He’s doing it again. Fake president Donald Trump is talking out of both sides of his mouth about the economy. He continues to tout its strength while at the same time trying to browbeat Fed Chair Jerome Powell into lowering the interest rate. It has already been lowered to close to zero. Just how low does Trump want it to go? To zero or negative, which according to CNN Business and Politico has been a disaster for Europe and Japan. Since Trump doesn’t read, he likely doesn’t know that. He’s desperately trying to save his failed “presidency” and will likely try just about anything.
Trump claims that lowering the interest rate to zero will help to refinance the national debt. “We have the great currency, power, and balance sheet,” he claims. Really? Has he forgotten about our debt to which he is rapidly adding? He obviously doesn’t understand how any of this works, and that misunderstanding fully explains why his own companies are frequently in bankrupt status. He’s trying to run this country as he does his companies: into the ground.
CNN Business uses Deutsche Bank as the best example of this disastrous policy. Negative rates are really taxes on banks which in turn transfer to the real economy. Banks normally earn interest when funds are left in central banks, but when rates are negative, central banks charge lenders interest for sitting on cash. As a result of these practices, Deutsche Bank’s stock has lost three-quarters of its value, and the Euro Stoxx Banks Index is also down. Mohamed El-Erian, the chief economic adviser at Allianz, tells Bloomberg that negative rates “eat away at the integrity of a well-functioning market-based economy” because they constrain credit and encourage risk taking, which also causes financial protection products to go crazy trying to figure out how to allocate their resources.
Deutsche Bank CEO Christian Sewing, who is obviously well versed in the effect of negative rates, said that another rate cut by the ECB “will have serious side effects.” Now, if all these experts and CEOs who are directly impacted by negative rates think they’re a bad idea, how in the world does Donald Trump think he knows more?
On top of his ignorance, Trump loves showing off his classlessness. He referred to Powell and the other feds as “boneheads” because they don’t simply take his advice. Then, he claimed that the heads of government in attendance at the G-7 summit were “giddy” about their interest rates. Who in their right mind believes anything Trump says? He then tried to portray them as “smarter” than the Federal Reserve, saying that the Reserve “cannot mentally keep up with the competition.” Ha! Look who’s talking. Trump can’t mentally keep up with a rock.
No, Trump, they’re not trying to keep up with the competition because the plan being used by the competition is failing, as are you. Be careful, Trump, your desperation is showing. Perhaps you should leave financial matters up to the experts, one of which you are not. Unless they want to know the best way to file bankruptcy, I doubt any of them will be turning to Trump for financial advice anytime soon.
Shirley is a former entertainment writer and has worked in the legal field for over 25 years