I agree. My definition of the "single biggest question" concept includes the idea that we don't yet know the answer. The clue we have on May 13: Will Warsh do Trump’s bidding? Does a bear shit in the woods?
I'll take Prof R's question about whether Warsh will do the orange pedofelon's bidding as rhetorical. He, Warsh, has a well established record of pushing for tight money when Dems occupy the White House and easy money when Rs occupy it. He is, as Elizabeth Warren aptly put it, the fat demented felon's sock puppet.
Warsh said he wants to shrink the Fed's footprint. If he lowers the rate at the same time, the result is that, when monetary signals blur due to simultaneous rate cuts and balance sheet shrinkage (QT), investors generally benefit more than wage earners. While this specific friction creates pockets of pain for everyone, asymmetric financial advantages heavily favor capital owners over individuals dependent on labor income.
The plan may be to help investors over wage earners, which will further increase inequality and cement the K-shaped economy.
Trump has had many long-term obsessions, sometimes for decades: tariffs, a ballroom at the White House, interest rates, money, oil .... the often do not follow any fact or logic. The only qualification anyone has to have that Trump nominates for anything is loyalty to Trump, oh, and "central casting" appearance. Warsh is just another Trump lapdog. Heaven help us
I hold the Republican Congress responsible for all that is happening. They are the ones enabling Trump to do what he is doing. He is the most corrupt president in my lifetime and I'm in my early 70s. I just don't know how much more I can take of this.
Penny - Don’t forget to toss in Fetterman to the list his record is more republican than it is democrat. I don’t mind lawmakers working in a bipartisan way but that hasn’t been done for quite a while. Now it’s just about giving them power at any cost. Not sure who I’m disappointed in the most - probably all of them even though I expected it from some of them.
Remember, Warsh, as unqualified as he is, has only 1 vote on the Board of Governors. A change in interest rates, in either direction, requires a majority vote. That's why Trump decided to try to fire Lisa Cook, so he replace her with another lackey's vote. Of course, he chose as his victim, an African American woman, who is beyond qualified. But of course, Trump specializes in choosing spectacularly unqualified people, who serve as his sock puppets.
Trump's only criteria for any job are the person's: 1.) appearance (if they come from "central casting") and 2.) loyalty to him. Nothing else is important
Donald - Both prices and the interest rate are already high and if enough people want to predict the market they just need to make an account on his social media where he tells everyone when to trade and on what. This whole administration refuses to think ahead about the consequences of their actions on a daily basis. Do I believe that Warsh is nothing but a yes man? Absolutely. Will it bite us in the a*s in the future? Absolutely.
Let's hope Warsh does the right thing. Our economy is so screwed up right now we don't need a loyalist to do his dirty work, we need someone who will do what his job stipulates!
I can truly agree with you on this one. I just hope we can get through the midterms this year and the Lame Duck final two years a little easier. Can't wait until it's all over.
The GOP's superpower is destroying economies through lax regulation, deficit spending, and tax cuts. It's the only party orthodoxy that the Trump admin hasn't shredded. They're right on track for another burst of stagflation. So much winning.
Frankly, I don’t think Trump cares about the economy. I believe he wants low interest rates because low interest rates are a real estate develop’s dream. Not to mention that the Trump corporation is sitting on massive debts and the ability to refinance any of that debt at a lower rate would save the Trump family millions. You can always bet that Trump’s first priority is Trump - not the GOP, not the country, simply Trump!!
With his deregulatory fetish (a legacy of his Ayn Rand years) he was arguably responsible in part for the crash of 2007-08 for which we (not the bankers) are still paying the price.
When later questioned by congress he admitted as much:
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity — myself especially — are in a state of shocked disbelief."
When asked whether his ideology "was not right, it was not working," he replied: "Absolutely, precisely."
In short a highly politicised ideological ally of the current nut jobs running America is the last thing we need at the Fed.
I very much like that Jerome Powell is on the board. I see a more uphill battle for Trump on everything. Just a mention, Trump will be 80 on June 14. It will be yet harder for him to battle up any hill.
