Would the Federal Reserve raise rates if Trump gets elected, for spite?

[Madison320]

I feel pretty confident that if Clinton gets elected the Fed will not raise rates but instead launch QE4. But I'm wondering if there's a chance they might raise rates if Trump gets elected, so they can blame the crash on him. I don't think they will, at least not significantly, since that will lead to massive bank failures, depression and dollar default. The Fed hates Trump but not THAT much. Maybe if Trump gets elected they'll just do another 1/2 point or so first before they chicken out and launch QE4.

[juleswin]

I feel pretty confident that if Clinton gets elected the Fed will not raise rates but instead launch QE4. But I'm wondering if there's a chance they might raise rates if Trump gets elected, so they can blame the crash on him. I don't think they will, at least not significantly, since that will lead to massive bank failures, depression and dollar default. The Fed hates Trump but not THAT much. Maybe if Trump gets elected they'll just do another 1/2 point or so first before they chicken out and launch QE4.

I thought raising interest rate from the artificially low rate was good for the economy? But we are to believe that the fed would do what is good to spite Trump. Listen guys, I know Trump being the liberal he is supports easy money and would absolutely hate it if the right thing is done for the economy under his watch. Luckily for you guys and Trump, if said "disastrous" scenario occurs, he can remove Janet Yell when her term ends in a little over a year after he is sworn into office.

[Madison320]

I thought raising interest rate from the artificially low rate was good for the economy? But we are to believe that the fed would do what is good to spite Trump. Listen guys, I know Trump being the liberal he is supports easy money and would absolutely hate it if the right thing is done for the economy under his watch. Luckily for you guys and Trump, if said "disastrous" scenario occurs, he can remove Janet Yell when her term ends in a little over a year after he is sworn into office.

Higher rates are good for the economy, in the long run. But first there has to be a purge. Depression, Bank failures and a dollar default of some sort. It's inevitable if you raise rates (because of all the debt and bubbles). After that we can build a real economy. The good news is that after a dollar default it will be hard to borrow and print so the government will be forced to cut spending.

I actually don't want the Fed to do the right thing and raise rates. Because then we won't learn the proper lesson. The short term crash will be blamed on doing the right thing. I think it'd be better if the Fed keeps printing until we get a dollar crash. That way it's more likely that we go back to real money.

[Zippyjuan]

How high should interest rates be? If raising rates is good- by how much should they be raised? A quarter percent? A whole percent? Ten percent? Twenty percent?

The Fed doesn't tend to change policy when the Presidency changes.

[Madison320]

How high should interest rates be? If raising rates is good- by how much should they be raised? A quarter percent? A whole percent? Ten percent? Twenty percent?

The Fed doesn't tend to change policy when the Presidency changes.

I don't know. The free market should set rates. All I know is that the free market would set rates much higher than 0%.

[erowe1]

I thought raising interest rate from the artificially low rate was good for the economy?

Good in the long run. But I think the thinking of the OP is that it would hasten a much-needed recession, rather than keep trying to put it off and make it worse. All Joe Public will know is that there was a Bush recession, an Obama recovery, and then a Trump recession.

[Madison320]

Good in the long run. But I think the thinking of the OP is that it would hasten a much-needed recession, rather than keep trying to put it off and make it worse. All Joe Public will know is that there was a Bush recession, an Obama recovery, and then a Trump recession.

Exactly. And then I'm afraid our next president would be a Bernie Sanders type. If Clinton wins and we finally get a dollar collapse, we have a better chance of getting a free market president. Plus the fact that borrowing and printing would be almost impossible.

[TheTexan]

The Federal Reserve is an independent entity working in the best interests of this nation and will take or not take actions of raising or lowering rates only in accordance to its Mission Principles because the Fed is indeed very principled.

I think I got that right. Zippy feel free to correct

[Danke]

The Federal Reserve is an independent entity working in the best interests of this nation and will take or not take actions of raising or lowering rates only in accordance to its Mission Principles because the Fed is indeed very principled.

I think I got that right. Zippy feel free to correct

Were you an economics major?

[Madison320]

The "Zippy" argument has changed from "The Economy is Improving and Rate Hikes are Coming Soon" to "The Economy is Improving but the Current Rate is About Right".

[Seraphim]

At the very least the Fed will avoid raising rates until after the election.

[TheTexan]

Were you an economics major?

No but I did take a class on it did well I think B+ IIRC

[TheTexan]

The "Zippy" argument has changed from "The Economy is Improving and Rate Hikes are Coming Soon" to "The Economy is Improving but the Current Rate is About Right".

Well the rate is of course where it's supposed to be. If it was supposed to be higher, or lower, the Fed would make it so

[spudea]

I feel pretty confident that if Clinton gets elected the Fed will not raise rates but instead launch QE4. But I'm wondering if there's a chance they might raise rates if Trump gets elected, so they can blame the crash on him. I don't think they will, at least not significantly, since that will lead to massive bank failures, depression and dollar default. The Fed hates Trump but not THAT much. Maybe if Trump gets elected they'll just do another 1/2 point or so first before they chicken out and launch QE4.

