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The Trump Economy


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  • 2 weeks later...

Trump is such a economic wizard  - what he's only bankrupted 6 companies.  Glad he has given the country his expertise. 

 

https://www.cnbc.com/2019/09/11/trump-says-fed-boneheads-should-cut-interest-rates-to-zero-or-less-us-should-refinance-debt.html

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President Donald Trump on Wednesday continued his verbal assault on the Federal Reserve, which he blames for slowing the economy, tweeting that the central bank should cut interest rates to zero or even set negative interest rates. The president also called Fed officials “boneheads” in the tweet.

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” he said.

 

 

 

 

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The idea for “refinancing” federal debt is without any modern precedent.

“It’s not viable and could be a significant problem for investors, financial markets and ultimately the economy,” said Mark Zandi, chief economist at Moody’s Analytics. “The debt is not prepayable. There’s a contractual relationship the Treasury has with investors. This isn’t a mortgage, this is U.S. Treasury debt. I think it would be incredibly disruptive to financial markets, and interest rates would ultimately rise, not fall.”

On Trump’s push for zero or negative rates, Zandi said he doesn’t see much benefit.

“The question you have to ask yourself is, if we go down to zero and we actually experienced a recession, then what?” he said.

It’s unclear how the refinancing idea would work. The Treasury Department likely would have to be involved, and there have been calls recently to issue longer-term debt, such as a 50- or 100-year Treasury.

“From a theoretical standpoint, obviously it would be wonderful for the United States government over a period of years if it were to lengthen the maturities on debt that would have rates below 1%,” said banking analyst Dick Bove at Odeon Capital Group. “It would certainly be beneficial to the United States government. Whether it would be beneficial to the United States economy is an open question.”

Cutting rates to zero or below would cheapen debt costs but also make the U.S. a less desirable spot for capital flow as the ability to generate yield would become more difficult.

 

 

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Trump, the Idiot, blasts his appointed Fed chef  because Powell didn't cut rates to 0% or below. 

 

https://www.politico.com/story/2019/09/18/federal-reserve-cuts-interest-rates-1501881

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A divided Federal Reserve lowered interest rates a quarter point on Wednesday but didn’t clearly signal that another cut was in store, immediately drawing a sharp denunciation from President Donald Trump.

Fed officials did not forecast another rate reduction this year, though they didn't rule out that option completely. That prompted Trump — who has called on the central bank to slash rates to zero or below — to blast the Fed and its chairman, Jerome Powell.

"Jay Powell and the Federal Reserve Fail Again. No 'guts,' no sense, no vision! A terrible communicator!" Trump tweeted within minutes of the Fed's move.

In a press conference afterward, Powell studiously avoided giving any clear signal about whether and when another rate decrease would be coming, given uncertainty about the global outlook. “We’re going to be highly data-dependent,” he said.

 

 

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  • 2 weeks later...

Funny how we don't hear about that great tax cut and the booming economy anymore. 

Basically the tax cut made the rich richer & the debt larger while the economy has remain on its pre-tax cut trajectory. 

 

https://www.marketwatch.com/story/how-trumps-economy-went-from-rocket-ship-to-lead-balloon-2019-09-27

 

 

 
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After the tax cut in late 2017, the U.S. economy briefly grew faster than 3% before slipping back.

President Trump argues that he couldn’t possibly be guilty of anything because the economy is so great. Which makes me wonder: Whatever happened to his boast that the U.S. economy would be able to grow not only at 3% but at “4%, 5% or even 6%” per year?

The latest figures show the economy expanded 2.3% in the past year, exactly the same pace of the past 10 years since the Great Recession ended. With prospects for even slower growth ahead.

Like so many of Trump’s promises, his hopes and dreams have collided head-on with reality. It turns out that making the American economy great again wasn’t nearly as easy as some politicians think.

GOP flying high

It seems like a million years ago, but in December 2017, when Trump signed the Tax Cut and Jobs Act (TCJA), the Republicans were flying high. With the tax cut, they had accomplished a significant legislative victory on their top priority issue. They celebrated that the economy would be able to soar once more.

And it did soar — a little bit, for a little while. Real gross domestic product (GDP) growth hit 3.5% in the spring of 2018, and it seemed for a moment to some Republicans that Trump might have been correct about the incredible impact that the tax cuts could have.

But then reality hit. Growth throttled back to 2.9% and then to 1.1%. Since the tax cut went into effect, growth has averaged 2.5%, about the same as the 2.6% recorded in the six quarters before the tax cut was passed.

 

Almost every forecast from professional economists, the Federal Reserve, the Congressional Budget Office, the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) — but not the White House! — looks for growth of around 2% per year for the foreseeable future. With the growth in the potential labor force slowing from about 1% per year to about 0.2%, it’ll take some very good productivity numbers just to hit 2%.

Ripples in the water

The consensus is that the tax cut changed almost nothing. It was like throwing a boulder into a lake: A big splash, some waves, but very little change in the water level once things settled down. Jason Furman, Barack Obama’s chief economist, says he and his co-author Robert Barro think the long-term impact of the tax cut will be to raise GDP by 0.04% per year.

That’s very little bang for a $1 trillion tax cut. It gets us one-hundredth of the way to 6% growth.

Despite evidence that the tax cut hasn’t been the game-changer it promised, the White House is sticking to its forecast of 3% growth for the next 10 years.

But what do others say?

The American Enterprise Institute, a conservative think tank in Washington, is hosting an online bipartisan symposium (#TCJANowWhat) on the impact of the tax cut, with blog posts and papers from economists, tax and fiscal policy experts, and various other wonks culminating in a face-to-face event on Oct. 22.

So far, about all the conservatives in the debate can say is: Don’t give up on the TCJA yet!

 

 

 
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Incentive to invest

The tax cut was supposed to supercharge economic growth by giving businesses the incentive to invest in the equipment, R&D, software and physical structures that would boost their productivity. We are counting on faster productivity growth even more than usual now, because the other ingredient for a bigger GDP — labor-force growth — is in short supply.

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Businesses were supposed to re-invest their tax savings in their productive capacity, but we got only a temporary bump.

But the tax cut didn’t have much lasting impact on business investment. In the six quarters since the tax cut passed, nonresidential fixed investment has increased at a 4.4% annual rate compared with a 4.7% pace in the six quarters prior to the tax cut. In the past year, investment has slowed to a 2.6% pace, about half the average growth rate since the recession ended 10 years ago.

Corporations returned most of their windfall to their shareholders, rather than putting it back into the business. And other data from the Census Bureau show that the tax cut had one other predictable consequence: The rich got richer.

All of this goes to show that making the economy great isn’t easy. Even a $1 trillion tax cut and massive deficit spending could only provide a temporary boost to the growth rate. The ability of any president to make large improvements in our living standards is exaggerated.

The ability of a president to make things worse, however, is really the more relevant story today.

 

 

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2 hours ago, TGHusker said:

Funny how we don't hear about that great tax cut and the booming economy anymore. 

Basically the tax cut made the rich richer & the debt larger while the economy has remain on its pre-tax cut trajectory. 

 

https://www.marketwatch.com/story/how-trumps-economy-went-from-rocket-ship-to-lead-balloon-2019-09-27

 

 

 

 

 

 

 

 

It it should be evident to everyone paying attention that the great Trump economy is a farce. 

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Just now, BigRedBuster said:

 

 

It it should be evident to everyone paying attention that the great Trump economy is a farce. 

Unless you are a cult member.  We could be in the great depression and they will believe the buffoon cult leader. 

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