Fed's Kaplan Warns Trump "US Too Levered To Use Debt For Growth"

Tyler Durden's picture

Federal Reserve Bank of Dallas President Robert Kaplan had lots to say this morning that, for now, the market has chosen to ignore. He warned "we are highly leveraged" implicitly warning President Trump that the country’s ability to boost growth through debt is limited.  

Speaking in Fort Worth, Texas, Kaplan said today that general measures of unemployment in the U.S. indicate that there is still slack in the labor market, although it's abating, Reuters reports.

He added:

  • *FED'S KAPLAN SEES U.S. GDP GROWTH IN EXCESS OF 2% IN 2017
  • *FED'S KAPLAN: UNEMPLOYMENT RATE CAN GO LOWER THAN 4.5%
  • *FED'S KAPLAN: LABOR MARKET GENERALLY IS GETTING TIGHTER
  • *KAPLAN: ECONOMY NOT RUNNING AWAY, FED CAN AFFORD TO BE GRADUAL
  • *KAPLAN: U.S. CONSUMER PROVIDING GOOD UNDERPINNING FOR ECONOMY

Kaplan also noted that the Fed balance sheet may be cut by year-end...

“I’m not going to get into the pause, no pause. I think it’s more appropriate to talk about the path of rates”

 

“The objective and the initiative to let the balance sheet run off does not alter my views as to what the path of rates should be” for 2017 or 2018

  • *KAPLAN: FED CAN BEGIN SHRINKING BALANCE SHEET LATER THIS YEAR
  • *FED'S KAPLAN: B/SHEET RUN-OFF TO HAVE SOME TIGHTENING IMPACT
  • *KAPLAN SAYS IMPORTANT FED'S BALANCE-SHEET SHRINK IS PREDICTABLE
  • *KAPLAN: FED CAN SHRINK B/SHEET IN A MANAGEABLE WAY
  • *FED'S KAPLAN: GOAL TO SHRINK B/SHEET WITHOUT MAJOR MKT EFECT

Well it's good to have goals, right? Good luck with this... 

Then he began his fiscal policy admonition...

  • *KAPLAN: U.S. DEBT TO BECOME BIGGER ISSUE AS RATES NORMALIZE
  • *KAPLAN: U.S. IS HIGHLY LEVERAGED, CAN'T USE DEBT TO BOOST GDP

It appears Mr. Kaplan was fine with President Obama's doubling of the national debt as The Fed held rates at zero during his term?

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Duc888's picture

 

 

I guess this would be Uncle Shams turd making the last two or three revolutions before going down the bowl.

bob_bichen's picture
bob_bichen (not verified) Duc888 Apr 12, 2017 11:25 AM

Please don't candy-coat reality for us. 

jcaz's picture

A Fed President with a grasp of real-life economics?

Say it ain't so, Joe........

Joe Sichs Pach's picture

Wait a second - all of a sudden the US is "too levered"?  

When did that happen?

Blankenstein's picture

This sounds like a CYA or some other ruse.  He worked at Goldman Sachs for 23 years.

 

"and vice-chairmen Robert Kaplan and Suzanne Nora Johnson scored $17.5 million apiece."    (2004)

 

http://nymag.com/nymetro/news/bizfinance/biz/features/15197/index1.html

Troy Ounce's picture

 

What Kaplan is saying that Trump was handed a life handgranate, pin removed, while standing in a closed shower with temperatures rising to boiling within 10 minutes.

What to do?

 

Blankenstein's picture

Kaplan worked for GOLDMAN SACHS for 23 years.  They helped create that hand grenade.

The Merovingian's picture

Rates will NEVER normalize. Kaplan is an idiot in search of a nail gun accident.

FlKeysFisherman's picture

Remember they're NOT political because they said so.

I bet that piece of shit Krugman has changed his mind on debt too. For years that asshole wrote article after article on how "debt doesn't matter" and the only logical course of action is more debt. I guarentee you he'll have an article up in the next 24 hours screaming for a balanced budget.

 

Turin Turambar's picture

It happened the day Obama was no longer the Drone Assassinator in Chief.

Creative_Destruct's picture

Exactly... "It appears Mr. Kaplan was fine with President Obama's doubling of the national debt as The Fed held rates at zero during his term?"

