Inflation at 1%? Does your butler do your grocery shopping? You must work from home and call a Uber when you need transportation because you clearly aren’t paying auto insurance. And your health must be so good you don’t need medical care.
Real inflation, the kind that normal wage slaves and retirees feel every day, is 8-10%. And that might be low. Interest rates need to go up, not down.
Normally I love your work. But not today. You live in a dream world.
Trump’s playbook: Trump’s a real-estate guy; he loves low rates because he, like many wealthy borrowers, is deeply leveraged. When rates fall—even into negative territory—it makes rolling over that debt a goldmine.
But that cheap money bonanza comes at the expense of ordinary Americans: inflation torches their savings, housing prices soar, and wages lag behind. Trump openly pressured Powell in his first term, demanding negative rates—and that playbook hasn’t changed.
The Powell pivot: During Trump’s first term, Powell caved hard—slashing rates to zero and blowing up the Fed’s balance sheet to nearly $9 trillion. Inflation and asset bubbles followed.
Under Biden, Powell finally seemed to come to his senses: with inflation running rampant, he aggressively raised rates, finally acting like a responsible central banker.
But now that Trump is back in office for his second term, he’s once again badgering Powell daily—calling for rate cuts and “easy money” to juice the economy regardless of the inflationary consequences. It’s déjà vu, and it’s clear this cycle is all about appearances: make the economy run white-hot while Trump’s in charge, while the poor, middle class, and savers get left holding the bag again.
Bottom line: Every president loves pulling the cheap money lever—it makes the economy look good in the short-term, but it’s like maxing out your credit card so you can party today and worry about the bill tomorrow. And guess who pays that bill?
Not Trump.
Not the billionaire class.
It’s the average worker, the saver, and the people trying to afford a home or retirement who get crushed every time.
Footnote / Additional thought:
When people say they “don’t like the Fed,” I don’t think they mean they oppose its existence outright. What they dislike is how bloated and activist the Fed has become. If the Fed stayed small and independent—just a true lender of last resort in rare emergencies—it might be respected. But instead, it’s become a hyperactive institution that caves to every political whim and inflates its balance sheet at the first sign of trouble.
Interest rates should really be set by the market—not dictated from a committee room in Washington. A free market would mean natural ups and downs, yes, but at least those would be real signals, not distortions.
As it stands today, the Fed isn’t independent. It acts at the beck and call of Wall Street and whichever president is yelling loudest, with savers and workers bearing the brunt of its overreach.
so that $7 Trillion the FED Printed for Banks...WHO GOT THAT MONEY!
I didn't. But my banker neighbors have never been more over paid. Virtually NONE of them could run the most basic business. Money spinning they can do...given their almost NOTHING COST OF CAPITAL....directly from the FED!!!!
"The issue is Powell keeping interest rates at some of the highest in 30 years despite inflation running a measly 1% since Trump took office.
High rates strangles jobs, growth, consumer debt, and keeps housing on the edge of catastrophe."
Why is it whenever Democratic Administrations toted out unbelievable numbers, you called them out on it, but suddenly 1% inflation is believable from this GOP Administration?
Once upon a time, banks were REQUIRED by law to pay savers 5.25% on passbook savings. The world didn't end, even though interest rates were higher than recent history. That is because individuals and companies didn't go deeply into debt and saved instead. Why is it interest rates are lowered to benefit debtors and never savers? Senior citizens used to be able to count on CDs, but the insane Fed drove interest rates so far down, they might as well stick it under their mattress. As for real estate, it is time that bubble popped too.
Why are you not advocating for interest rates to be set by the market?
The only purpose of a central bank should be to provide liquidity when it is required. Otherwise, the markets will always remain distorted as long as the Fed is jacking around rates and pretending to matter. The Fed should be abolished and then banks might have to become a bit more respectable institutions. Maybe.
This ignores what was going on economically at the time. For instance, interest rates weren't that high throughout Reagan's 8 years, so it is wrong to believe the high interest rates to wipe out inflation were somehow aimed at Reagan.
Since 2000(really 1987)...the FED is JUST A TOOL to enrich wall street and the richest!
TIME TO TAX Wall Street! They have a lower cost of capital and no longer have ANY RISK...they will be RESCUED...everyone knowns it. Even Lehman...all the employees just shifted to other firms to SCREW main street! Wall Street can buy everyone house or business...with their lower costs.
