Fed Says It’s Trade, Not Rates, That’s Undermining the U.S. Economy

[ltlee1]

https://www.bloomberg.com/news/articles/2019-08-23/fed-says-it-s-trade-not-rates-that-s-undermining-u-s-economy?
"President Donald Trump has a pithy message to Americans worried about the economy: It’s the Fed, Fed, Fed.

The Federal Reserve has a snappy retort: It’s trade, trade, trade.

Central bank officials are loath to engage the president directly. But as they gathered this week in the mountains of Wyoming, policy makers explained again and again how trade disputes are poisoning the global economy and making their job more difficult.

“The fulcrum or center of gravity of the U.S. economic policy today is not monetary policy, it is trade uncertainty,” Dallas Fed President Robert Kaplan said Thursday as the Kansas City Fed’s annual symposium in Jackson Hole kicked off.

He was followed by Patrick Harker, president of the Philadelphia Fed, who recounted what businesses in his district are telling him. “What we hear repeatedly from companies is the trade uncertainty. It is not the cost of capital,” he said.

In other words, don’t be fooled by the president into blaming the Fed for what’s slowly curdling the world’s largest economy, illustrated by the weakening of business investment and manufacturing output."

[wakal...@yahoo.com.sg]

American lawmakers introduce bills to stop Trump from doing all sorts of minor things. But for the trade war, they have done nothing. I've said before, if it's just Trump, things would not be so bad and dangerous. But America's anti-China disorder is bipartisan and enjoys public support.

When people finally realised that the US economy is a mess, they'd blame Trump. But, really, American lawmakers and public have to take part of the blame too.

Wakalukong

[ltlee1]

And then there is more, from Larry Summers:
https://www.bloomberg.com/news/articles/2019-08-22/summers-says-central-bankers-confront-a-black-hole-for-policy

------------------
Explaining his views over a series of 28 tweets, Summers said a forthcoming paper he has co-authored with Harvard researcher Anna Stansbury argues low interest rates do little to stimulate demand and may make the problem worse.

Black hole monetary economics - interest rates stuck at zero with no real prospect of escape - is now the confident market expectation in Europe & Japan, with essentially zero or negative yields over a generation. The United States is only one recession away from joining them. 6/
— Lawrence H. Summers (@LHSummers) August 22, 2019

“Interest rate cuts, even if feasible, may be at best only weakly effective at stimulating aggregate demand and at worst counterproductive,” Summers wrote, explaining that they could produce financial bubbles, induce higher savings, and sustain zombie firms with low debt service payments that are like students “who do not have to take tests.”

------------------

[Jesus Christ is a lying JEW BASTARD]

Depression is coming to USA....

ALL JOBS shift to CHINA VIETNAM INDONESIA

[wakal...@yahoo.com.sg]

Trump won't understand any of this.

Wakalukong

[ltlee1]

Looks like the side effect of the dollar trap is now showing up.

Species money like gold has limited supply and limited growth rate. A gold based economy is also an economy which growth is limited by gold. An international system backed by gold is better. But it still put a upper bound on how fast any economy can grow. In leading economies, fiat money backed by gold had caused high inflation and then followed by stagflation once inflation expectation had because an integral part of economic decisions.

Fiat money, backed by mostly the dollar at present, would in contrast generates deflationary pressure, first in the import/export sector of the US, then spread to the economy as a whole. And then spread to other countries if the dollar trap is allowed to operate long enough. Deflation expectation, if taken hold, would lead to global depression worst than the Great Depression.

The US is likely to its real interest rate below the natural/neutral real interest rate for full employment. Lowering the interest rate would only harden deflation expectation.

[wakal...@yahoo.com.sg]

The US dollar is backed by hot air. But things worked okay for some time because people the world over had trust in the US dollar, even they knew it was only hot air that had kept it floating. But then, the buffoon president went all out to weaponized the dollar and the international banking controlled by the US. Countries around the world, including US allies, are jumping ship, because they can't afford to be held hostage.

Things are unravelling for the US dollar, and there is no turning back.

Wakalukong

[ltlee1]

On Friday, August 23, 2019 at 10:07:28 PM UTC-4, ltlee1 wrote:

(9/17) =====================

Another warning on possible negative effect on still lower interest.

https://www.project-syndicate.org/commentary/why-ultra-low-interest-rates-hurt-growth-by-ernest-liu-et-al-2019-09

"Could Ultra-Low Interest Rates Be Contractionary?

Low interest rates have traditionally been viewed as positive for economic growth. But our recent research suggests that this may not be the case. Instead, extremely low interest rates may lead to slower growth by increasing market concentration. If this argument is correct, it implies that reducing interest rates further will not save the global economy from stagnation.

The traditional view holds that when long-term rates fall, the net present value of future cash flows increases, making it more attractive for firms to invest in productivity-enhancing technologies. Low interest rates therefore have an expansionary effect on the economy through stronger productivity growth.

But if low interest rates also have an opposite strategic effect, they reduce the incentive for firms to invest in boosting productivity. Moreover, as long-term real rates approach zero, this strategic contractionary effect dominates. So, in today’s low-interest-rate environment, a further decline in rates will most probably slow the economy by reducing productivity growth.

This strategic effect works through industry competition. Although lower interest rates encourage all firms in a sector to invest more, the incentive to do so is greater for market leaders than for followers. As a result, industries become more monopolistic over time as long-term rates fall.

Our research indicates that an industry leader and follower interact strategically in the sense that each carefully considers the other’s investment policy when deciding on its own. In particular, because industry leaders respond more strongly to a decline in the interest rate, followers become discouraged and stop investing as leaders get too far ahead. And because leaders then face no serious competitive threat, they too ultimately stop investing and become “lazy monopolists.”

[Jesus Christ is a lying JEW BASTARD]

Print .ore paper cash ....build more CHINESE NAVY SHIPS ......

CHINESE have plenty of paper cash inside CHINA .. NOT US DOLLARS ...

ÇHINA can just let under ground cash flow increase cash circulations ...

No problem .. just make sure underground banking 's cash is plenty

[Wakalukong Tuapekkong]

Yes, rates do not undermine the US economy. But trade also does not undermine the US economy. It is good for the US economy. But the US is a low IQ nation. So it goes to war to damage or destroy what is good.

Wakalukong

[Jesus Christ is a WHITE RACE monopoly Power]

the problem is ..

US DOLLAR BILLS can buy anything in this world except in CHINA ...

CPC controls the exit of Yuan ..but
underground banking in CHINA flows out some Yuans ...

so US tries to control who buys what with US DOLLARS ..


China can use PORTUGUESE bank to sell US BILLLS to other EURO BANKS which can acept US BONDS ...

EURO BANKS can flood US BONDS to other nation states in EAST EUROPE which need US PRODUCTS ..WEAPONS ..TELECOMS .. COMPUTERS .. or lands in UKRAINE ......

in that way CHINA can help EU NATIONS to buy lands in UKRAINE with US BONDS from CHINA ...

WHAT will China get in return ?

EURO EURO EURO BONDS