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Trump's Stunning Comments Suggest A Federal Reserve "Suicide Mission"

Posted by Dirk Watters on

In a CNBC interview last week Trump said, "I'm not thrilled" with the Fed's rate hikes.

"Because we go up, and every time you go up they want to raise rates again. I don"t really I'm not happy about it. ..."

Fed chair Jerome Powell is preparing for Trump onslaught

The Federal Reserve Chief Jerome Powell and his policymaking committee have raised rates twice in 2018 and forecast two more bumps this year and three in 2019.

The Federal reserves strategy can make stocks less attractive, and lifting rates too rapidly can trigger a recession.

JPMorgan Chase economist Michael Feroli says:

"The Fed's policy making committee is made up of 12 voting members who can't be swayed in any single direction, he says.

"Seven are Fed board governors appointed by the president but they have 14-year terms and can only be removed for cause."

In other words, President Trump has little to no sway over the Federal Reserve.

Multibillionaire bond manager Jeffrey Gundlack says the federal deficit and the cost to service that debt are rising at the same time is putting the U.S. on a "suicide mission,"

"The federal debt is exploding," Gundlach said.
He showed the Congressional Budget Office (CBO) projections, illustrating that our federal debt-to-GDP ratio will be 125% by 2030, and it is accelerating at a very steep slope. It is now approximately 80%.
It is very unusual to see this deficit expansion so late in the economic cycle, according to Gundlach. Historically, the deficit expands when the Fed funds rate is being cut, which is typically during or following a recession. "This is almost like a suicide mission, At some point, with debt and its service cost increasing, there will be a collision.

There could be a solvency problem."

And just last week, Jerome Powell said in an interview that he is not concerned about political interference. "I would add though that no one in the administration has said anything to me that really gives me concern on this front," he said. Jeff Gundlach, the legendary investor who predicted the subprime loan crisis, fears that Washington is spending its way to a "suicide mission."

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