It seems like we have become a broken record on this blog now as this is the third time the Fed has decided to cut rates since we started this class. So I am still a strong believer that we are using our safety net WAY before we actually need it and Trump is at fault for part of this. The reason the Fed is not associated with the government is that there shouldn't be any political pressure for decisions. Trump has done nothing but tells Powell and companions what a terrible job they are doing for not cutting rates harder and not cutting them earlier when realistically, cutting rates this early is using up one of our safety nets before we actually need it. This could all blow up right before the election next year or it is going to become a massive problem for Trump after he uses the strong economy to get re-elected (implying that he does get re-elected). If Trump and his staff are able to continue such growth then this will truly go down as the best economic presidency in the history of this country.
https://www.cnbc.com/2019/10/31/trump-rails-against-powell-day-after-fed-cuts-rates-for-a-third-time-this-year.html
I agree that it is very important that fed is and remains independent from the government to avoid any political pressure and or bribes. I also find it important that the current U.S president cooperate with the fed and make wise decisions in regards to trade, inflation and the interest rate and to take these things into account before making any rash decisions which is what Trump is currently doing.
ReplyDeleteWhen you look at other macroeconomic indicators such as growth, inflation,
ReplyDeleteand unemployment rate; they all seem to be at a stable levels. Jerome Powell has been adamant that he does not want to lower interest rate; however the Fed has listened to the presidents wishes. I believe there should be a clear division between the Feds goals and the President's.