The Fed is quite undecided where interest rates should be. Trump isn’t.
Trump on Interest Rates
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet…..
Note: Nothing follows “sheet….”
At today’s meeting the Fed cut interest rates by a quarter point to a range of 4 to 4‑1/4 percent.
Trump demands zero interest rates, or less. The request is economic idiocy and highly inflationary. Fortunately, it’s not going to happen.
Summary of Economic Projections
Please consider the Fed’s Summary of Economic Projections from the September 17, 2025 FOMC meeting.
“Appropriate monetary policy” is defined as the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her individual interpretation of the statutory mandate to promote maximum employment and price stability.
SEP Summary
- Year-over-year GDP: 1.6 percent in the fourth quarter. The longer run is 1.8 percent.
- Unemployment Rate: Rising to 4.5 percent by December
- PCE inflation 3.0 percent. The longer run, as always, is what the Fed wants to see. It’s consistent arrogance.
- Fed Funds Rate: 3.6 percent for December. The longer term is 3.0 percent.
Trump is not be happy with the Fed’s projections of interest rates, the unemployment rate, inflation, or GDP.
Fed Notes “Challenging and Unusual” Setup on Unemployment and Inflation
Earlier today, I commented Fed Notes “Challenging and Unusual” Setup on Unemployment and Inflation
Powell says risks to inflation are to the upside. Risks to labor market are to the downside.
“Think of this as a risk-management cut. There are no risk-free paths. It’s not obvious what to do,” said Powell. Click above link for more quotes.
Stagflation: What, Me Worry?
Rising inflation with rising unemployment is a stagflation worry. The worry is reasonable. But Powell does not have a lot of confidence in that worry.
Neither do I, at the moment.
More importantly, the 30-year long bond has recently dropped stagflation concerns.
No Bubble Concerns
In response to a question on bubbles and the stock market, Powell responded: “We don’t have a view” on asset prices. The Fed is concerned with its dual mandate.
The comment on bubbles is telling. The Fed blows them repeatedly then cleans up the mess it makes.
It was the Fed who created the housing mess by holding rates too low, too long, and unwarranted QE. Powell denies all responsibility.
And once again the Fed does not see the bubbles it has created.
Labor Market Concerns
I suspect Powell will be surprised at the speed at which the labor market collapses. But perhaps not given the median unemployment projections.
Powell does not make known how he votes personally.
Fedthink! The Fed Is Incompetent by Design
In case you missed it, please see Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
Is the Fed playing politics? Does the Fed know what it’s doing at all?
We are trapped in “Fedthink”, especially the nonsensical proposition that two percent inflation is a good thing despite the fact that the Fed is clueless on how to measure inflation in the first place.
Related Posts
September 4, 2025: Year-Over-Year Small Business Employment Growth Barely Above Zero
ADP reports the total YOY small business growth as +19,000.
The Unemployment Level Is Now Greater than Job Openings
On September 3, I noted The Unemployment Level Is Now Greater than Job Openings
For the first time since the pandemic unemployment is above openings.
The nonfarm payroll response rate is 42.6 percent with the same issues as with JOLTS
September 5, 2025: Jobs Report Misery – Only 22,000 Gain in August, June Revised to -13,000
August was a bad month for job seekers. Here are the grim details.
September 5, 2025: Since January 2023, BLS Jobs Revisions Were Negative 24 Out of 31 Times
Witness negative revisions 77 percent of the time, with more coming.
If anything, Powell’s labor market concerns are too low.
The Fed was able to legislate 31 USC §462 in 1933 that identified the Federal Reserve’s private debt of FRN’s [Redeemable in Gold/Lawful Money] as a Legal Tender. That added the public/govt as responsible for the Fed’s private debt. If the bogus legislation is challenged as based upon fraud, the legislation would appear to be void from its inception and the debt would be the responsibility of the private owned Fed. A $37 Trillion for-profit entity is not acceptable as a government agency. All profit of the Fed legally belongs to the government. Ref. 31 CFR #375.3.
Unfortuntely the stock market continues to soar and Trump believes his action are working so the craziness will continue. I think the economy is much more resillient than we think even if it is not for those in lower income levels paying higher prices and least able to afford them.
