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Trump: Low interest rates are creating a false market

12 points by jondubois 10y ago

totalZero 10y ago
The market will probably sell off if there's a rate hike, even if it's as small a shift as 25 or 50 basis points. A small hike won't qualitatively affect institutions' ability to access money, but it would lead to a cosmetic downtick in the stock market. In that sense, you can argue that there has been a false rally in the stock market. Maybe Trump is trying to seem market savvy, or maybe he actually wants to see a rate-hike-initiated selloff that reflects poorly on Obama, and by association Clinton.
- hga 10y ago
  You don't think a real estate developer, who's the son of one, isn't exquisitely aware of the importance of interest rates? He did, after all, start during the period when they were a more sane ~5%, and experienced the run up to the peak of 21.5% on December 19th, 1980 (http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm http://www.fedprimerate.com/wall_street_journal_prime_rate_h...) and the lengthy decay---my goodness, it wasn't until 2001 that they got back to ~5%, and that was of course due to post dot.com crash Fed intervention. I can attest from my family's businesses in the very early '80s that it was very hard to do more than keep them afloat while hoping they went down to something more sane. Now that we're in a regime of financial repression (https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression) they're earning a pittance out of their retirement savings, they're as I recall getting more from Social Security (!), and due to their work history in a very low cost of living that's not all that much, significantly less than I'm getting having worked in the high cost Boston and D.C. areas.
  - totalZero 10y ago
    I'm assuming that Trump knows the consequences of what he is suggesting. I don't see a place where I insinuated that he isn't aware. I did say he might want to seem market savvy. It makes him come across as knowledgeable and professional, which are two traits that his critics generally claim he lacks. Still, even a knowledgeable person may have ulterior motives for wishing to see a market sell-off. Especially one who is running for president against an incumbent party.

12 points by jondubois 10y ago

The market will probably sell off if there's a rate hike, even if it's as small a shift as 25 or 50 basis points. A small hike won't qualitatively affect institutions' ability to access money, but it would lead to a cosmetic downtick in the stock market. In that sense, you can argue that there has been a false rally in the stock market. Maybe Trump is trying to seem market savvy, or maybe he actually wants to see a rate-hike-initiated selloff that reflects poorly on Obama, and by association Clinton.

hga 10y ago
You don't think a real estate developer, who's the son of one, isn't exquisitely aware of the importance of interest rates? He did, after all, start during the period when they were a more sane ~5%, and experienced the run up to the peak of 21.5% on December 19th, 1980 (http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm http://www.fedprimerate.com/wall_street_journal_prime_rate_h...) and the lengthy decay---my goodness, it wasn't until 2001 that they got back to ~5%, and that was of course due to post dot.com crash Fed intervention. I can attest from my family's businesses in the very early '80s that it was very hard to do more than keep them afloat while hoping they went down to something more sane. Now that we're in a regime of financial repression (https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression) they're earning a pittance out of their retirement savings, they're as I recall getting more from Social Security (!), and due to their work history in a very low cost of living that's not all that much, significantly less than I'm getting having worked in the high cost Boston and D.C. areas.
- totalZero 10y ago
  I'm assuming that Trump knows the consequences of what he is suggesting. I don't see a place where I insinuated that he isn't aware. I did say he might want to seem market savvy. It makes him come across as knowledgeable and professional, which are two traits that his critics generally claim he lacks. Still, even a knowledgeable person may have ulterior motives for wishing to see a market sell-off. Especially one who is running for president against an incumbent party.