Low Interest Rate Persons
She is a low-interest-rate person. She has always been a low-interest-rate person. And I must be honest. I am a low-interest-rate person. If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.
— Donald Trump
Two low interest rate persons! The Trumpsumptive president (Donald the Tremendous) can be seen here indicating the approximate size of the interest rate that will still keep us out of “major problems”.
BALTIMORE – With startling clarity, the presumptive Republican presidential nominee described himself – and Fed chief Janet Yellen. But he could have just as easily been talking about his rival in this year’s presidential elections, Hillary Clinton.
Donald Trump had already gone broke – twice – by the time Bill Clinton took office. But then, the combination of lower interest rates and rising asset prices saved him.
And extraordinary abundance and prosperity of the Clinton years owes little to Mr. and Mrs. Clinton and much to the fact that Alan Greenspan had inaugurated his famous “Greenspan Put” in 1987.
1987 – the year of Greenspan’s original sin – click to enlarge.
Greenspan reassured investors that he had their backs with a rate cut whenever the stock market took a turn for the worse. This led to an “illusion of prosperity,” as stock prices rose, helping Bill get reelected… and gaining national prominence for Hillary as the aggrieved wife in the Monica Lewinsky affair.
Stock prices filled with hot air, until the bubble in the Nasdaq blew up in Clinton’s last year in office. Both of this year’s presumptive candidates are “low interest rate” people, all right. Their adult lives were marked by the credit cycle and their careers shaped by ballooning debt. And now, almost the entire world economy depends on low rates.
We live on Planet Debt.
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