Check me on this – Census people are saying 1M immigrants have left the country so far this year. Isn’t that 1M jobs that are waiting for US citizens to take? Why on earth would the unemployment rate go up when those excellent jobs are no longer being stolen by immigrants? /s
Why assume the immigrants were employed?
Candace, Puta, bmc^2… all the same shit !
Economists simply do not understand money and central banking. Economics is an exact social science. Banks do not lend deposits. A shift into interest bearing deposits depletes noninterest bearing deposits dollar for dollar.
Drive the banks out of the savings business and you’ll make banks more profitable.
So now you’re not just a theoretical muse for the rest of us here (using 100-year-old texts), but now more knowledgeable than bank CEOs about how to make the most profit.
Thanks Captain Capitalism
LOL
This animated chart is interesting: https://www.reddit.com/r/dataisbeautiful/comments/1nk73o1/oc_the_feds_eternal_struggle_jobs_vs_prices_chair/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
So here’s the difference. Once person is interested in click bait and says that people like me are “blinded”, when in fact he may actually be falling victim to lack of clarity.
Then, you’ve got the other guy who’s very straightforward with his analysis & doesn’t try to bring politics into the discussion. Speaking of Miran’s dissent, here’s WR’s thoughts:
In theory, dissents are good. This endless strive for unanimity under Powell bred the false impression that everyone agreed even when there was a lot of disagreement and uncertainty about everything.
Outstanding thought process here. And, again, Miran may be shown to be correct.
I wonder if Evita will make a comeback?
Maybe they’ll update it to Melania.
Don’t cry for me America … My husband turned the US into a 3rd world country but I don’t care …
They look absolutely miserable in the pictures with King Charles and Co, and it makes me laugh. The Brits are masters at subtly inflicting misery.
You were there in the room! Were a server, dishwasher or British noble?
Nobody remembers 1970 musical trivia anymore. Try something more recent.
ABBA makes $2 million per week on ABBA Voyage in London.
Great music lives on no matter how old.
Here’s Agnetha from ABBA singing “I Don`t Know How To Love Him” as Mary Magdalen in Jesus Christ Superstar, Swedish version, 1972.
Her voice is incomparable.
https://www.youtube.com/watch?v=X_nX8xFfPn4
More importantly, the 30-year long bond has recently dropped stagflation concerns.
Bonds have been wrong about inflation and the neutral rate of interest for five years straight now (since Covid). Why would this drop in rates be right this time?
I have to agree. It’s pretty clear that the long bond is only slightly less reactive than the markets in terms of being a pointer. The difference is that it comes first and the market reacts to it.
As I said in May “September should be a good time to buy bonds.”
Just off topic. Listening to the Trump and Starmer interview in UK. Trump talking absolute drivel, with Starmer not far behind. Whatever happened to half decent leaders?
When the voting majority is stupid, democracy fails.
Scott Bessent wrote a nice paper titled “The Fed’s New “Gain-of-Function” Monetary Policy” this month where he criticized the Fed’s actions in 2008 and afterwards. Don’t whether any of you have read it or care. Nevertheless here it is:
TIE_Sp25_Bessent.pdf
Thanks for the link
QE took supply off the market, lowering the real rate of interest. The proper way to do that is
https://files.stlouisfed.org/files/htdocs/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements.pdf
And not a day too late as we might be entering another downturn, and it is important to point out the shenanigans of the central banking cabal.
The already loose financial conditions combined with the announced beginning of a rate cutting *cycle* guarantees that the economy will overheat for at least the next several months. The FOMC is a joke.
Maybe. Or maybe it’ll tank anyhow… that seems to be how recessions work at this stage.
Hardly. The FED’s timing is perfect. Both R-gDp and N-gDp are due to decelerate.
I don’t think you’ll see real GDP rise at any appreciable rate but inflation will. The level of interest rates are not what is holding back the US economy.
The question is: How bad is the jolt if reality arrives?
And, I guess: How crazy will be the “solutions” Trump demands?
I helped empower this interventionist lunatic. Can I get the vote back pleading election fraud?
They’ll take it back in the next election. Audioanimatrump will win a third term with 105% of vote.
