Thursday, July 26, 2018

Qanon - Trump poised to take control of the Federal Reserve

This has gone unnoticed in the Q drops.  However, its timing suggests that it may well be about to happen by executive order or through the usual process of loading the board with like thinkers which is possible because the board is practically empty.  What was Obama thinking or am i missing something here?  
Lifting interest rates aggressively now would cold cock the nascent housing recovery.  This is not logical now and does smack of a possible political agenda. considering the actions of the ptrevious regime, this is completely possible.
Secondly they should not be pushing for regulation per se.  It is not their mandate and also smacks of political loading among employees.  Again this is another good reason to ensure real control just to ensure that everyone is on the same play sheet.
Now something else.  This is our first president whose knowledge of monetary policy is adept at least.  Decades past he commentated on it intelligently.  Past presidents have been out of their league in most cases except for Reagan and generally stepped back.  Remember that...

Dick Bove: Trump poised to take control of the Federal Reserve

President Trump sharply criticized the Federal Reserve this week, saying interest rate increases are hurting the economy.

 Trump will have the opportunity to fashion the central bank in the image he would like as he has four vacancies to fill on the board of governors.

 The result could be a more politicized Fed. 

 Richard X. Bove

Published 11:58 AM ET Fri, 20 July 2018 Updated 6:26 PM ET Fri, 20 July 2018

Trump: I don't necessarily agree with raising rates

 1:41 PM ET Thu, 19 July 2018 | 01:35

President Donald Trump has multiple reasons as to why he should take control of the Federal Reserve. He will do so both because he can and because his broader policies argue that he should do so. The president is anti-overregulating American industry. The Fed is a leader in pushing stringent regulation on the nation. By raising interest rates and stopping the growth in the money supply it stands in the way of further growth in the American economy.

First, He Can 

he Board of Governors of the Federal Reserve is required to have seven members. It has three. Two of the current governors were put into their position by President Trump. Two more have been nominated by the president and are awaiting confirmation by the Senate. After these two are put on the Fed’s board, the president will then nominate two more to follow them. In essence, it is possible that six of the seven Board members will be put in place by Trump.

The Federal Open Market Committee has 12 members and sets the nation’s monetary policy. Seven of the 12 are the members of the Board of Governors. Five additional are Federal Reserve district bank presidents. Other than the head of the Fed bank in New York, who was nominated by the president, the other four can only take their positions as district bank presidents if the board in Washington agrees to their hiring. One of these, the Fed Bank president in Minneapolis, Neel Kashkari, is already arguing for no further rate increases.

Trump’s comments on the Fed were a big deal. 

Here’s why 6:19 PM ET Fri, 20 July 2018 | 02:05

Second, Regulation

Following the passage of the Dodd Frank Act in July 2010, the Fed was given enormous power to regulate the banking industry. It moved quickly to implement a number of new rules. The Fed set up a system that would penalize banks that failed to obey its new rules. These rules included setting limits as to how big an individual bank could be; how much money the banks had to invest in fed funds and Treasurys as a percent of their assets; which loans were desirable and which were not; where the banks had to obtain their funding and many, many, more up to and including how much a bank could pay its investors in dividends.

These rules have meaningfully slowed bank investments in the economy (the Volcker Rule) and they have had a crippling effect on bank lending in the housing markets (other agencies have had an impact here also).

Thus, of all of the government agencies the Fed has been possibly the most restrictive. The president has already moved to correct these excesses by putting in place a new Fed Governor (Randal Quarles) to regulate the banking industry.

Three, Killing Economic Growth

In the second quarter of 2018, the growth in non-seasonally adjusted money supply (M2) has been zero. That’s right, the money supply did not grow at all. This is because the Fed is shrinking its balance sheet ultimately by $50 billion per month. In addition, the Fed has raised interest rates seven times since Q4 2015. Supposedly there are five more rate increases coming.

This is the tightest monetary policy since Paul Volcker headed the institution in the mid-1980s. It will be recalled his policies led to back-to-back recessions. Current Fed monetary policy is directly in conflict with the president’s economic goals.

Moreover, the Treasury is estimating it will pay $415 billion in interest on the federal debt in this fiscal year. A better estimate might be $450 billion if rates keep going up. There are a lot of bridges and tunnels and jobs that could be created with this money.

Then there is inflation. It is likely to rise if the Fed eases its policies. If that happens paying down the federal debt becomes easier. On a less desirable note, higher interest rates lower real estate values. Lower rates that stimulate inflation increase real estate values.

Bottom Line

The president can and will take control of the Fed. It may be recalled when the law was written creating the Federal Reserve the secretary of the Treasury was designated as the head of the Federal Reserve. We are going to return to that era. Like it or not the Fed is about to be politicized.

Strategist Mark Grant: Trump has a right to call out the Fed if it's not acting in the US best interest

President Trump has a right to call out the Fed if he feels the central bank is not acting in the best interest of the U.S., strategist Mark Grant says.

In an interview with CNBC last week, Trump expressed frustration with the Fed's recent move to raise interest rates.

"The Federal Reserve bank does not represent the emerging markets or the European Union, it represents the United States of America," Grant says. 

Berkeley Lovelace Jr. | @BerkeleyJr

Published 8:48 AM ET Mon, 23 July 2018

Now is not the time for Fed to raise rates, says pro 8:05 AM ET Mon, 23 July 2018 | 02:10

President Donald Trump has "a right" to call out the Federal Reserve if he feels the central bank is not acting in the best interest of the United States, strategist Mark Grant told CNBC on Monday.

"The Federal Reserve bank does not represent the emerging markets or the European Union. It represents the United States of America," said Grant, the chief strategist at B. Riley FBR.

"If [the government] feels like the Fed is not working within the policies of the United States government, they have a right to stand up and say something," Grant added in a "Squawk Box" interview. "You have the Fed moving in the opposite direction of the government."

Grant said to question the policies of the Fed does not interfere with its decisions.

In an exclusive interview with CNBC's Joe Kernen that aired Friday, Trump expressed frustration with the Fed's recent move to raise interest rates and said the central bank could disrupt the U.S. economic recovery.

Trump then criticized the Fed monetary policy again in a tweet Friday.

Fed officials, including Chairman Jerome Powell, have raised interest rates twice this year and have indicated two more are coming before the end of 2018.

Grant, who was previously managing director and chief strategist at Hilltop Securities, said he doesn't agree with the central bank's "return to normalcy." He said if the Fed continues to raise interest rates, it will slow down economic growth.

"I don't think the Fed should be raising interest rates at a time when Congress and the president under the Tax Cuts and Jobs Act is trying to grow the economy," Grant said.

—CNBC's Jeff Cox contributed to this report.

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