When Obama took office, everything was blamed on Bush. Same thing will happen here.

[Zippyjuan]

The "Zippy" argument has changed from "The Economy is Improving and Rate Hikes are Coming Soon" to "The Economy is Improving but the Current Rate is About Right".

I didn't say what I thought interest rates should do. I asked what you though since you said raising them would be better for the economy. I doubt they will but think they probably could raise rates another quarter percent this week and then wait a few months for another increase. Inflation is low so low interest rates are justified. The Fed only sets short term (overnight) rates that banks borrow from them at. Treasury note rates are set by auction and many rates take their cue from those- car loans follow the three year rate mostly and mortgages the ten or fifteen year rates (they don't set them to those but when long term Treasury rates move up or down mortgaged tend to follow).

The economy is growing so it can absorb small rate increases with little impact but it is not over-heating which would require higher rates to try to slow it down.

[oyarde]

No but I did take a class on it did well I think B+ IIRC

I got a C without even going to class or participating . Since I did that while I was fishing and drinking beer , I thought I should have gotten an A .

[anaconda]

The Federal Reserve is an independent entity working in the best interests of this nation and will take or not take actions of raising or lowering rates only in accordance to its Mission Principles because the Fed is indeed very principled.

Agreed. And this is why we must never impair the independence of the Federal Reserve with an audit. Even speaking of an audit could unsettle the markets or result in your loved ones becoming unemployed. These are serious issues.

[Danke]

I got a C without even going to class or participating . Since I did that while I was fishing and drinking beer , I thought I should have gotten an A .

The school probably didn't want to get sued in a discrimination lawsuit.

[oyarde]

The school probably didn't want to get sued in a discrimination lawsuit.

It was just that I was there so seldom nobody looked for me .

[Occam's Banana]

The economy is growing so it can absorb small rate increases with little impact but it is not over-heating which would require higher rates to try to slow it down.

[P3ter_Griffin]

Would the fed be able to prevent a crash if Trump's economic policies were placed into effect? Between foreign tariffs, deportation of the workforce, and increase in the minimum wage, I'd expect the price of everything to go through the roof. I'd love to hear someone's thoughts on the matter who has a better grasp on Trump's economic proposals and on economics itself.

[oyarde]

Would the fed be able to prevent a crash if Trump's economic policies were placed into effect? Between foreign tariffs, deportation of the workforce, and increase in the minimum wage, I'd expect the price of everything to go through the roof. I'd love to hear someone's thoughts on the matter who has a better grasp on Trump's economic proposals and on economics itself.

I guess that would increase prices and the Fed would get the inflation they have been after .......

[P3ter_Griffin]

I guess that would increase prices and the Fed would get the inflation they have been after .......

yeah, I imagine we'd have a lot more dollars floating around the country and a lot less resources. no need for holding USD in foreign reserves when foreign trade is done in SDRs!

I had (what I think is) a great idea for a Trump voter comic strip: titled The Progression of a Trumpster

You start out with two individuals (the main characters) being younger in the first box. Individual A says to individual B, 'we should come together and form a union'! B says 'but our employer pays us good, and if you work hard you can get merit raises and move up in the company'. A says 'I don't like working hard, and I've been here the longest so I should make the most money!' Second box: A says 'vote against the compensation negotiation!'. B says 'but they are offering us good compensation'. A says 'you can never have enough, always vote against the proposal!'. Box 3: A says 'Think of the children! Think of the environment! Vote for more government!' B says 'charity can help those in need. More regulations and taxes are going to make it harder to do business which only means more people will be in need of charity.' A says 'Fascist!' Box 4: (both A and B now work for a fast food establishment, their apparel reflecting such, and there is a black individual, a muslim, and a mexican, all standing in line) A says, directed at the people in line 'You guys are ruining our country! You're taking our jobs, you're raping our women, and you aren't compatible with freedom! I used to make really good money until you guys $#@!ed up the country! Now I'm flipping burgers!' B just looks on in horror. Box 5: (A is now wearing a trumpster shirt and B a libertarian shirt) A says, 'you know what we need to do? we need to stop trading with all these countries that took our jobs! they are our jobs, those countries didn't deserve to take them!' B says, 'you voted to take away the business owners rights to negotiate wages, you voted to keep increasing the wages even when we were being paid fairly, you voted to make it more expensive to do business in this country, it is your....' A interrupts 'and we need to increase minimum wage!' B says, 'That's a $#@!in nough!' Box 6: B is shown holstering his gun walking away from A who is laying on the ground.

Cash that in and buy yourself some liquor!

[Seraphim]

Japan is the blueprint. Rates are going NEGATIVE (particularly short term rates and 10 year UST's). The overnight lending rate the Fed controls is not going up by any significant measure. The Fed will not raise rates in any significant way to spite a Trump presidency.

If the banking cartel views Trump at as a legitimate threat/concern to their operations he will get the JFK treatment.