Mike Pence: The "Economy is Roaring" So Let's Cut Rates

-edited

Vice President Mike Pence and Economic Director Lawrence Kudlow escalate Trump's feud with the Fed.

On Friday, President Trump Escalated his Feud with the Fed over interest rates.

Vice President Mike Pence and White House National Economic Council Director Lawrence Kudlow—echoing President Trump’s comments Tuesday—called on the Fed to lower interest rates, saying the economy’s engine could handle more fuel.

“The economy is roaring,” Mr. Pence said Friday in a CNBC interview, not long after the Labor Department reported the jobless rate had fallen to 3.6% in April, the lowest level in 50 years. “This is exactly the time not only to not raise interest rates, but we ought to consider cutting them.”

It isn’t unprecedented for politicians to lean on the Fed to cut interest rates and give the economy the kind of jolt that voters reward at the polls. President Nixon pressured Fed Chairman Arthur Burns to keep rates low right before the 1972 election.

But it is rare for the White House to take on the Fed so openly, analysts said. “It not only breaks the norms, it shatters them,” said Laurence Meyer, a former Fed governor. “It’s just amazing.”

Just Amazing

The amazing thing is not that Trump is doing anything unusual. The unusual is the norm.

Rather, the amazing thing is the logic the administration used.

If you can't hike rates when the "economy is booming" then you can never hike rates because you don't hike rates when the economy is doing poorly.

Economy Booming?

We can debate whether the economy is booming. Despite Friday's jobs report, it's pretty clear the economy is slowing.

But that' not the argument Pence presented. Pence wants to cut rates despite his claim that the economy is booming. That's the amazing thing.

Mike "Mish" Shedlock

Comments (39)
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C. P. Roberts
C. P. Roberts

Why Fed Chair Powell is a Laughingstock

Just this week, for example, Powell zoomed in on the dots and concluded that the federal funds rate should remain within a range or 2.25 to 2.5 percent. At the same time, via an implementation note, Powell lowered the interest on excess reserves (IOER) rate 5 basis points to 2.35 percent.

Ted R
Ted R

Cut rates down to what? Zero? Somebody needs to explain to our Vice President about the liability side of the balance sheet, namely debt and unfunded government liabilities. Good Lord.

Menaquinone
Menaquinone

Local grocery inflation is 30% because of a new $11/hr minimum wage. Local rent inflation is 10% because of no campus housing, student loans, and Chinese robber barron children paying $60K tuition. Gasoline inflation is 20% over last year. Construction is everywhere. The state borrows free money to build an elevated public transit train. Everyone has money. A burger, fries, and craft beer at a sidewalk cafe is $10. Premium coffee is $2.50 per cup. Construction workers drive boss four seat trucks. Set up another punch bowl. The party is just getting started.

AWC
AWC

Dow 30,000 on deck. Long blue tarps and shopping carts down by the river. More financial "Diversification."

2 Trillion bucks worth of new bridges for folks to camp under. Life is gooo-oood.

Webej
Webej

Has there even been a presidential team with a higher ignorance score ??

Maximus_Minimus
Maximus_Minimus

What is this brain disease called, cognitive dissonance? There seems to be an epidemic.

Bbbbbbb
Bbbbbbb

But that’s capitalism. That’s greed. What capitalist doesn’t want $2 million when he’s got $1 million? It could also be a sign that though he won’t say it, he fears the economy IS slowing down.

lol
lol

Can you blame him?Looked at that(simulated) jobs report and saw the continued collapse of the tax base,Less people working now than when LBJ was president...ouch.

Jackula
Jackula

Expecting today's politicians to be able to soundly run a financial system is like trying to get a junkie off dope, they don't learn until they have several near death experiences.

MikePod
MikePod

What did you expect, we live in Clown World. One day this will blow up in spectacular fashion.

jberman4
jberman4

Just curious - how are all of you folks who think the FED is FUBAR positioned wrt your investments? In other words, how are you preparing for the jump in inflation that you think is just around the corner?

Boot6761
Boot6761

When does it end Miss...that is the question. When do we have to bite the bullet and start to be more fiscally responsible?

ReadyKilowatt
ReadyKilowatt

Don't these people realize that 10,000 people a day are turning 65? Most of them are one bad day away from chucking it all and retiring. Well they would be if they knew their meager savings might be enough to live on for another 30 years. So they keep working.

Then because they keep working no one moves up. We all just slog along, getting our annual 1.5% "merit increase" if we don't blow up anything. Young people are stuck in entry level jobs. And the old timers (who aren't dying thanks to medical advances and our winning the war on germs) are hoarding because they know their children won't be there to take care of them when they can no longer maintain their homes.

Then when they actually do pretend to take action by raising interest rates by the laughable amount of 1/4 point, the reaction by politicians and Wall Street is to throw a temper tantrum. Because apparently the economy is running at perfection and don't dare change anything ever. If you have a 6 figure salary today you should always have a 6 figure salary. If your job title is "supervising manager" you should always be a "supervising manger" no matter what. And you should never retire because look at what happened to that guy who did -he was dead in 20 years! John McCain died in office, and he had a wonderful life. Sir Ian McKellen's still making movies at 79. Tim Cook (age 58) is a young go-getter in comparison.

Casual_Observer
Casual_Observer

Pence is just a puppet of his boss. The trump administration is seriously functioning how dictatorships function. Literally every decision is at the whim of the dictator. Fortunately we have two other branches of government. It is only a matter of time before Trump is thrown out of office imo. This may happen before the 2020 election.

At some point people will realize that economic growth matters less than liberty and freedom and oppression.

RonJ
RonJ

But it is rare for the White House to take on the Fed so openly, analysts said. “It not only breaks the norms, it shatters them,” said Laurence Meyer, a former Fed governor. “It’s just amazing.”

Norms is a restaurant.