As the US came off the eight years of Federal Reserve controlled economy during the Obama administration’s anemic efforts to grow out of the Great Recession.
In January 2016, I wrote the most viewed post in the history of this blog. It touched on what I called The Greatest Transfer of Wealth in History.
Fast forward to today where President Trump is at odds with his Fed chief pick Jay Powell. Trump is constantly tweeting to Powell, where is the inflation that has the Fed so concerned that it had to raise rates so quickly.
A bit of recent history shows Trump has a very interesting point. In Dec 2015 the Fed Funds Rate was 0.5%. The next rise in rates came the following year. In Dec 2016 after Trump was elected the Fed ticked up the rate to 0.75%.
During Trump’s first two years the Fed’s has raised rates 0.25 percentage point six times, with a seventh planned for next week.
Trump knows that the Fed is tamping down his economic growth by pulling credit off the table. The President knows that lower rates would allow the US economy to grow after years of Fed-controlled Obama stagnation.
On Monday night we have a peek into the thinking of the White House as it concerns the Fed. “Structure change coming” with a date of Mar. 2019.
What would be the change in structure? It could be the first-ever audit of the Fed and if it goes back to 2007 we could see the handling of the $45 trillion injected into the global banking sector. Remember many large global banks are partial owners of the Federal Reserve and receive dividends from the profits as well as a high rate of interest on funds deposited at the Fed.
Understand of course this is the first volley in a long effort to transform the global banking industry. History tells us that this is a dangerous proposition for anyone who has attempted to take on the idea of private central banks. Some names that come to mind include: Andrew Jackson, Abraham Lincoln and John F. Kennedy.
Tread carefully, Mr. President.