The private banking cartel, which has controlled the US Federal Reserve since 1913, has announced its first interest rate hike in a year, something which will have a recessionary effect, and mean that Donald Trump could start his tenure with an economic crisis.
Investors forecast that the Fed will raise rates by 0.25 percentage point when it meets this week taking the interest rate to 0.5 percentage points with more hikes expected next year.
As noted on this blog, Donald Trump’s picks for the Commercial and Treasury departments are both banksters and are both advancing policies that are inflationary, by planning greater government spending at a time of massive tax cuts and tariff increases on products from China and Mexico.
A combination of far fewer products circulating in a market together with a simultaneous increase in cash available for spending is a recipe for a surge in inflation.
Trump needs to put a break on interest rate rises by the Fed as fast as possible since the amount of US debt is, in the meantime, so great that even a small rise in interest rates would have a recessionary effect.
“But the seeds to the reversal of the ‘Trump trade’ are already sown,” Edward Luce says in the FT. “The biggest threat will come from the U.S. Federal Reserve. On Wednesday, Janet Yellen, the Fed chair, will almost certainly raise U.S. interest rates for only the second time in a decade.”
There are two key positions to be filled at the Federal Reserve, two Governors, it has emerged.
Trump needs to get his people in there to break the Fed’s interest rate war on the US economy and his presidency.
The market appears to have taken the view that a Trump presidency will be inflationary and prompt interest rate hike from the Fed. Wall Street bank shares are surging on the expectation the banks will have much higher profits on the back of higher interest rates.
The Fed has reduced the interest rate from 4. 75% to zero and 0.25% in December 2008 to stop a financial implosion.
Lower interest rates helps consumption and so industries like the car industry and the housing industry. On other hand, lower interest rates hit savers and share holders. However, in the USA, there are not may people left with substantial savings.
The Fed should keep interest rates at 0.% and launch another round of quantitative easing until it can be renationalized.
The tariff increases, tax cuts and government spending have to be carefully coordinated and taken in steps to avoid in inflation.
Above all, government spending should be channelled into boosting manufacturing to replace specifically the products from China and Mexico that will be held out of the market by higher tariffs.
I think Trump should use the Senate confirmation process to replace his Commerce and Treasury department picks. After all, he has obtained loans and favourable terms form both Wilbur Ross and Steven Mnuchin and can cite conflicts of interest to remove them. Key to his presidency will be delivering an economic upswing. That means, reigning in the private banks and the private Fed.
Trump’s new economic advisor is another Goldman Sachs bankster. Goldman Sachs and other Wall Street banks caused the financial meltdown of the USA, positioning themselves to pick up the assets of bankrupted companies and families for pennies.