Trump tells Fed to slash rates or he’ll end trade with countries with U.S. surpluses

quote:

---

criminality of the Fed

---

Never change MAGA. Never change.

quote:

---

President Donald Trump demanded that the Federal Reserve slash interest rates or else he will cut off trade with countries with which the U.S. maintains trade deficits.

---

He's an economic imbecile who seems to be morphing into Bernie Sanders.

quote:

---

Is the Fed's mandate to have low interest rates?

---

No. Nor does it have a mandate to lower trade deficits. Trying to lower trade deficits by devaluing the dollar is... well... spectacularly stupid.

quote:

---

He's an economic imbecile who seems to be morphing into Bernie Sanders.

---

He's always been Bernie Sanders when it comes to economics.

They were the only two candidate running on tariffs in 2016.

But yes, either the Wharton School of Economics sucks arse, or Trump completed his "education" there like Thornton Mellon did in "Back To School." Paid Milton Friedman to write his econ papers and the like.

quote:

---

POTUS Trump gets it and is exposing the criminality of the Fed. People need to go to jail!!

---

What criminality is going on precisely and how will threatening to crash the economy expose it?

I generally support Trump, but this is just stupid.

quote:

---

The correct answer, except that I would add the phrase, "That don't even represent a problem for the US" after "trade deficits."

---

I sometimes wonder if Trump is one of those people that think we have to pay back the "trade deficit".

He's an economic imbecile who seems to be morphing into Bernie Sanders.

Don’t pretend you don’t know what he’s doing.

Right now many global bond yields are at multi-year, and some reaching even multi-decade highs. Some of the key drivers of the very high global bond yields are:

1. Fiscal Dominance – The United States government and other nations worldwide are running large fiscal deficits and issuing substantial amounts of debt. The U.S. federal deficit is approximately 6% of GDP. In addition, many countries are increasing defense spending, which is likely to require further government borrowing. These pressures are particularly evident across the G7 nations and higher bond yields globally.

2. Japan’s public debt is approximately 250% of GDP, among the highest levels in the world. The yen’s long-term weakness has been associated with yen-funded carry trades, in which investors borrow yen at relatively low interest rates and invest in higher-yielding assets elsewhere. If Japanese interest rates rise or the yen appreciates sharply, those positions could be unwound, creating volatility in global markets. The Bank of Japan and the US have recently coordinated intervention to support the yen, primarily motivated by Japan’s large holdings of U.S. Treasuries.

3. The substantial AI build-out is causing large Tech companies, some of which have credit rating on par with or better than the US government’s rating. The massive debt issuance in the AI build-out, is so massive (in the tens if not hundreds of billions of USD), that it competes with the Federal government’s ability to borrow and raise capital, particularly when the largest investment funds, foreign buyers, pension funds, hedge funds and firms have other options to chose from.

4. Global Tariffs are encouraging companies to re-draw their global supply chains and change trading partnerships. These changes may persist for many years. The re-direction of supply chains and trade causes an overall increase in global uncertainty, operating expenses, and the prices of whatever goods are being re-priced. These developments contribute to cost-push inflation, which may cause many investors to demand higher yields on longer-term bonds because they reject the face value of what they require as a return on their cost of doing business.

5. Certain choke-points such as the Bab-el Mandeb strait, the Strait of Hormuz etc have caused very high war premiums on underwriting insurance global maritme shipping and has caused re-routing around the Cap of Good Hope in South Africa ,causing delays as high as 15 days. The increased cost of these voyages also has an affect on cost push inflation.

6. The Strait of Hormuz is a major route for global oil shipments. Any sustained disruption or threat of blockade is likely to have the affect to raise global oil prices, increasing transportation costs (not just inside US trucking routes), but also affecting overall global trade, air and maritime costs.

So whether or not the over crowding of debt (sovereign or corporate bonds) in the bond market or potential forward looking inflationary pressures occur, it has the affect of large institutions, pension funds, sovereign nations, fund managers, corporation and investors to re-model uncertainty and risk. The de-risking can have the affect of global sell offs of any un-appealing bonds toward assets having more certainty, less risk and higher returns. This has had the effect of sell-offs on the long-end of the yield curve, which is something that Fed doesn’t even set.

quote:

---

You need help

---

As opposed to thinking The Fed is a criminal organization or out to 'get' Trump?