Wednesday, November 14, 2018
If you have been reading this blog for a while then you probably realize that I identify as a "conservative".
Conservatives spend a lot of time jumping up-and-down pointing out the theatrics of the other side.
That doesn't mean that conservatives don't engage in theatrics. In fact, I would be disappointed if we didn't. Theatrics make complex ideas interesting and make points-of-view "sticky".
Trump is a master of theatrics. That is a good thing if you are a conservative and a bad thing if you consider yourself a progressive.
One must wonder if Trump's hand-wringing over rising interest rates is mostly theatrics.
If a business slow-down is in the cards then Trump wants the carnage cleared before November, 2020. If the slow-down had started before Nov 2018 then voters would have blamed the Republicans, the party that is nominally the more conservative.
With Democrats in control of the House and baying like hounds to destroy Trump, Trump has the perfect scapegoat if/when GE (and Tesla and any five, medium sized banks you care to name) goes into reorganization and property values tank. It is not Trump's way to "play nice" and settle for a bone. He plays for the win and does not allow the other team to control the tempo of the game.
In a perfect world, interest rates would slowly rise to the point where it made economic sense for people to put money in the bank. I contend that is 3% more than the rate of inflation.
In a perfect world, the speed with which rates were raised would result in a rate of sovereign, business and personal liquidations that the economy could recognize and absorb the write-downs, redeploy the real assets and still show a little bit of real growth.
I don't think that is going to happen because I think the time frame for that sure-footed absorption of malinvestment would extend way beyond 2020.