Why were you against Clinton lowering the budget? He is the only president I know of who balanced the budget and even had a surplus. As far as the fed goes, I agree with Ron Paul, if not abolished it at least needs to be audited. Who are the member banks ? Why do they control our money when only congress is supposed to have the right to coin money? Go back to pre Reagan tax rates, use that money to pay down the national debt and break up all these super monopolies, especially tech and media.
I was worried enough about Powell’s nomination to Fed chair, as a businessman Trump likes, not a macroeconomist. He was okay.
I have considerably less hope of Warsh.
But also, a lot of civilians and for that matter monetary and financial economists seem to be to think that monetary policy has unique and uberpuissant policy that I don’t think it has.
Warsh's predicament is worse than it looks. Banks fund the Fed and, in a way, own it. They like high interest rates (which let them make more on their loans) and Republicans (who avoid pesky consumer protection rules). So the game is to get the Fed to raise rates before the time for a Democratic president's reelection, then keep them low and have a growth party during Republicans' time in power until they crash something, and then gradually tighten once again during the ensuing Democrats' time in power to boost bank margins.
What screws up the pattern for Warsh is that there was inflation under a Democrat and rates had to rise as a Republican took office. This hasn't happened since Reagan took office. COVID wasn't Biden's fault, and the 1970s oil shock wasn't Carter's. The result in both cases, nevertheless, makes life less comfortable than normal for Federal Reserve boards that are answerable to the banking community.
Of course he will be on bended knee. I believe that's why he was picked.
I agree. My definition of the "single biggest question" concept includes the idea that we don't yet know the answer. The clue we have on May 13: Will Warsh do Trump’s bidding? Does a bear shit in the woods?
I'll take Prof R's question about whether Warsh will do the orange pedofelon's bidding as rhetorical. He, Warsh, has a well established record of pushing for tight money when Dems occupy the White House and easy money when Rs occupy it. He is, as Elizabeth Warren aptly put it, the fat demented felon's sock puppet.
that is discouraging.... Elizabeth knows her stuff, and her words are solid.
Warsh said he wants to shrink the Fed's footprint. If he lowers the rate at the same time, the result is that, when monetary signals blur due to simultaneous rate cuts and balance sheet shrinkage (QT), investors generally benefit more than wage earners. While this specific friction creates pockets of pain for everyone, asymmetric financial advantages heavily favor capital owners over individuals dependent on labor income.
The plan may be to help investors over wage earners, which will further increase inequality and cement the K-shaped economy.
Trump has had many long-term obsessions, sometimes for decades: tariffs, a ballroom at the White House, interest rates, money, oil .... the often do not follow any fact or logic. The only qualification anyone has to have that Trump nominates for anything is loyalty to Trump, oh, and "central casting" appearance. Warsh is just another Trump lapdog. Heaven help us
- Karen Cooper
Lapdofvgor djt. Pitbull destroying people.
I hold the Republican Congress responsible for all that is happening. They are the ones enabling Trump to do what he is doing. He is the most corrupt president in my lifetime and I'm in my early 70s. I just don't know how much more I can take of this.
Penny - Don’t forget to toss in Fetterman to the list his record is more republican than it is democrat. I don’t mind lawmakers working in a bipartisan way but that hasn’t been done for quite a while. Now it’s just about giving them power at any cost. Not sure who I’m disappointed in the most - probably all of them even though I expected it from some of them.
It seems like Fetterman's stroke changed his personality from liberal to conservative.
It certainly changed his values. Personality-wise, I always thought he was an odd duck.
Precisely. Add to that they are traitors, maybe not as the dictionary defines it, but it's a good term that fits
- Karen Cooper
Knowing Trump, interest rates will be below 3% in no time. Another puppet..
Remember, Warsh, as unqualified as he is, has only 1 vote on the Board of Governors. A change in interest rates, in either direction, requires a majority vote. That's why Trump decided to try to fire Lisa Cook, so he replace her with another lackey's vote. Of course, he chose as his victim, an African American woman, who is beyond qualified. But of course, Trump specializes in choosing spectacularly unqualified people, who serve as his sock puppets.
He's also especially fond of going after minority women so, she's an especially desirable prey.
