this post was submitted on 07 May 2025
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No, the tariffs are actively preventing monetary easing. If you were wondering what the news about bond rates and the conflict between Bessent and Powell is about, it's because they can't ease.
At a core easing relies on borrowing money to fix the downturn. Usually, when a downturn happens, interest rates go down because there's less to invest in. If you can't get a 8% return on stocks, you buy bonds until bond returns go below 4% or so. Except, thanks to crazy man tariffs, no one trusts the bonds anymore. So USA can't ease.
I also want to note, this was clearly Bessents original plan. Hurt the economy with tariffs, then do easing and pull more money back into the American Treasury. But oops, no one trusts USA anymore...
*Edit: Lol, god damn this happens fast. Powell is talking about what I'm talking about here literally just now.
https://lemmy.ml/post/29763814?scrollToComments=true
So the inflation he's talking about is why they can't ease. Normally when stocks go down, bonds go up it's caused by deflation. People stop spending money so prices go down and thus, bond rates go down. But we're not seeing deflation, we're seeing inflation, which again is causing the inability to monetarily ease. It's just funny to me we were just talking about this and bam, there's a news article.
Holy cow!
Any guess as to what will happen? The US also has a debt ceiling issue coming up very soon too
That's way too difficult a question to answer. But that said my theory is USA will have a lost decade like Japan. The distrust and broken agreements should have decades long effects. Can USA get back to where they were? Maybe, but no matter what now, it's going to take decades.
Sweet jebus, you're not joking. That really was fast. Thanks for being ahead of the curve for us lonely souls on the Fediverse - even if it was only for a few hours or so. And thanks for answering my question.
This aligns strongly with some sentiment I've seen around here. That what we're really up against is just a cadre of goons that are laser-focused on short term greed, a very simple playbook, and little else. I say "goon" only because I'm at a loss for a word that means: "dangerous like a cornered-and-hungry predator, yet piloted by weaponized levels of stupidity."
The biggest issue I have isn't that they're evil. Though obviously that's a huge issue, but that they are woefully incompetent. We've seen this type of evil before in the USA. Richard Nixon is obviously well known to be a greedy goon. But he did it in a way people didn't really see it until after he was impeached. Trump is way too obvious for his own good. Though, maybe that's a good thing... Burn it down asap