Candidate Trump Warned the Fed Had Inflated a Dangerous Bubble. He Was Right

by | Jun 20, 2019

Candidate Trump Warned the Fed Had Inflated a Dangerous Bubble. He Was Right

by | Jun 20, 2019

DALLAS, TX - SEPTEMBER 14: Republican presidential candidate Donald Trump speaks during a campaign rally at the American Airlines Center on September 14, 2015 in Dallas, Texas. More than 20,000 tickets have been distributed for the event. (Photo by Tom Pennington/Getty Images)

Candidate Trump (2016):

Count Donald Trump among the ranks of those who don’t think too much of the stock market as a sound place to put money.

A day after making a widely watched public address on his economic plan, the Republican presidential nominee advised against betting on Wall Street.

The big problem, as Trump sees it: The low interest rate environment fostered by the Federal Reserve that has coincided with a 227 percent market gain since the financial crisis lows.

“If rates go up, you’re going to see something that’s not pretty,” the billionaire businessman told Fox News during a Tuesday morning phone interview. “It’s all a big bubble.”

President Trump (the present):

President Trump renewed his criticism of the Federal Reserve on Monday, saying that the Fed erred in lifting interest rates last year and put the United States at a disadvantage to China.

Mr. Trump, in an interview on CNBC, said the Fed “made a big mistake: They raised interest rates far too fast.”

Mr. Trump has repeatedly attacked the Fed’s decision last year to raise interest rates, accusing it of undermining his economic policies and slowing growth. And he has urged the Fed to cut rates and take additional steps to stimulate economic growth.

“They devalue their currency,” Mr. Trump said. “They have for years. It’s put them at a tremendous competitive advantage, and we don’t have that advantage because we have a Fed that doesn’t lower interest rates. We should be entitled to have a fair playing field, but even without a fair playing field — because our Fed is very, very disruptive to us — even without a fair playing field we are winning.”

Candidate Trump warned there had been no real recovery people could feel in their everyday lives. The Fed’s low interest rates had merely inflated a stock market bubble.

President Trump lambasts the Fed for raising rates and demands they be lowered as soon as possible.

There is no contradiction. Trump doesn’t want higher rates because he knows they would burst the bubble. He’s gone from warning about the bubble to claiming it as a genuine boom engineered by him, so he is now pro-bubble.

The Fed feels the same way which is why — in three years of talking up raises since 2015 through 2018 — they’ve only raised to 2.25% which is still a low, emergency-level rate. And which is why they’re already talking about going back to cutting. They can feel the “recovery” wasn’t real and that the illusion won’t survive normal-times rates.

Trump understands more about economics than he lets on, but has subordinated everything to getting elected in 2020. The bubble bursting is the last thing he wants, and if that means he must keep blowing it up — which will increase the pain when it finally does burst — then so be it. Trump first, country second.

Most of what he does in his seemingly chaotic foreign policy likewise makes perfect sense considered from the perspective of Trump as candidate in 2020:

• Venezuela: could have helped with Florida.

• Iran: as long as he doesn’t make it a shooting war, a hard-line policy is risk-free. There is no downside, only a possible upside with the evangelicals.

• China: will make for a great whipping boy in 2020. Try as he might the Democrat won’t be able to play the bigger hawk. To the extent someone like Warren tries it will only serve to highlight Trump made it an issue sooner.

• Russia: gave up the reverse-Nixon to seperate Russia from China as soon as it was clear he’d pay a political price for it.

• North Korea: torpedoed his own deal rather than having to defend it at home.

As with every politician personal interest comes before country. And the Empire blindly marches on…to doom.

Republished from checkpointasia.net.

Marko Marjanović

Marko Marjanović

Marko Marjanović is a deputy editor at Russia Insider. He has contributed to The Voluntaryist Reader, The Libertarian Liquidationist and published the Crappy Town blog. His articles have been published by Antiwar.com and the Mises Institute. His new project is Checkpoint Asia.

View all posts

Our Books

libertarian inst books

Related Articles

Related

TGIF: What Free Market in Health Care?

TGIF: What Free Market in Health Care?

Contrary to a popular article of faith, America has no free market in health care—far from it. Consider this: the largest lobby in Washington, D.C., is—wait for it—the health care and health insurance industries. Last year, they spent 5.8 times the amount the...

read more
A Critique of Practical Hasbara

A Critique of Practical Hasbara

Immanuel Kant published The Critique of Pure Reason in 1781. It was the same year the Rebel Alliance triumphed at Yorktown, Virginia. The victory at Yorktown made possible the decline of the British “liberal” empire and the eventual rise of Washinton DCs “non-empire”...

read more
The Switzerland Summit: Peace Through Delusion

The Switzerland Summit: Peace Through Delusion

Ukraine has been at war for over ten years, and even the political establishment wipeout in the European elections has not managed to shock the Western ruling class back into coherence. Nothing could provide a clearer example of their clownish nature than the recent...

read more
Smashing the UK’s Statist Mindset

Smashing the UK’s Statist Mindset

Mainstream British political thought processes contain an epidemic of dreadful reasoning. Witness the average political interaction between “popular” British parliamentarians and voters, think through the reasoning of the topics discussed, and you will know exactly...

read more
Will Trump Learn from Bump Stock Battering?

Will Trump Learn from Bump Stock Battering?

The Supreme Court last Friday struck down one of the most controversial gun control edicts in recent years. The ruling on bump stocks is being widely hailed as a victory for an expansive reading of the Second Amendment. But it is also a stark rebuke to Donald Trump’s...

read more

Pin It on Pinterest

Share This