Banks are given privileges and NOW just use the PRIVELDGE TO SELF ENRICH!
We need a 3% tax on the GROSS of ALL trades or moving money offshore! Make it about investing! Dozen of the richest people....just trade stocks in pico-second trades...which SERVES NO PURPOSE but to front running EVERY ONE! I want that kind of TRADING GONE!
"Donald Trump has been burning up the mean tweets over Jerome Powell's strangling interest rates. He's variously called Powell very dumb, very stupid, low IQ, numbskull, major loser, and Mr Too Late."
How sad we have a President who never seemed to have left first-grade name calling behind. It is an embarrassment to have someone in the White House with no idea what class, tact, and diplomacy are.
> Central bank independence is fundamentally undemocratic -- it hands our life’s work to a cartel of bankers who, in practice, deliver inflation, recession, and bailouts.
And a political controlled fed would deliver those things in much greater amounts in an attempt to get more money to bribe voters with. Seriously, I have a hard time believing you don't know this.
Prof. St. Onge, as you have illustrated, the Fed is not independent, as in the US economy. They are in partners, and, controlled, by the Central Bank Cabal and the Deep State. The Fed is not even independent politically. It is left wing, demonrat. To expect that Powell and his hoods might operate with some competence and neutrality is beyond reality. Without question, the Fed is responsible for the ups and downs (booms and recessions) of our financial system. The Fed is the main cause for the devaluation of the dollar, to the point where the dollar is almost valueless. If Trump had any real brass, he would call for the elimination of the Fed. Problems solved.
The Fed is evil. Where did it get its money in the first place? You can’t loan something you don’t have, right? Oh wait…they can. I searched Google recently and asked what the reserve requirement is for banks these days. ZERO %!!!! Even if that’s off a little, that’s scary.
So why doesn’t President Trump just fire Powell immediately if Powell is causing so much consternation? That stunt elitist Powell pulled wanting to remodel the Fed building for a cool billion is enough to warrant his dismissal!
Inflation at 1%? Does your butler do your grocery shopping? You must work from home and call a Uber when you need transportation because you clearly aren’t paying auto insurance. And your health must be so good you don’t need medical care.
Real inflation, the kind that normal wage slaves and retirees feel every day, is 8-10%. And that might be low. Interest rates need to go up, not down.
Normally I love your work. But not today. You live in a dream world.
I appreciate all you’ve said, but what is your basis for saying inflation is running at 1%? Just curious.
Here’s my take:
Trump’s playbook: Trump’s a real-estate guy; he loves low rates because he, like many wealthy borrowers, is deeply leveraged. When rates fall—even into negative territory—it makes rolling over that debt a goldmine.
But that cheap money bonanza comes at the expense of ordinary Americans: inflation torches their savings, housing prices soar, and wages lag behind. Trump openly pressured Powell in his first term, demanding negative rates—and that playbook hasn’t changed.
The Powell pivot: During Trump’s first term, Powell caved hard—slashing rates to zero and blowing up the Fed’s balance sheet to nearly $9 trillion. Inflation and asset bubbles followed.
Under Biden, Powell finally seemed to come to his senses: with inflation running rampant, he aggressively raised rates, finally acting like a responsible central banker.
But now that Trump is back in office for his second term, he’s once again badgering Powell daily—calling for rate cuts and “easy money” to juice the economy regardless of the inflationary consequences. It’s déjà vu, and it’s clear this cycle is all about appearances: make the economy run white-hot while Trump’s in charge, while the poor, middle class, and savers get left holding the bag again.
Bottom line: Every president loves pulling the cheap money lever—it makes the economy look good in the short-term, but it’s like maxing out your credit card so you can party today and worry about the bill tomorrow. And guess who pays that bill?
Not Trump.
Not the billionaire class.
It’s the average worker, the saver, and the people trying to afford a home or retirement who get crushed every time.
Footnote / Additional thought:
When people say they “don’t like the Fed,” I don’t think they mean they oppose its existence outright. What they dislike is how bloated and activist the Fed has become. If the Fed stayed small and independent—just a true lender of last resort in rare emergencies—it might be respected. But instead, it’s become a hyperactive institution that caves to every political whim and inflates its balance sheet at the first sign of trouble.
