The Fed Is Raising Rates, Yet Inflation Is Down! WHAT?
By Dante Vitoria June 20, 2017
Yes, inflation is down (and heading LOWER) and the Federal Reserve just voted to increase interest rates by 0.25 basis points. Not a BIG increase, but an increase none the less. But WHY? Even MORE telling, they announced their plans to “unwind” some of its $4.5 Trillion debt as well. The debt is in the form of Treasury Bonds, Notes, Bonds, Bills, mortgage-backed securities and debt from Government agencies.
Normally (actually ALWAYS), this type of decision is only made and implemented when inflation is moving upwards. It is done to ease lending, and to try to get money back into the economy and to be a “calming influence” on the people. Not NOW! This seems to be a situation where the members of the Federal Open Market Committee feel that President Trump and his cabinet members will continue to implement the programs and pass legislation to ease the financial burdens of Corporate America, and will turn our economy BACK to where it was in the early 1980’s under President Reagan, BOOMING!
Look at the announcement and the plan over the rest of this year. The Fed plans to “retire” $6 Billion of Treasuries and $4 Billion in mortgage-backed securities per MONTH! Do you think the Federal Reserve believes in President Trump and his economic plans?
This, in spite of last month’s “data”, which showed that consumer spending was slightly down 2.8% in May. Consumer Electronics, sporting goods and overall department store sales declined. Consumer spending is the largest “engine” in our economy, and the move to raise interest rates by .25% on its “face” is odd however, many Economists feel it will rebound soon, but overall economic growth, rising employment, disposable income and overall household wealth will all increase in 2017.
What makes ALL of this even more peculiar is this comment from Federal Reserve Chairwoman Janet Yellen in March of this year, addressing inflation, “There have been idiosyncratic factors I think that have held down inflation in recent months particularly a huge decline in cell telephone plan prices, declines in prescription drugs, we had an exceptionally low reading on core PCE (Personal Consumption Expenditure) in March and that will continue to hold down 12 month changes until that reading drops.”
Reading that you would think that Ms. Yellen is “bearish” on our economy and would be making moves to TIGHTEN the reins even more than she did under President Obama. So, two months later, we see her and the Board of Directors of The Fed do this? One is the impact on President Trump’s plans to implement tax cuts for not only corporations, but individuals. Another is what he has done with American Corporations and “encouraging” (that is a NICE word for it) to bring foreign-based jobs BACK to the United States and hire Americans.
Look, you all know by now, my position on our President and the EXCELLENT job I think he is doing. My point is, apparently, Federal Reserve Chairwoman Yellen MUST be in agreement, at least economically. The Federal Reserve is RETIRING DEBT, $10 Billion per month (at least) so President Trump’s word has penetrated their ears (and HEADS). We have too much debt and it is becoming harder and harder to service within the present economy, the POOR ECONOMY President Trump inherited from Barack Hussein Obama. It will be a MONUMENTAL UNDERTAKING to turn our economy back around (don’t look now folks, but it is already happening).
What a GREAT Nation we would have IF all of our elected and appointed Officials actually decided to work WITH our President (or at least hear what he has to say BEFORE they decide to FIGHT what he wants to accomplish)? I have said this over and over again. We do not NEED a President, we need a CEO who can lead our Nation BACK to World prominence and YES DOMINATION in all economic (and other) areas!
This is NOW what we have. I applaud the Federal Reserve for the decision they made and hope they will continue on this path. It is in the Country’s best interest. And one little “tidbit”…want a great economic indicator? Watch all of the Congressional Hearings you want! Listen to what a BAD GUY President Trump is. Listen to “Chuckie” and Bernie…Nancy and Maxine…St. James Comey himself. And after ALL the NONSENSE, the market goes UP! Every single time!
The “Market” is not a Democrat or Republican, liberal or conservative. It does not care if Comey lied, told the truth, or who he is at all. The Market cares about ONE THING….MAKING MONEY.
We have a President/CEO at 1600 Pennsylvania Ave who understands that better than MOST, and THAT is why we are coming back economically, and every other way, DESPITE of what the Senate Minority Leader wants! In Trump We Trust! And let’s let OUR CEO keep his promise and Make America Great Again!
Dante Vitoria is the Founder and CEO of The Vitoria Group in New York City.