Trump pushes to reduce interest, despite Fed’s warning

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It’s been a while since President Trump declared his interest (some might say forced) in directly influencing the Fed, declaring a serious distrust on its management and on its chairman, Jerome H. Powell. The President wants Powell to reduce interest points by at least 100 basis points, pushing drastic and intense demands on the central banks prerogative. Either way, there’s never been such a direct intention from the POTUS to influence the economy, at least not in such a specific manner.



In my opinion, these are radical measures that can only lead to inflation, inflation that will make a recession less maneuverable than usual. We’re talking about lowering the actual Fed rate (2.25%) to a 1.25%. This can only lead to a weaker dollar and a weaker US economy.

A recession is basically unstoppable at this point, I’ve been talking about this for half a year, but the signs are there. The Inverted Yield Curve appears prior to any recession (big and small) in US financial history, and it’s inverting again.

Even the higher ups, like Secretary Wilbur Ross, are acknowledging this: 

“Look, eventually there’ll be a recession, but this inversion is not as reliable in my view as people think. (...) Anything that takes 22 months to affect the economy — and in some cases, the inversion has taken that — that’s a long ways. (...) And a lot of the variables come in during a 22-month period. Beyond which, normally, inversions have occurred in the period of tightening money, tightening credit. And availability of credit is the biggest problem.” Ross said.

I’ll keep watching from my outpost for new signs of this recession coming, but believe me, it will come. This doesn’t mean a necessary negative outcome for the country, recessions are normal. But if the current administration keeps pushing for extraordinary measures, we could receive a really drastic and different resolution.



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