Whatever you may think the Federal Reserve’s function is—preserve the value of the dollar, promote low inflation and low unemployment, regulate the banking system—it’s real function is to keep stock and bond prices high and rising. From David Stockman at lewrockwell.com:
It doesn’t get any more pathetic than this. The Fed cuts the absurdly
low money market rate by another 50 basis points at 10AM and before noon the
Donald is banging the podium for more.
So if you ever needed a final warning to get out of the casino, today’s
back-to-back eruption of financial insanity from the two most powerful economic actors on the planet should be it.
Even then, we might be inclined to give the Donald a tad bit of slack. After
all, he’s an absolute dunderhead on economics and spent a lifetime as a
leveraged real estate speculator, where, in fact, lower rates are always, but
always, to be welcomed when you’re rolling the dice with other people’s
Still, it doesn’t get any more primitive or dangerous than the Donald’s
current conviction that the price of money should be graduated lower based on
the current year international league tables of GDP growth or the level of presidential braggadocio, as the case may be.
Effectively, however, the tiny posse of fools who run the ECB and the BOJ are
burning down the financial foundations of their own economies. So the Donald
insists we burn down ours, too.
Folks, that’s the sum, substance and full extent of his “thinking”:
“As usual, Jay Powell and the Federal Reserve are slow to act. Germany
and others are pumping money into their economies. Other Central Banks are much more aggressive,” Trump said, referring to the Fed chairman.
“The Federal Reserve is cutting but must further ease and, most importantly,
come into line with other countries/competitors. We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve
to LEAD. More easing and cutting!”
By contrast, the empty suite and sniveling coward who announced today’s
emergency 50 basis point cut deserves no quarter whatsoever. The man is so petrified of a hissy fit by the boys, girls and robo-machines in the trading pits that he has just plain abandoned any pretense of rational financial thought.