Trump's only criteria for any job are the person's: 1.) appearance (if they come from "central casting") and 2.) loyalty to him. Nothing else is important
- Karen Cooper
Donald - Both prices and the interest rate are already high and if enough people want to predict the market they just need to make an account on his social media where he tells everyone when to trade and on what. This whole administration refuses to think ahead about the consequences of their actions on a daily basis. Do I believe that Warsh is nothing but a yes man? Absolutely. Will it bite us in the a*s in the future? Absolutely.
It appears to be time to invest in home builders and real estate speculation.
Let's hope Warsh does the right thing. Our economy is so screwed up right now we don't need a loyalist to do his dirty work, we need someone who will do what his job stipulates!
Hope? Wanna bet?
Get that nincompoop out of 1600, back to Mar-a-LarDo where he belongs, put adults in charge... if we can find any.
I can truly agree with you on this one. I just hope we can get through the midterms this year and the Lame Duck final two years a little easier. Can't wait until it's all over.
HOO-RA: Let's make it OVER sooner, not later... the sooner the better...
No Fed Head has done that since Volker and, as it has been pointed out, was not good for Carter's popularity when running for a second term.
The GOP's superpower is destroying economies through lax regulation, deficit spending, and tax cuts. It's the only party orthodoxy that the Trump admin hasn't shredded. They're right on track for another burst of stagflation. So much winning.
Well Trump has got the Supreme Court in the bag , so the Federal Reserve is next to be bagged. To take total control of things it takes time.
Frankly, I don’t think Trump cares about the economy. I believe he wants low interest rates because low interest rates are a real estate develop’s dream. Not to mention that the Trump corporation is sitting on massive debts and the ability to refinance any of that debt at a lower rate would save the Trump family millions. You can always bet that Trump’s first priority is Trump - not the GOP, not the country, simply Trump!!
The Greenspan mention is interesting.
With his deregulatory fetish (a legacy of his Ayn Rand years) he was arguably responsible in part for the crash of 2007-08 for which we (not the bankers) are still paying the price.
When later questioned by congress he admitted as much:
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity — myself especially — are in a state of shocked disbelief."
When asked whether his ideology "was not right, it was not working," he replied: "Absolutely, precisely."
In short a highly politicised ideological ally of the current nut jobs running America is the last thing we need at the Fed.
I very much like that Jerome Powell is on the board. I see a more uphill battle for Trump on everything. Just a mention, Trump will be 80 on June 14. It will be yet harder for him to battle up any hill.
Warsh is a “ wash” he’ll be thru the spin cycle and hung out to dry before Trump comes back from China
Why were you against Clinton lowering the budget? He is the only president I know of who balanced the budget and even had a surplus. As far as the fed goes, I agree with Ron Paul, if not abolished it at least needs to be audited. Who are the member banks ? Why do they control our money when only congress is supposed to have the right to coin money? Go back to pre Reagan tax rates, use that money to pay down the national debt and break up all these super monopolies, especially tech and media.
Honor means so little to so many.
Thank you, Farhad, for making this simple, yet deeply profound statement. How true it is.
I was worried enough about Powell’s nomination to Fed chair, as a businessman Trump likes, not a macroeconomist. He was okay.
I have considerably less hope of Warsh.
But also, a lot of civilians and for that matter monetary and financial economists seem to be to think that monetary policy has unique and uberpuissant policy that I don’t think it has.
Warsh's predicament is worse than it looks. Banks fund the Fed and, in a way, own it. They like high interest rates (which let them make more on their loans) and Republicans (who avoid pesky consumer protection rules). So the game is to get the Fed to raise rates before the time for a Democratic president's reelection, then keep them low and have a growth party during Republicans' time in power until they crash something, and then gradually tighten once again during the ensuing Democrats' time in power to boost bank margins.
What screws up the pattern for Warsh is that there was inflation under a Democrat and rates had to rise as a Republican took office. This hasn't happened since Reagan took office. COVID wasn't Biden's fault, and the 1970s oil shock wasn't Carter's. The result in both cases, nevertheless, makes life less comfortable than normal for Federal Reserve boards that are answerable to the banking community.
He has not answered the question "did Donald Trump lose the 2020 elections?"
It's good that there are still others on the Fed who can vote against Warsh.
Robert, Bill Clinton served for two terms so he was not “booted out“ of Office in 1996. Just for clarification.
He wrote “might have caused…” I think.