QUESTION: You may have stated you disagree with Trump about decrease rates of interest as a result of he has been a borrower and never a lender. There was dissent on the Fed about Powell’s third reduce. You may have additionally stated that the ECB has been attempting to assist the euro due to the pending conflict and that rates of interest rise in occasions of conflict. That is getting very complicated. Are you able to shed any gentle on this chaos? The speed reduce include the market at a file excessive. That is all beginning to seem reckless.
PK
REPLY: Look, Trump is following what he was taught in class and what the speaking heads have been saying for many years about rates of interest and the economic system. Neither Trump not anybody on Capital Hill understands financial historical past and mainstream media would NEVER put me on the air as a result of I might contradict each speaking head that they depend on. No one correlates rates of interest with the economic system. It’s at all times clinging to Marxist theories employed by Keynes from the Nice Melancholy period. The Fed raised charges all through Trump’s first time period and the market rallied.
There isn’t a EMPIRICAL EVIDENCE in any way that charges down the and also you get a bull market. Charges ALWAYS fall throughout depressions and recessions. That is at all times the identical BS when the reply is just confidence. You’ll pay 20% should you imagine that market will rally 100% however you’ll not borrow at 1% if you don’t count on the market to rally 1%.
In 1927, there was the primary G4 the place the European Central Banks pleaded with the Fed to chop charges satisfied that the cash was flowing to the US merely due to larger rates of interest when the good cash was smelling sovereign default which did are available 1931.
The Fed reduce charges below stress from Europe and that confirmed that there have been issues in Europe. The capital flows then intensified into the US shopping for the auto-stocks which was the new sector (bubble) again then. The market started to take off and the Fed deserted that coverage and started to boost charges chasing the market to its all time excessive in September 1929. Will historical past repeat however this time the coercion is coming from Trump?
I’m sorry, however the press retains placing out this BS that decrease charges are bullish when they’re indicative of melancholy or recession – not bull markets. That is what they educate in class that decrease rates of interest will clean out the economic system in keeping with Keynesian Economics – a complete lie! I have no idea of 1 college that teaches the reality. This silly principle has NEVER labored and there isn’t a college or any of the media prepared to ever inform the reality. For this reason you could have folks like Trump who scream at Powell with out simply trigger as a result of he has been taught the basic propaganda.
Again in 2009 after I stated the low was in place and the market would rally to new highs, Barron’s report that as a joke. They thought that was actually humorous.