You boned us… but props for coming around and admitting it.
Since I lived during the 1970s when unemployment was 8.5% and higher and inflation above 10%, I really can’t say I am afraid of the present unemployment rate of 4.5% and inflation at 3%. True that the 1970s stagflation started from small beginnings but the tariff increases are nowhere near the two oil shocks when oil prices quadrupled and quadrupled a second time.
Exactly!
Oil effects the price of almost everything. Since Trump took office, WTI is down 19% which is having an offsetting effect to the tariffs that it seems like nobody takes into account.
However, until the labor market rolls over into a recession, I suspect inflation will continue to rise. As I posted yesterday, this is exactly what happened in late 2007 where inflation doubled in about 3 months.
The difference is all the deficit spending is creating added buoyancy to today’s economy, so the lag to the next recession showing up to our doorstep is being delayed.
Read Bessent’s article about the Fed. It is elucidating.
Gain of function monetary policy. DAMN!
He needs to win a Pulitzer just for coining this phrase.
Given that we’re 16 years into with 3 major episodes of MBS purchases, I would agree that the Fed is massively off the reservation & doing all sorts of gain of function / wealth effect experiments.
Massively overpriced homes & huge deficits are the result.
The Fed’s Policy: “Socialism for Investors, Capitalism for Everyone Else”
Again, he nails it squarely on the head.
Only the very wealthiest individuals own financial assets that are most directly impacted by the Fed’s large-scale asset purchases.
Boom, another direct impact.
And all of this craziness culminated in the collapse of SBV & other banks who loaded up on long Treasuries that EVERYONE knew except the regulators that a quick rise in interest bond yields would result in disaster.
And why did this happen? Because the Fed bought its way down to a rock bottom 20YT yield of something like .97% in July 2020. According to FRED data, there’s NEVER been a time when the 20YT yield dropped anywhere near 1% until QE arrive on the scene.
From 1962, it never fell below 4% until we hit the Great Recession, when it dropped to 3.05% in late 2008. But since then, it spent 14 years sub 4% until we got to post COVID.
The Fed is a criminal enterprise. They’re the money Cartel for banks.
1913 FED’s century plus RICO crime scene continues.
NVDA bough 5% of Intel. Both will dominate the high end chips and the low end.
AMD is down.
NVIDIA
The side effects of Trump policies are moving jobs overseas will expand. Labor market is toast.
We’re Going to Have an Additional $30 Trillion in Debt Ten Years From Now. | Thomas Massie.
Thomas Massie stating that the US debt will be approaching 70 trillion ten years from now on this Maneco 64 interview.
Got gold?
Got NVIDIA?
Got stupid?
I see you didn’t buy NVIDA when you could afford one share and now it is too late.
ZEROHEDGER NAILS IT. WITH LOL. Israel kills Kirk.
Gay tranny takes the rap.
Marco touches the wall with Bibi, $650M to the Israeli genocide machine.
Trump declares war on the radical tranny leftist discord chat groups.
America…we are so back.
Arm yourselves.
Candace Owns: Bibi killed Kirk. Brigitte Macron was born a male with a dick. Geobbels: the biggest lies spread fastest.
No. No and Goebbel’s propaganda tricks worked principally on Germans and only few others.
Inside the Room Where CEOs Say What They Really Think of Trump’s Policies
https://archive.is/bLtQt#selection-515.0-515.73
Refresh ceo MBA and not from Yale Sonnenfeld. In 2016 a Yale history prof glued Hitler, Stalin, Mao and Gobbles quates to Trump. For 4 years the dems used it as their Mein Kampf.
These are high class problems.
this s what happens when you elect a guy whose businesses went bankrupt multiple times. he wants to rinse and repeat. take n debt, get rid of it or refinance it lower and but keep on adding. none of this cuts amounted to diddly squat in the end, and his tax cuts will further burden the country with $3 trillion excess debt from the trajectory we had been on. so of course he wants ZIRP.
it’s like allowing people with horrible credit, debt level they can’t service to pick the interest rate on the new BMW and mansion they want to buy.
