Dünya Ekonomi Politika Türkiye

Trump & Powell should leave interest rates alone

Kimden: Richard DeGraff ]dickdegraff@gmail.com] Tarih: Monday, July 22, 2019 7:29 PM




Right now, President Trump and Chair Powell are on a collision course and that could start a real worldwide depression.

It has nothing to do with the stock market because that is really a casino. It is the real economy that counts.

My solution(suggestion) is quite simple and direct.

Freeze interest rates and state that the Fed Funds Rate will remain constant for five years subject to renewal. (Fed Fund Rates are what the member bankers pay for their funds.)

The United States has a ton of debt that if interest rates rise the payment on the interest rates will be 100% of our current budget and become the largest expense way over our defense and entitlement programs. That will suck the economy into a worldwide depression whirlpool

If the Fed lowers rates it will destroy the middle classes of the world because they will have only the casino markets to gamble in and no safe haven like conservative local savings banks. That destroys local economies. This could cause large scale demonstrations that could also become riots.

There is now $13 TRILLION worth of Sovereign debt that has a negative yield. That is shocking. It means that conservative investors are so scared that they are paying countries to hold THEIR funds instead of countries paying them. These notes are usually the 10-year paper. This reduces the velocity of amounts of money which is deflationary.

This also allows the manipulators easy access for casino markets. JP Morgan loves this.

The positives for a constant rate of return:

  1. It will allow corporations real future financial expansion planning because they will have a constant expense for their debt when needed. This allows real solid growth for our economies.
  2. There is now a corporate junk bond rating debt that also has negative yields. Besides the zero-velocity of funds, there is a possibility of a major loss of principal in a serious recession/depression. This is exactly when governments want a free flow of funds for their citizens.

  3. The confidence level increases when the private investor knows and sees his funds at honest levels in a local bank without risk of principal.

  4. The private investor will spend and invest excess funds when he knows other funds a safe. This increases the velocity of money for a sound growing economy.

Mr. President, you will now have an additional problem worse than the impeachment scandal.

The manipulators will hold you hostage by threatening to “crash” the casino stock market just before elections in 2020. When the private investor has savings to depend upon and is at the mercy of these modern robber barons in 401k’s you could lose your voter base.

I have written before it is the private citizen that makes this country great. They vote, they buy and they sell. They can make or break a major political party or corporation.

The Financial Committees of the 63rd Congress was given the most important challenge to present to the Congress and the country a political fail-safe monetary law to protect the country and its economy and Citizens.

The Federal Reserve Act of 1913 has lasted over 100 years with minor revisions. Now is the time to work WITH them.

Cheerio !!!


Richard C De Graff

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