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Trump Is Fantasizing That He Controls Interest Rates

By January 23, 2025Commentary

Our new President, and I am happy he is that, said yesterday that interest rates must be lowered.  Part of the basis for his saying that was that energy prices have declined.  I am not sure energy prices really have much of anything to do with interest rates.  The Federal Reserve tried to lower interest rates last fall, with a pretty significant cut.  They went up instead.  Trump doesn’t control interest rates any more than the Federal Reserve does.  Rates are up because our deficits are enormous and our debt is scary large.  Buyers aren’t buying US debt unless they are compensated for what they perceive as increased risk.  Energy prices haven’t really fallen and even if they did, that doesn’t mean inflation will be or remain low.  If Trump really wants lower interest rates, and lower inflation, he needs to focus on one thing and one thing only–reduce the deficit, ideally get it to zero within a couple of years.  Then the Fed and Treasury can stop printing so much money and inflation may decline quite a bit.  If nothing happens with the deficit, there will be no reduction in interest rates and inflation will continue to be an issue.

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  • Krista says:

    Just remember…everything at that level is tactical. I used to work for DHS. When the cuts came down for tje govs office we’d pick the most painful cuts we could make because we knew they wouldn’t pass. The advocates got to work and it all reinstated behind closed doors. Nothing is done without thinking thru the end game. He’s probably just making the base happy knowing it wont fly.

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