Yawn:
Fed Inclined to Lift Rates If New President Adds Budget Bump
The Federal Reserve is inclined to raise interest rates higher than otherwise if the next president pursues a more stimulative fiscal policy.
U.S. central bankers say they would welcome such a step as shifting some onus for supporting the economy away from the Fed. But they suggest they would offset the extra demand that a bigger budget deficit would spur by making monetary policy less stimulative.
Once again, market monetarists have known all along what the media is just beginning to discover—just as with negative interest rates.
And this made me shake my head:
It also could pose some political problems for the Fed if it was perceived by lawmakers as working at cross-purposes with their efforts to spur economic growth.
Congress has been whining about low rates for years. And now were are told that if the Fed raises rates to 1% or 2%, Congress will start complaining about high interest rates?
BTW, the entire premise of the article is wrong. Fiscal policy will not have much impact on interest rates, because rates mostly depend on NGDP growth, and the Fed isn’t going to let that rise above 3% on any sustained basis.
Hillary and Trump aren’t going to give us growth, they are going to deliver big government.
HT: Michael Darda
PS. Time for the daily Trump dump:
1. Trump has threatened to sue people on at least 20 occasions since the campaign began.
2. The ABA prepared a report on Trump’s excessive litigation, which called Trump a “libel bully“. But the ABA refused to release the report . . . (and this is not a Onion joke) . . . for fear of being sued by Trump.
3. Trump praised Hillary as a great senator and a great person. Said Bill was a great president. But don’t worry Harding, that was back in 2008, when he was not running for president and was free to speak his mind. I’m sure his views since he had to begin kowtowing to the alt-right are much more representative of his actual beliefs.
4. And talk about “first world problems“:
For all their sharp differences, supporters of Hillary Clinton and Donald Trump have one thing in common: election-related stress.
Nearly half of all likely voters in the ABC News tracking poll, 46 percent, describe the election as a source of stress in their lives, including roughly equal numbers of Clinton and Trump supporters. Nearly a quarter, again among both candidates’ camps, say the stress is serious.
Wow, get a life. I wish politics were all I had to worry about.
HT: Tom Brown