Is this time different?

[Oscar77]

Fox:
Yes, you are right "......Fed rate reductions have nothing to do with Tariffs...."
But that wasnt the point I was making.
We have a national deficit. That deficit which you and I have been discussing. How a deficit develops is the Govt spends more than it has in revenue. The money they spend (but dont have) is acquired by loans of different means but they Govt doesnt get the extra money for free. They pay interest on the loan. Those interest payments are included in the deficit amount and is what you and I are discussing. For example in FY 2024 those amounted to 879.9Billion dollars or 13% of the Federal expenditures.
So it's in, actually all of our interests, not just the Presidents, if interest rates lower.
But instead of soley to counter inflation, it, (reduced interest rates), not only reduces the deficit but make credit card rates cheaper, allow homes, cars etc to be bought.
Not to mention all the businesses that benefit from lower rates- they borrow money too- buildings, trucks, etc etc.

Thats the main reason why they also increase rates, if the economy becomes too hot or more correctly inflation rises too quickly or employment rates drop too low.

Take Care.

PS: While certainly appreciate theoretical statements by Scholars, unfortunately my experience has been lately they have been horribly wrong. I prefer to look at the at the actual numbers or just look around.
Foreign Investment in the US is at an all time high- Why would they risk all that money and time if they felt it would fail?
You say Tariffs will increase costs to the consumer or ultimately fail, well they haven't.
You say bringing jobs back to the US will increase costs, well it hasn't.
So you say well, those things are coming........ but that's a guess, grant you a well thought out guess, and you could be wrong.
But those things, like increased consumer costs, could easily be off set by dropping interest rates or better production capabilities here.
Thats a guess too.
I think I'm right............ you think you're right.
No worries.

PSS: To clarify part of my concern over relying on Scholars is this: I believe, but could be wrong, that your scholar reference goes back to 1930 when Pres Hoover signed the Smoot-Hawley Act.
(Yes I had to remind myself of it thru google).
But immediately I'd argue that any comparison to the US then vs now is sheer folly. There is no realistic way to compare the condition and strength of the US now vs then. Just one example: Then we were basically nothing more than an agricultural based economy. Now we are the World leaders in Tech, Defense, Education and finance.

So for a current observation, watch this, it's short:
Larry Kudlow: Jerome Powell's Fed wrong about growth and inflation 'as usual' | Fox Business Video