Tariffs are hidden taxes in a static economy, but when tariffs are imposed to protect expanding, or new essential industries – in a dynamic economy – the labor force will benefit from them, wages will rise in real terms, interest rates can be negative, for a few years, gov size shrink and productivity will rise ==> if these industries produce items that people or foreign countries want and need. If not, the market will punish them. After 50 years of sucking our industries Trump’s policies are not likely to fail.
He just has to select the most important ones.
> The request is economic idiocy and highly inflationary.
> Fortunately, it’s not going to happen.
In Fascist Clown World, everything is possible.
I agree. Trump is economically illiterate when it comes to where interest rates should be. For example, for him to even suggest that rates should be negative is down right idiotic. Lowering rates will, among other things, simply spur the government to spend more money which is the last damn thing we should be doing.
So, Mish, does that sound like I’m wearing Trump rose-colored glasses or that I’m an acolyte?
Real rates, BenW
“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.”
I interpret this as nominal rates. I don’t see Trump doing an inflation comparison. He appears to want negative nominal rates to make borrowing t-bills costs near zero.
I could be wrong. It won’t be the first or last time.
If you want to inflate away the debt that would be the way to go. The US did it from 1946 to 1951 by having 10% inflation with -7% real interest rates. Prices rose 50% but debt to GDP went from 120% down to 60% by the end of 1951. In fact, the UK, Canada, France, Italy and Australia did exactly the same thing. I imagine the temptation to screw bondholders is rising about everywhere now.
When Real rates will be zero or negative, along with: tariffs, higher payroll tax collection and half size gov ==> debt will cut by at least a 1/3. The Fed dots indicate about 3% in 2026, 2027 and 2028. Inflation rate can range between 3% and 10%. It’s normal. It’s an old normal. Get used to it. Obama’s midnight comedians lapdogs sacking cont. Watch out Schrodinger !!
And Heisenberg
It’s interesting that Erdogan (Turkey) and Trump (US) agree that nominal interest rates need to be as low as possible, but that their reasonings are very different. Erdogan has always argued that higher nominal interest rates cause inflation because they drive up cost (this reasoning jibes with Islamic thinking). He stuck to his reasoning even when his lowering of nominal rates drove Turkish inflation up to 80 percent. By contrast, Trump seems simply to be confused about the difference between nominal vs. real rates as well as between nominal short vs. nominal long rates, i.e. his reasoning has no coherent underpinnings.
Erdogan deflated wages in order to strengthen Turkey’s industries and military. Turkey main export markets are the EU and the ME. Turkey and Qatar spread of Muslim Bros is breaking apart Europe, the US and S. America. Each has an iron grip on us.
If the Fed doesn’t lower interest rates dramatically, we could see 2-5% daily swings between major currency pairs on a daily basis. It won’t be the US imposing capital controls. Most every other country will freak out.
Imo Unemployment will stay low (relative)because we have a large number of retired citizens who are needing goods and services
I would have more respect for trump if he would just release the video of the Russian hooker peeing on him. Than i do on his economic understanding. .
He earned his money the old fashion way. Inherited it.
Given her age being below the age of consent, I doubt it could be released.
Besides ~ we couldn’t “unsee” the disgusting sight of trumps (blubbery whale) body…
That’s the market for Hillary’s Chairman Mao designer line.
You would have loved the troughs at Wrigley Field.
Getting rates below zero? that shows Trump’s economic illiteracy.
But is that post by Trump from 6 years ago? If so, why include that in your analysis? Surely you can find something relevant from today or yesterday?
He’ll get them down 1500%
Interest rates are such a Neanderthal way of to control an economy that is infinitely more complex. Regulate derivatives and remove derivatives on commodities and.the economy for everyone will improve.
The creation of the Federal Reserve in 1913 was, and continues to be this countries worst/biggest mistake in its history! Nothing else comes close ! Trump continues to show and prove he is economically and financially illiterate!! SAD !