And Obama and Krugman, and all of the other neo-keynsian madmen claimed the debt is no biggie, that we should incur MUCH more and stimulate, stimulate, stimulate, ( effectively doing the same stupid shit we've been doing the last 30 years living beyond our means), and all of the Fed puppets and MSM puppets danced at the end of their strings.

"we are highly leveraged" implicitly warning President Trump that the country’s ability to boost growth through debt is limited

Now that Trump is there, suddenly any debt that HE proposes is  gonna be a big no,no.

auricle's picture

Translation, we need a crisis before we can get away with debasing our currency further. 

SomethingSomethingDarkSide's picture

"Just shut the fuck up already, Kaplan" - every other communist Fed Governer

NoDebt's picture

Kaplan was quick to add: "Let me be clear.  This doesn't mean we won't TRY to use more debt to generate growth.  Not at all.  We will always try to prop up this ponzi scheme with money we are borrowing from you, your children and your grandchildren.  Because, after all, it's all about the kids."

I should be a Fed governor.  I could absolutely deliver that line with a straight, serious face and make most idiots believe it.

 

Falconsixone's picture

Haha... yeah, dont forget to pay us this much and we'll talk moar.... Ha!

Use the Marines to run that press. I bet they can make it work and the jews will run away and cry. Winning.

JRobby's picture

I don't see any "grasp" of reality if he believes unemployment is at 5% and can go lower. Delusional along with 2% GDP for 2017. Auto & Retail collapsing (for starters)

As far as the debt is concerned, $10T piled on by Oblivio did very little to stimulate growth and especially, job growth. Of course when you undertand that that, QE, ZIRP / NIRP, ect. were done purposely to crush the US economy, it makes your decision making process easier because it was done to "safegard" against a populist POTUS coming in and turning things around quickly. Of course we still have to deal with the problem of a "wholly owned legislature"

GUS100CORRINA's picture

Title: Fed's Kaplan Warns Trump "US Too Levered To Use Debt For Growth"

My response: The above is probably TRUE, but the USA has no other choice.

We all need to wake up to that reality and soon. The DEBT train is too far down the TRACK on a STEEP decline to reverse now!

OBOZO added 10 Trillion during his 8 years of ungodliness alone while corporate greed has doubled debt on corporate balanace sheets.

WE NEED TO WAKE UP TO REALITY WHICH IS NOT A PRETTY SIGHT!

DavidC's picture

The USA DOES have another choice.

STOP spending so much on defence (the US spends over HALF of the GLOBAL spending on defence, something like 53% if I recall correctly), and STOP spending DEBT on wars in various parts of the World.

It's not difficult.

DavidC

Giant Meteor's picture

Oh, it's too late for that I'm afraid ...

US is going full tilt ...

Sorta reminds me of that inverted passenger plane scene, what the hell was it ?

bob_bichen's picture
bob_bichen (not verified) Giant Meteor Apr 12, 2017 12:00 PM

I was always partial to the Aloha AIrlines plane that had the roof ripped off.  [One passenger sucked out as she wasn't wearing her seat belt.]

https://www.youtube.com/watch?v=YQFk4QGIp4c

Giant Meteor's picture

Yep, I remember it well, (I wasn't on the plane.) Talk about your thrills and chills ..

GUS100CORRINA's picture

What you suggest would be the right choice, but unfortunately the political will is not present as evidenced by the HEALTHCARE bill set back. To really fix this situation is going to require sacrifice verses self serving mentallity

Sadly, the CONGRESS and the SENATE are not up for the challenge.

America is going full tilt into the abyss and there is no stopping it. TRUMP gave it his best effort, but the SWAMP is too DEEP and WIDE for even President TRUMP.

This is going to need GOD's almightly intervention.

Today, Americans for the most part are only interested in one thing: SEX, DRUGS and ROCK'n ROLL on a quest to amuse themselves to death!

America needs a REFORMATION!!!!

Hal n back's picture

the us could also cut welfare-first start with immigrant, legal or not, welfare. Back 80-100 years ago immigrants were pretty much on their own. Thats why we could afford it then and why we cannot afford it now.

Then attack outright fraud.

Then ask people if they want to pay higher tax and insurance premiums to support  the 35 million or so that do not have insurance, AND tell them how much the real amount will be, eg not a savings but a real out of pocket cost. Its like supporting another family. 

Ya do not do things because its a  nice thing to do. and congress can use OPM.

