When the president wants a “low prices”

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Trump loves low interest rates. It is really really truly He wants the low man to be in the federal reserve. like Claire Jones mentioned in maintenance During the weekend.

Donald Trump said he would only choose a new president of the federal reserve that will reduce interest rates in the United States, as he called the central bank to reduce borrowing costs to 1 percent.

Didn’t we see this movie before?

No, not this movie.

Certainly, it may be there Lessons from Low interest rates from President Erdogan to President Erdogan with the low interest rates in strong Türkiye-and if this is linked to high inflation rates in the country, the collapsed currency and the nomination of the banking system.

But our minds went for the first time to the drama about the birth of the modern Federal Reserve in 1951. The story was listed with Gusto by Robert Heitzel and Ralph Lich in A. Narration More than 20 years ago. Although readers will numb well by reading the whole matter, we have brought out some prominent points, which later became known as the Treasury Agreement.

Once the United States entered World War II, fears of inflation on one side were set for national security. Short -term interest rates have been linked by 0.375 percent, and Return curve control has been implemented With a cover on long returns from 2.5 percent.

However, while short—ite–was raised in 1947, the US Treasury insisted on the Federal Reserve to keep the ceiling on the bond returns in the long run. For President Truman, an ethical issue was to protect the market value of the war bonds that Patriot bought (he himself was himself rinse When he had to sell $ 100 of freedom loan in World War I for $ 80 upon his return from France).

The Federal Reserve was not happy. Because after the post -war bust of the first war, the inflation was getting YipPy again.

The Federal Reserve wanted to raise short rates, but the maximum revenue of bonds, which is 2.5 per cent, is its weakest ability to do so. Short rates above the market have pushed the sale of long -term bonds, in fact the federal reserve is forced to more and more QE to defend the maximum. All this – calculate – was – was leading inflation.

But at the time, monetary policy was still in the hands of the President and the United States. This became a tempting tool to use when the Korean war broke out in 1950, as Heetzl and Leach noted:

Truman was convincing reasons for freezing interest rates. On January 25, 1951, he froze wages and prices, regardless of farm prices. Raise the cost of borrowing, especially on home mortgages, while frozen wages were cm. More importantly, in January 1951, Truman faced the possibility of World War. . . Truman and (Treasury Secretary) wanted to maintain the cost of financing the deficit that would come out of a wider war.

With the escalation of the war in Korea, consumers rushed to buy goods, the prices of basic commodities increased, and the consumer price index enlarged – in the three months ending in February 1951 – operating at an annual rate of 21 percent. Yixes.

Therefore, Truman did not call the Chairman of the Board of Directors only to the Federal Reserve, but rather the entire Federal Open Market Committee to the White House to convince them of their national duty to maintain confidence in government securities during the national crisis period. Follow the White House with a Press statement Declaration of that:

The Federal Reserve pledged to support President Truman to maintain the stability of government securities as long as the emergency continues.

Unfortunately, FOMC did nothing like that. Keeping the general ambiguity with regard to their commitment to continuing the bidding of the treasury was one of the few cards they had. The Icel Mariner Eucleis Governor was affected by ascertaining New York Times and Washington Post Know it.

Perhaps not surprisingly, this fell as follows with FOMC members, making it more clear-and with a constantly increasing size-the high inflation was the direct result of the yield cover for which the cabinet forced them.

When Treasury Secretary John Wesley Snyder went to the hospital to carry out the Ain lens operation on February 11, negotiations with the Federal Reserve were officially delivered to the Deputy Secretary of Treasury William Makshni Martin. The assumption (perhaps even instructions) was to stop the escalating crisis for a few weeks until Snyder returned.

However, Martin – a financial financial person who became president on the New York Stock Exchange more than a decade ago at the age of 31 – moved quickly.

Martin set an agreement between the Federal Reserve and a Treasury. It included a major debt swap that stripped the bond holders of the option to put them in the fund Exchanging the ability to circulate it for a higher voucher Treasury bonds under the new monetary system. Somehow he sold the plan to his president, who is still a hospital.

If this seems to be the Federal Reserve’s victory, it should be weighed against what can be considered the price: Maccabi’s resignation as the Federal Reserve Chairman.

It can put Truman for him A man at the Federal Reserve – the loyal cabinet man. A person understood his biggest image. Low man average. Who chose? Why, of course, William McChani Martin.

The initial reaction to the Federal Reserve Council and employees was that “the Federal Reserve Bank has won the battle but lost the war,” according to Lich, an economist at the US Central Bank at that time. The Federal Reserve may have been released from the cabinet, but then the cabinet recovered it by installing its leg. “

The Senate confirmed that Martin decreased by the Senate on March 21. And in it The first statement as president Declared this:

. . . ” I pledge to support all reasonable measures to maintain the purchasing power of the dollar.

Wait, what? Instead of a weak man, Martin has become a violent defender of the independence of the central bank, Express federal reserve function That “the boats that ordered Pleian to remove only when the party was really heating.”

The rates of increased and inflation decreased (although the long and changing delays of monetary policy, he believed that the fall was doing Martin completely). Today, Martin’s agreement was designed by the modern independent US Central Bank.

How did Truman take this?

A few years later, Martin Harry Truman encountered a street in New York City. Truman said in the face, and he said one word, “The traitor”, then continued.

What is Trump’s lesson? If you really want a low man, be sure to set a real Stooge, instead of a new Martin.