I guess so, if we simply delete that silly thing, “the American century.” Come to think of it, rolling that back is what the new confused conquerors are (ostensibly) all about (not that they have any knowledge of what actually preceded it: they have selective nanosecond attention spans plus wild fantasies). Funny thing though, there are small problems like, time only moves forward. Events do have paths. But fantasists can generate their social media-boosted “vision thing” to materialize goal posts anywhere. Likewise with interest rates and one-dimensional imaginations. Apparently a catchy impulsive idea and a baseball bat will solve all problems. All this ramshackle baloney would mean nothing without a crowd of over-anxious acolytes feverishly rationalizing in its (weird and wayward) wake. Thank goodness surreal entertainment has become free and ubiquitous. That helps my budget.
“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.” Zero? Holy fuck. Expect inflation to undo the young entirely. Well, until an angry and fiscally incentivized generation brings the destruction of a system that does nothing for them. This administration doubles down on asset inflation which benefits those who very well may be chosen for the guillotine.
They’re all glued to their phones. They won’t be a problem.
Start with a balanced budget then get money out of politics. Tax the wealthy ( because they are the only ones with money)/ somewhere in there change the voting system so every district is purple.
Pipe dream
Or everyone can set themselves up as an offshore LLC for tax purposes.
you are seeing this is NYC with the leading candidate for mayor a communist. Expect more of this.
The Feral Reserve is wasting interest rate reductions because this is the 4th interest rate cut since the cycle top in October 2023, and unemployment has gotten worse. The Fed is trying to stop a trend that is more powerful than it.
And Trump made some idiotic post about how Powelll better do 100 bps next time or he is fired
Umm. Lets see. GDP is apparently running at 3% or better (GDP is useless as a real metric but thats another argument for another time)
Inflation is like 2.8%
So the 10 year should be running around 5 to 6% based on those numbers (theoretically should be around nominal output)
Bond market discounting recession apparently with rate around 4% and has been for several years
Now I know long rates are supposedly independently market determined while short rates are the province of the Fed (they arent really, the Fed follows what the market determines short rates to be)
So why would you yell at the Fed Chairman to cut rates to 3% ? You would see HIGHER long rates then. And the spread between short and long rates would be historically enormous
Trump is pretty clueless. About this as well as foreign policy issues. Even if you beleve people like Luongo who believe there are much larger goals afoot
Summary: Trump is clueless.
You are welcome
When you have such a big pile of debt,you like negative real interest rates and inflation.Or you sink.This is what Trump is telling.
It’s going to happen. Zero or near zero. Dictators don’t care about inflation. Govt numbers can be massaged. And unless you plan on taking on the army, dictators don’t care about urban unrest either.
Maybe he can bully rates to near zero. But that doesn’t mean anyone has to buy the Government bonds at that rate of return.
Like many countries in the past, they buy their own bonds. They monetize the debt. Never works but that doesn’t stop them from trying.
The Fed buying debt is QE,
Right now we still have the opposite – QT
I suspect that’s only going to last until trump finds out that’s what makes negative interest rates work.
Total reserves need to fall during QT
Reserves of Depository Institutions: Total (TOTRESNS) | FRED | St. Louis Fed
QT and QE are measures of the Fed’s balance sheet nothing more nothing less
The Fed has slowed the pace of QT to around $20 billion per month as it is only mortgage payments against principal and principal payoffs from home sales that are retired.
As an aside; The last three months have seen $6 billion injected (but I expect to see around $50 billion out the next two weeks).
There are guaranteed buyers at every treasury auction.
The primary market makers are obligated to bid
Exactly.
Still at it i see.
How was the urban unrest in the blue cities? I see the, ahem, dictator didn’t get his wish yet again, oh that ever so mild, compliant, conciliatory dictator. By definition, as I’ve lectured to you, a dictator would just set the rate or have the requisite number of lackeys to get his way…yet you prattle on with the label of dictator. Now you throw in urban unrest while ignoring who leads those cities where it occurs.
Take Trump to task for what he thinks on inflation, government spending, tariffs, taxes but wanting rates at zero is nothing new for the executive and calling him a dictator, though playing to the never Trumper crowd, is repeatedly silly and runs counter to how true dictators would handle rates.
Rates were zero 10 of last 17 years under those other “dictators”.
Great plan! Then the army does… What exactly? Destroys the roads that the economy needs to function? Bombs the cities where its entire economy lives and dies?
It’s a bad plan, but you’d be shocked how dumb a disconnected dictator can be I guess.