Three weeks after angering the mainstream media with his apocryphal assessment that the US "Is Headed For A Massive Recession" and that "It's A Terrible Time To Invest In Stocks", Trump is likely set to make even more waves with an interview he gave to Fortune magazine, which will be released in its entirety later this week, in which Trump says that while he likes Janet Yellen’s low interest rates, he is not a big fan of Janet Yellen herself.
"I think she’s done a serviceable job," Trump tells Fortune. "I don’t want to comment on reappointment, but I would be more inclined to put other people in."
As he’s said in the past, Trump tells Fortune that he would “absolutely” support proposals that would take power away from the Fed, and allow Congress to audit the U.S. central bank’s decision making.
Curiously, while Trump is not a fan of Yellen herself, he does like zero rates, and is a fan of the Fed's monetary policy. "The best thing we have going for us is that interest rates are so low,” says Trump, comparing the U.S. to a homeowner refinancing their mortgage. "There are lots of good things that could be done that aren’t being done, amazingly."
Maybe that is the case of billionaire real-estate developers, but it is hardly the case of tens of millions of (mostly aged) Americans who until recently relied on interest income from their savings, and ever since the arrival of the New Normal have been forced to take a job during what otherwise would have been retirement years to make ends meet. That, or simply gamble in the stock market in hopes of striking it rich.
Trump added that if the Fed were to raise interest rates now it could be disastrous because the country would be forced to pay higher interest rates on our debt, and that would be very “scary” for the economy.
"People think the Fed should be raising interest rates,” says Trump. “If rates are 3% or 4% or whatever, you start adding that kind of number to an already reasonably crippled economy in terms of what we produce, that number is a very scary number.”
Odd, considering, that only a few weeks ago the same Trump was warning of big Fed-created bubbles, which are the direct result of the Fed's ultra loose, purposeful bubble-inflating policy.
It is also odd because when the Fed actually did hike rates last December, it led to a wholesale rush out of "risk on" assets such as stocks, and into Treasurys, pushing yields even lower. It's not just fund flows: by rising rates the Fed is effectively accelerating the inversion of the curve, thereby bringing closer the date when the US slides into recession and leaving markets with just a deflationary outcome, i.e., lower yields.
But Trump doesn’t seem to be focused on that. Instead, as Fortune writes, Trump says he would like to take advantage of lower interest rates in order to refinance the debt and spend more money to rebuild the military and the country’s infrastructure. Trump did acknowledge that he thought we need to reduce our debt, but it was one of a number of things he thinks we need to do.
"The problem with low interest rates is that it’s unfair that people who’ve saved every penny, paid off mortgages, and everything they were supposed to do and they were going to retire with their beautiful nest egg and now they’re getting one-eighth of 1%,” says Trump. “I think that’s unfair to those people."
Again, nothing about all those people who have saved all their lives in hopes of collecting at least some interest on their labor.
Finally, in a notable reversion of his "Make America Debt-Free Again" plan, country debt free, Trump softened that stance during the Fortune interview.
"You could pay off a percentage of it, depending on how aggressive you want to be,” he says. “I’d rather not be all that aggressive. I’d rather not have debt but we’re stuck with it. If I had a choice of taking over debt free or having $19 trillion – which by the way is going up to $21 trillion very soon because of the omnibus budget, which is a disaster. If I had my choice I’ll take no debt every time."
Clearly, the only problem is that someone has to "take" that debt; and with the entire world now drowning in debt - including China which according to estimates is now approaching Japan's 400% total debt/GDP with a ratio close to 350%, there is simply no way out, without implementing one of the only three possible "solutions" - default, hyperinflation or war.
We wonder how long until Trump, or any other presidential candidate for that matter, admits as much.