Fed Up Friday: Overly Cautious Fed Can’t Figure Out Trump

This week, the national debt edged closer to $20 trillion, double what it was at the beginning of Obama’s presidency. The FOMC minutes were also released from their latest meeting. As it turns out, the Federal Reserve just doesn’t know how Trump’s incoming presidency will affect the economy.

Trump is Stumping the Federal Reserve

Some are calling it a “climate of uncertainty” for the economy this year, and the Fed doesn’t seem to know what to expect from Trump when he takes office in a few weeks. FOMC expectations are high that the president-elect’s tax cuts and fiscal spending will goad inflation to rise, increasing the need for interest rate increases. At this point, some Fed members can’t decide if Trump’s going to grow the economy or balloon inflation. Given the abundance of uncertainty in European politics and policies at home, the Fed’s path to three rate increases this year will be a rocky one.

Bill to Audit the Fed is Gaining Traction

The controversial bit of legislation to audit the Fed, spearheaded by Rand Paul, has been reintroduced. Having been shot down numerous times before, such a bill could find its chances of passing with a Republican-controller house and senate and an incumbent Commander in Chief who’s also called for an audit.

If the bill passes, the Fed’s meetings and deliberations would be closely watched by a Government Accountability Office. Many Republicans believe that the Fed is too powerful and lacks oversight when deciding on monetary policy. Janet Yellen and others have stated that the policy would cause too much political pressure and discourage enforcing economic benefit to the overall economy.

Fed’s Lack of Confidence for 2017 is Helping Gold

The release of the FOMC minutes this week has left the dollar falling, and bolstered gold towards a one-month high. Overall, gold had good gains in 2016, up a total of 8.5%, and the quick bump at the end of the year has helped it start 2017 off on the right foot.

Under Obama’s Reign the Debt Nearly Doubled

19.98 trillion dollars is almost an inconceivable number even when it’s not connected to the national debt. That’s right, the US National Debt ended the year and Obama’s reign at $20 trillion worth of debt and much of which is the result of the Fed’s open market operations and quantitative easing.  That’s an 88% increase from where we were on January 20, 2009.

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