A billion here and a billion there, after a while it adds up to real money.

Mustafa Kemal's picture

"It's not difficult."

Yes, those that say it is diffucult are the crackpot realists. The only reason it is "difficult" is because the MIC will not allow it.

Consuelo's picture

 

 

'Obozo' didn't do anything ---- save for what he was TOLD to do, just like his successor.  

Blankenstein's picture

He isn't living the rest of his life in the lap of luxury for "doing nothing".

MFL5591's picture

Where was this tribal member when Obama added $10 Trillion to the debt?

Captain Chlamydia's picture

turn on the money machine! Print Moar....

ThanksIwillHaveAnother's picture

Never has country in this situation made the hard choices so it will be PRINT MOAR!

Fiat Money Inflation in France is excellent small book to learn what will happen.

Houses Depreciate's picture

Thanks Captain Obvious and welcome to the 21st century.

TrustbutVerify's picture

How about a bully pulpit "Buy American" factory visit tour for the President - highlighting products made in the USA. He could easily avoid major phony "American" brands that manufacture the majority of their products in other countries.

asteroids's picture

How often in the last century has the US (or any other G8) really reduced their debt? Yah, I thought so.

ipso_facto's picture

'How often in the last century has the US (or any other G8) really reduced their debt? Yah, I thought so.'

US dramatically reduced federal debt from 1948-1975:

https://en.wikipedia.org/wiki/National_debt_of_the_United_States

Dr. Engali's picture

Pffft...,Too levered?  Has this guy ever heard of Japan?

SomethingSomethingDarkSide's picture

Japanese citizens would be up in arms if it weren't for video games and hentai

ipso_facto's picture

Where was this guy ten years ago?

Blankenstein's picture

This.  I love how all these guys come out after the problem becomes a global crisis that could bring down the world economy.  These same assholes are the ones who attack anyone who tries to warn that the current trajectory isn't sustainable in the early stages of the problem.

Take Housing Bubble 1.0, anyone who came out and tried to caution that there was a bubble and it was unsustainable, before it was obvious to even the mouth breathers and low foreheads, was ridiculed and attacked.  And the sheep join in with the "experts" to try and stamp out any opposition to the narrative being pushed by the likes of the NAR, Fed, etc.

 

Brooksley Born was sounding the early warning bells on derivatives and Bernie Madoff and look what they did to her.  And now they act concerned, well they can all go eat shit.  

 

 

To Hell In A Handbasket's picture

The opening salvo in the propaganda war that the USSA, is too leveraged to undertake anymore debt, to rebuild its crumbling infrastructure. The Central Banksters can have access to more QE money for the chosen few, to speculate and gamble. But to boost growth through debt and government borrowing? That's just terrible. Uncle Sham is almost bled dry by the money-changers. The end is nigh.

VWAndy's picture

 So now the Fed has issues with too much leverage?  These are the same cats that pulled out the liquidity back in 08 triggering the recovery.

   I hope this cat has a date with a woodchipper in his future.

Break_the_Bank's picture

Four dollars of debt for each dollar of growth. What inability to fund growth? The debt will never be repaid, we all know that, so what's the problem? Just inject more debt and pretend it's capital. 

Giant Meteor's picture

Helicopter drop ...

Who knows, maybe it hovers over my pad this time ..

Better that than a missile up my ass ..

sinbad2's picture

Helicopter money is ridiculed, but the Australian Government did it, and whilst the rest of the world sank into the mire of debt and poverty, the Australian economy boomed.

Mind you, we are heading for a recession, first one in 25 years, the younguns won't know what hit them.

silverer's picture

I guess everyone has to sing while they row now to make forward progress, while the Fed beats the drum.

Giant Meteor's picture

Being a fan of history, historical slave ships and such, I always appreciate this visual.

Row, Row I say, damn you !

Sung to .. "You Are My Sunshine, my only Sunshine, ..."

SgtShaftoe's picture

I thought deficits didn't matter. I'm guess it wouldn't matter if my tractor's PTO brushhog went over Cheney's face then?
I'm confused.

Bill of Rights's picture

Fucken cock suckers let Obama blow his nut tho..END THIS CRIMINAL ORGANIZATION!

Falconsixone's picture

I'm done working for jews. Better buy some new slaves.

sinbad2's picture

If you read history you would know there is only one way to escape your slavery.