary policy.’ What the authors missed is that the Fed has never been non-political or independent, nor was it intended to be autonomous. The Fed is not an independent body free of political coercion, but rather an institution whose actions have long been dictated by the president and politicians in power. More important, since Congress is empowered through the Constitution ‘To coin Money, regulate the Value thereof,’ it’s folly for general defenders of central bank independence to presume that this applies to our own Federal Reserve.”