Trump Administration Has Given Up On Fighting Inflation
Trump Administration Has Given Up On Fighting Inflation. AI spending up and employees are being laid off. It’s the great transition.
So, the Fed they cut the rate by a quarter point, and everyone said hooray. Most everybody said hooray, because when you take a look at the vote count there of these Federal Reserve officers, one person said it should be a half point. Another person said, don’t cut it in the slightest. But it seems clear to me that Jerome Powell is well, here you go, market, here’s exactly what you wanted. Here are the lower rates you dreamed of. But is this good for us? We’ve got Dr Matt Will joining us, economist at the University of Indianapolis. Now there’s a host of things to cover on this rate cut, and this happening as President Trump is taking this tour in Asia, which I would argue has been a successful tour, not only on a diplomacy side, but on a deal side, at least framework side. Right until we have a deal that actually brings dollars in, there’s nothing but South Korea is saying they’re going to put in three hundred and fifty billion dollars further the relationship with Japan to try and thwart the hegemonic desires of China, and then the meeting with Xi Jinping, which took place in South Korea. So, before we get to the rate cut, talk to me about how this trip and these conversations coming out of this Asia trip are seen by financial economists like yourself.
We see it as fantastic because the uncertainty is being removed. The biggest problem that we’ve had with the tariffs is well the second biggest. The biggest is they’re tariffs. They stink, But the second biggest problem has been the uncertainty. And the Wall Street hates uncertainty. Business hates uncertainty. They want to know what to do. You can’t plan for the future until you know what’s going to happen. And so, the fact that these frameworks are in place and deals are getting cut, even though they may not be good deals for the consumer or for businesses, the deals are cut and everybody likes it. And what I got to tell you Trump actually he pulled one off on this because I was hearing this morning read some information about the fact that China now wants to participate in the new LNG process pipeline from Alaska. They want to invest in a pipeline that’s going to feed LNG to Japan and South Korea. This is a win no matter how you slice it. For Trump going out to the East.
Now, I have to tell you I don’t favor at all, in any way, shape or form, allowing China to have any energy from the United States. I think that is an opportunity for massive failure. I’ve also disagreed with President Trump when it’s a conversation of allowing Chinese nationals to come into the country to be students, the student visa conversation. But we’ll get to those things later. You see this trip as a success. In the middle of this trip comes Jerome Powell and comes the rate cut of a quarter point.
Now, I have to tell you I don’t favor at all, in any way, shape or form, allowing China to have any energy from the United States. I think that is an opportunity for massive failure. I’ve also disagreed with President Trump when it’s a conversation of allowing Chinese nationals to come into the country to be students, the student visa conversation. But we’ll get to those things later. You see this trip as a success. In the middle of this trip comes Jerome Powell and comes the rate cut of a quarter point.
Was this the right move?
No, it was the wrong move. Well, unless it was combined with a reducing of the balance sheet. The headline, Tony is rate cut quarter point. That’s the rate, that’s the headline. But there’s three things that happened here, and I think all three of them are bad. One was the rate cut by itself. That’s not a good thing. The second thing they did is they decided to stop reducing the balance sheet as of December. First, they will officially reverse quantitative tightening and go back to what they call neutral, but I believe is more quantitative easy. If you’re not reducing the balance sheet, that’s a bad thing. That will pump cash into the economy. And the third thing they announced is they’re going to replace long term investments on the FED balance sheet with short term investments on the FED balance sheet.
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