[Mosaic Mystic]

Does anyone truly believe Trump will implement meaningful spending cuts? To me, he seems more like an opportunist. In the past, he advocated for abolishing the debt ceiling, which would align with an anti-austerity stance. However, after losing power to Biden, he completely reversed course, backing significant spending cuts and even suggesting the U.S. default on its debt.

In 2019, Trump criticized Powell for being too slow to cut rates, arguing for more aggressive interest rate reductions. But then, Trump tried to appoint Judy Shelton, a gold standard advocate, to the Federal Reserve. Her stance is completely at odds with Trump’s push for lower rates, especially since the gold standard would limit the ability to pursue such policies.

Now, with Trump appointing Scott Bessant as Treasury Secretary for 2024, Bessant seems to recognize that interest rate hikes can be inflationary, which could suggest a preference for lower rates—especially since inflation is still a major concern for many Americans. This, to me, signals a potential step forward. But I’m left puzzled by Trump’s past actions, especially his attempt to appoint Shelton, as her views on gold are incompatible with his apparent desire for low interest rates. It’s a strange back-and-forth.

[Puffer Fish]

Does anyone truly believe Trump will implement meaningful spending cuts? To me, he seems more like an opportunist.

Mostly no.

I'm sure he will in a few areas, but this is mostly talk.

He probably will not expand spending as much as the Democrats have. Perhaps the budget deficits might be less under the next Trump presidency than what they were under Biden. Which would be a reversal of the pattern, since the budget deficits have grown greater under every president than the president before them since Bill Clinton.

Most likely taxes are going to have to be raised to deal with the increased National Debt. The question is how to do it, and how much.

[Puffer Fish]

In 2019, Trump criticized Powell for being too slow to cut rates, arguing for more aggressive interest rate reductions. But then, Trump tried to appoint Judy Shelton, a gold standard advocate, to the Federal Reserve. Her stance is completely at odds with Trump’s push for lower rates

You are correct. This is inconsistent.

Trump was probably just being self-serving, wanting lower rates because he thought it would help him win reelection. Many politicians think this way, but most are not unabashed about it like Trump was.

Most of Trump's conservative Libertarian intellectual supporters do not want the Federal Reserve to constantly be taking measures to keep rates low.

The view by mainstream economists is that reducing interest rates provides economic stimulus in the short term but carries longer term economic and inflationary costs. The Federal Reserve is supposed to try to lower interest rates to try to ease the country out of a Recession, for example. But constantly keeping rates low is like constantly drinking lots of coffee all the time and expecting that to give you more energy in life. It doesn't work that way. Coffee will give you energy but afterwards there will be a crash. And then you would have to have more coffee to delay the crash.

[Mosaic Mystic]

Thanks for the reply, @Puffer Fish. I’m not as strongly opposed to the Fed or ultra-low rates as you seem to be, nor do I share the belief that taxes need to be raised. To me, the debt is a non-issue. I’d actually prefer to see the debt ceiling abolished altogether to avoid these recurring debates about spending cuts and tax increases. That said, I appreciate your participation in the thread. Most people find this topic dull, which is probably why it hasn’t garnered much engagement.

[Hakeer]

You are correct. This is inconsistent.

Trump was probably just being self-serving, wanting lower rates because he thought it would help him win reelection. Many politicians think this way, but most are not unabashed about it like Trump was.

Most of Trump's conservative Libertarian intellectual supporters do not want the Federal Reserve to constantly be taking measures to keep rates low.

The view by mainstream economists is that reducing interest rates provides economic stimulus in the short term but carries longer term economic and inflationary costs. The Federal Reserve is supposed to try to lower interest rates to try to ease the country out of a Recession, for example. But constantly keeping rates low is like constantly drinking lots of coffee all the time and expecting that to give you more energy in life. It doesn't work that way. Coffee will give you energy but afterwards there will be a crash. And then you would have to have more coffee to delay the crash.

I am an investor in stock market. It is crazy, but many people move trillions of dollars back and forth between bonds and stocks in response to interest rate changes by the Fed. This affects the amount of money corporations have available to spend. This, in turn, affects the economy either positively or negatively. Personally, I never buy bonds, but I’m in the minority.