Speaking to an assembly of global leaders at the World Economic Forum in Davos by video, President Donald Trump says he’ll ‘demand that interest rates drop immediately’.

President Donald Trump lobbed his first volley at the Federal Reserve, saying Thursday that he will apply pressure to bring down interest rates.

“I’ll demand that interest rates drop immediately,” Trump said. “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”

Trump at Davos

Please start this at the 6:15 mark. You will have to suffer through a 30 second ad, but it will be worth it.

For many minutes, Trump bragged to the world how great he is, in his video addess. Then he issued this demand.

“My message to every business in the world is very simple: Come make your product in America and we will give you among the lowest taxes of any nation on Earth.”

Then he demanded Saudi Arabia lower the forces of oil and ability to set interest rates for the whole world.

Trump is read he speech word for word and sounds wooden.

Trump said many things I totally agree with, but setting interest rates by his mandate is over the top ridiculous.

Trump Demand That He Replace the Fed

With his statements, Trump demands that the decision on where rates should be are set by him and him alone.

Powell won’t go along. Nor should he.

End the Fed

There should no be a Fed as I have stated many times. Interest rates should be set by the market. But Trump is not the market.

I have also said that the one thing worse than the Fed setting rates would be politicians setting rates.

Economically Illiterate

At Davos, Trump proved he is economically illiterate. When Trump gets rid of Powell, and he will, Trump will appoint an economic puppet that will do what Trump wants, rather try to.

The Chair has a lot of sway, but Trump would need to stack the Fed with a majority of puppets. Also, the Senate would have to approve the next Fed chair.

Wish Granted

Ta Da! Let’s assume Trump gets his wish. Inflation would immediately soar if interest rates were set too low.

But yields on the long end would then soar unless Trump proposed taking over the entire bond market.

Who knows? If Trump is crazy enough to make himself the entire Fed, he may as well take over the entire bond market too.

What a pompous, economically illiterate speech.

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