The independence of the Federal Reserve is one of the key features of our economic system. To keep near term political pressure off of the Fed, the President NEVER publicly comments on monetary policy or meddles in decisions made by the agency.  Well, never until yesterday.  Yesterday, Trump (as usual) shattered another decades-long practice by publicly complaining to CNBC that he was “not happy” about the Fed raising interest rates, and that rising rates damaged “all the work” that he’s putting into the economy.

Jesus.  After careful consideration and years of observation, I have determined that Trump is an idiot.  His spouting off about interest rates on CNBC certainly demonstrates (for the thousandth time) that he has no understanding or respect for his responsibilities of the office he infests; worse, said spouting also demonstrates that he has no understanding about how interest rates actually work.  So, I’ve decided to help; let’s talk to Trump about Interest Rates 101:

Dear Donnie…HEY! YOU!

First, sit down and shut up.  Zip it and listen.  You need to UNDERSTAND THIS.  You’re bitching about interest rates, but you clearly have the knowledge of a chimpanzee about the subject.  So, let’s talk interest rates; I’ll keep this simple so even you can understand it.  Why is it important that we get this concept through that big hair weave?  Because, dumbass, even as you complain about interest rates going up, YOU are making interest rates go up!  Your idiotic and unneeded tax cut to billionaires accomplished two things: 1) You overheated the economy, fueling inflation, and the Fed is having to raise the Fed funds rate to slow down spending, and 2) You exploded the deficit, forcing the Fed to sell more debt.  To sell more debt, INTEREST RATES HAVE TO GO UP TO GET INVESTORS TO BUY IT.  When you blew a gigantic hole in the deficit with your tax cut, YOU caused the problem.  Also, because of your idiotic and erratic leadership, demand for US bonds internationally is down, especially in China.  Again, dropping demand forces higher interest rates to get investors to buy US debt.  Simple.

A debt rate primer: US debt rates are determined by the demand for government bonds. US Government debt is how we finance deficit spending.  You remember that, right, way back when deficits used to matter when the Black Guy was in the White House? Right?  Anyway, I digress.  When demand for bonds exceeds the supply of bonds, interest rates go down until demand is reduced.  If demand for bonds is less than the supply of bonds, then interest rates go up until demand increases and the bonds sell. Interest rates are increasing now because we’re having to finance more debt.  So, here’s what YOU can do, Donnie, (I know your orange head is going to explode) to lower interest rates, you should:

1. RAISE TAXES.  This will raise revenue and lower the need to issue more US debt.  Interest rates will go down.
2. STOP YOUR ASININE TRADE WAR. Confidence and stability in the US increases demand for US debt, and interest rates will go down.
3. Stop commenting publicly on Fed monetary policy, labor numbers, and Hillary Clinton (Hillary comments have nothing to do with interest rates, but they do make you look like a moron.)

Now, go back up to the residence, but turn off Fox Noise and go play with your Legos.

Sincerely,

El Jefe, Interest Rates 101 Instructor

There is a place for anger, and THIS is it.