Interest Rate Wars
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, we’re talking about:
Interest Rate Wars
The president says lower ’em.
But his new Fed chair is raising ’em.
Let’s take a look at both arguments,
Are we blazing ’em or glazing ’em?
This is…
Interest Rate Wars
In the most electrifying move in finance entertainment, the Federal Reserve of the United States raised the rate this week.
And if you read your market flashcards, you knew this was coming.
The president was not happy about it. He has his own ideas about how the economy works and what the US should do.
It’s a good old-fashioned interest rate war!
Both took to their typical methods of communication to convey their points. The Federal Open Market Committee issued this press release, followed by a press conference.
And President Trump posted to social media:
Both sides agree on some parts, albeit with different verbiage.
The Fed says, “Economic activity is expanding at a solid pace.” And Trump says,
“Our Country is BOOMING.”
So how do we get to such different opinions on the rate?
Both sides have their economic pedigree. Trump studied economics at the prestigious Wharton School in the Ivy League at the University of Pennsylvania. And the Fed’s Kevin Warsh attended Stanford before getting a law degree with Elle Woods at Harvard.
When two of our country's top economic minds have differing schools of thought, how do we decide who is right?
Both camps recently addressed AI, so I figured I would ask our future overlords for their help in deciphering these two mammoths of monetary musings.
We’re going to run down both of their statements and use the highly complex method of asking Google.
Now the boring ol’ Fed doesn’t really put much oomph into that press release. They just kind of list out a summary of economic data. So we’ll start just by confirming the accuracy.
Boring…
Okay, data is data.
Is raising rates the right move?
Give me the answer, you stupid robot!
“It depends.”
Psssh, typical AI. Can’t say definitively one way or the other.
Alright, let’s try with Trump, although I have a feeling it will be more of the same.
Keep in mind, all I am doing is using his exact words from his interest rate social media post here.
First up: “If the US stopped Trading with every country that we have a Deficit with, would we make 1.5 Trillion Dollars a year?”
Oh. Well, that wasn’t wishy-washy at all. A hard no. A blatant he’s wrong. An emphatic, “that would cause economic collapse”.
Let’s try again:
“Is the word ‘Deficit’ nothing more than a fancy word for LOSS?”
Oh damn. Well, that lays it out pretty clearly. Just a big font, bottom line, “No.”
Trump is 0/2, I guess.
Maybe the president is on to something with his third point.
“Is the US ‘carrying’ almost every country in the World?”
Okay, score one for Donny. This has some merit. We’ve got a trade deficit, we got the big military, and we are the single largest donor of aid worldwide.
Now we’re talking.
What’s that?
Scroll down?
Dammit!
The U.S. does not “carry” the world in a financial vacuum?
The president is a resounding 0/3.
It’s almost like…
The leader of the free world posts blatantly incorrect information that can be disproven in 30 seconds by your average middle schooler who knows how to type a question into Google.
Nah.
Couldn’t be.
AI is probably just a hoax.
I am proud to announce that, effective immediately, I am banning Fake News AI because of their constant “reporting” of FICTION and LIES!
This interest rate war is just too close to call.
Final Thought
Shout out to Kevin Warsh for keeping the Fed independent.
