A disconnect

© 2016 Jim Spence - Suddenly, the health of the economy is seen to be improving so much since the November election, the Federal Reserve Board is contemplating another Fed Funds interest rate hike in an effort to return American monetary policy to what might pass for normal. If the Fed actually hikes in March, it will be the second Fed Funds rate hike since Trump was elected president. By way of contrast, for the entire eight year Obama presidency, a presidency that presided over the slowest rate of growth in U.S. history, the Fed Funds rate stayed at historic lows. These ultra low rates cheated savers and bank C.D. investors like no others have ever been cheated.
The Federal Reserve Board had only hiked the Fed Funds rate once during Obama’s entire presidency until Trump became president-elect. Within five weeks of Trump’s win, the Fed has finally felt confident enough to hike again (in December 2016). It now seems likely the Fed will hike again in March.
What is going on here?
United States Fed Funds Rate
We had a meeting this morning with two prominent bankers that serve our region. To paraphrase their explanation, “There has been an incredible surge in loan demand from business people……since early November. Business people are finally confident and optimistic enough to both hire and expand.”
And speaking of surges in confidence, since early November, the S & P 500 index has gained 10.61%. We may well be seeing the strongest market after a presidential election in history.
In the U.S. private sector, it is pretty clear now that decision-makers who must take real risks to create jobs, have flipped from being hopelessly cautious or worse for eight years under Obama, to being increasingly optimistic now that Mr. Obama is out. These folks, are the economic realities out there in the real world.
Sadly, this is not what gets discussed in America these days. In the public schools, at colleges and universities, in news media (minus Fox), and especially in the entertainment industry, it is as if the world is coming to an end.....not emerging from ten years of bitter economic winter. Accordingly, there is simply a complete disconnect between the reality of finally being blessed with a pro-business government, and the perpetual denial of the damage done by the horrific anti-business policies of Obama.
It was fitting that an industry dominated by Democrats, one that makes huge piles of money each year producing hundreds of shoot em up films, still has the temerity to lecture Americans about gun controls. Hollywood, which sees itself as the pillar of moral virtue that somehow entitles stars to preach, could not get the right envelope in the hands of its presenters during the best picture Oscar awarding on Sunday night. As if the industry needed one more embarrassment to add to its resume of boorish behavior.
Anti Trump Oscars 2017
Tony Branco's rendering of what the Oscar ceremonies are all about

Will the momentum of economic optimism thanks to Trump's deregulation continue? Unfortunately, this is a tough call. There are several gigantic and highly influential entities trying to throw up barriers to our chances for an economic revival. First, there is a relentless propaganda war not just on Trump, but against his very positive economic policies. Collectively (no pun intended) Democrats have decided to run with their absurd Russian connection con job. This Russian hack propaganda ruse is being orchestrated by Democrat partisans in the media, public education, and even in the entertainment industry. Second, there are plenty of gutless Republicans in the House and Senate who seem to be too cowardly to take action on the changes demanded by the electorate last November. Some observers think the lack of action on tax reform and Obamacare are just Washington moving a bit slow. Others think it is gutlessness as usual in our nation’s capitol. Only time will tell. As an independent, I have very little confidence in the GOP to do what they say they will do....even if Trump is doing what he said he would do. GOP members of the House and Senate seem way too content to see if they will catch hell for doing nothing, while they see if Trump's popularity holds under the unprincipled assaults.

In the meantime, as all of this plays out, it is comical to see Hollywood types continue to be overwhelmed by their inflated sense of self importance. Jackass movie stars think people want to hear all about their petty hatreds while they are accepting trophies for pretending to be someone else. Of course some people agree with Hollywood. But not 85% of all American counties or 60% of all American states. Counties and states voted for the optimism that came with a Trump win. This optimism is reflected in the quantum leaps in: loan demand, the stock market, and confidence at the Federal Reserve. But of course, nobody quotes these Americans in the New York Times.



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