In this article they are basically talking about what is going to be the impact that Donald Trump is going to have in the economy now that he is president. This are just predictions about the future and what might happen with the Fed. It talks about the economic ideas that Trump has and how in some cases are different with the ones that the Fed and the chairwoman Jannet Yellen have. They talk about interest rates, before the elections the Fed was talking about raising them in december and they still have that same idea, but Trump has said before that he likes having the interest rates low, so we will see how politics affect in this case the decision the Fed is going to take.
The article also talks about how much is Trump actually going to influence the Fed and how he might change a lot of thing inside it. Since he is going to give a candidate for the next chairman or chairwoman for the Fed at the beginning of the year this might help him a lot to being able to have more control and be able to influence more the decisions that the Fed takes. This would be the case where he want to manage somehow what the Fed is doing to being able to control monetary policy. In the other hand there is people that is saying that since he is more in favor for the use of fiscal policy instead of monetary policy he is not going to affect what is happening with the Fed that much and he is not going to be as involved as some people think he will. They also talk about the fiscal policies he wants to make like for example tax cuts and increase government spending in the military, and how the Fed might react to these changes to stabilize the economy since Trump wants to grow the economy really fast and the Fed might be against this since this could cause a bad slow down in the economy in the long run.
Link: http://www.nytimes.com/2016/11/13/business/economy/trump-the-fed-yellen-gets-ready-for-reckoning.html?_r=0
It will be interesting to see how Trump's policies affect the economy. Will his trickle down economics work? And if not, how swift/effective will the Fed's reaction be?
ReplyDeleteThe Fed has a tough task at hand. Trump appears to want to balance the deficit through trade tariffs and not allowing as many companies to utilize foreign workers. His ideas will surely appreciate the dollar, which is not necessarily a thing that the Fed wants.
ReplyDeleteDue to Trump's plan to increase government spending and decrease taxes, we will see an increase in both a budget and trade deficit. This plan by the NX curve will ultimately increase the world interest rate (lol Trump). This will however give the Fed more flexibility with how they can affect the interest rates. Luckily, the fed is independent of the politicians.
ReplyDeleteThe Fed and Trump should not clash on economic policy. They should work together to help promote economic growth and a stable job market.
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