Interest rates should really be set by the market—not dictated from a committee room in Washington. A free market would mean natural ups and downs, yes, but at least those would be real signals, not distortions.
As it stands today, the Fed isn’t independent. It acts at the beck and call of Wall Street and whichever president is yelling loudest, with savers and workers bearing the brunt of its overreach.
so that $7 Trillion the FED Printed for Banks...WHO GOT THAT MONEY!
I didn't. But my banker neighbors have never been more over paid. Virtually NONE of them could run the most basic business. Money spinning they can do...given their almost NOTHING COST OF CAPITAL....directly from the FED!!!!
"The issue is Powell keeping interest rates at some of the highest in 30 years despite inflation running a measly 1% since Trump took office.
High rates strangles jobs, growth, consumer debt, and keeps housing on the edge of catastrophe."
Why is it whenever Democratic Administrations toted out unbelievable numbers, you called them out on it, but suddenly 1% inflation is believable from this GOP Administration?
Once upon a time, banks were REQUIRED by law to pay savers 5.25% on passbook savings. The world didn't end, even though interest rates were higher than recent history. That is because individuals and companies didn't go deeply into debt and saved instead. Why is it interest rates are lowered to benefit debtors and never savers? Senior citizens used to be able to count on CDs, but the insane Fed drove interest rates so far down, they might as well stick it under their mattress. As for real estate, it is time that bubble popped too.
Why are you not advocating for interest rates to be set by the market?
The only purpose of a central bank should be to provide liquidity when it is required. Otherwise, the markets will always remain distorted as long as the Fed is jacking around rates and pretending to matter. The Fed should be abolished and then banks might have to become a bit more respectable institutions. Maybe.
100%
“So all-you-can-eat for Democrat Presidents, 4 years of Nurse Ratchet for Republicans.”
Brilliant.
This ignores what was going on economically at the time. For instance, interest rates weren't that high throughout Reagan's 8 years, so it is wrong to believe the high interest rates to wipe out inflation were somehow aimed at Reagan.
Since 2000(really 1987)...the FED is JUST A TOOL to enrich wall street and the richest!
TIME TO TAX Wall Street! They have a lower cost of capital and no longer have ANY RISK...they will be RESCUED...everyone knowns it. Even Lehman...all the employees just shifted to other firms to SCREW main street! Wall Street can buy everyone house or business...with their lower costs.
Banks are given privileges and NOW just use the PRIVELDGE TO SELF ENRICH!
We need a 3% tax on the GROSS of ALL trades or moving money offshore! Make it about investing! Dozen of the richest people....just trade stocks in pico-second trades...which SERVES NO PURPOSE but to front running EVERY ONE! I want that kind of TRADING GONE!
"Donald Trump has been burning up the mean tweets over Jerome Powell's strangling interest rates. He's variously called Powell very dumb, very stupid, low IQ, numbskull, major loser, and Mr Too Late."
How sad we have a President who never seemed to have left first-grade name calling behind. It is an embarrassment to have someone in the White House with no idea what class, tact, and diplomacy are.
> Central bank independence is fundamentally undemocratic -- it hands our life’s work to a cartel of bankers who, in practice, deliver inflation, recession, and bailouts.
And a political controlled fed would deliver those things in much greater amounts in an attempt to get more money to bribe voters with. Seriously, I have a hard time believing you don't know this.
Prof. St. Onge, as you have illustrated, the Fed is not independent, as in the US economy. They are in partners, and, controlled, by the Central Bank Cabal and the Deep State. The Fed is not even independent politically. It is left wing, demonrat. To expect that Powell and his hoods might operate with some competence and neutrality is beyond reality. Without question, the Fed is responsible for the ups and downs (booms and recessions) of our financial system. The Fed is the main cause for the devaluation of the dollar, to the point where the dollar is almost valueless. If Trump had any real brass, he would call for the elimination of the Fed. Problems solved.
The Fed is evil. Where did it get its money in the first place? You can’t loan something you don’t have, right? Oh wait…they can. I searched Google recently and asked what the reserve requirement is for banks these days. ZERO %!!!! Even if that’s off a little, that’s scary.
So why doesn’t President Trump just fire Powell immediately if Powell is causing so much consternation? That stunt elitist Powell pulled wanting to remodel the Fed building for a cool billion is enough to warrant his dismissal!