And he wants Janet to play interest rate low-ball
by Zach Scheidt via TheDailyReckoning
“I like [Janet Yellen]. I like her demeanor. I think she’s done a good job. I’d like to see rates stay low. She’s always been – you know, she’s historically been a low-interest-rate person, a believer.”
Those are the words of your president when asked if he will re-appoint Janet Yellen as the Federal Reserve Chairwoman, or pursue other candidates.
Trump mentioned that there are a couple of other candidates on the docket.
But one thing is very clear — Trump will definitely appoint a Fed Chair who will favor low interest rates. And that means there is no relief in sight for savers desperate for higher interest payments from their retirement nest eggs…
Fed Loses Independence, And the Dollar Loses Value
The Federal Reserve was designed to be a politically independent body, not beholden to Republicans, Democrats, or any other political party.
That’s the story anyway.
The idea was that the Fed should operate independently of political pressure, allowing the board to make wise economic decisions for the good of the country — no matter which party is in control.
But that’s not how the real world works.
Instead, the Fed is heavily influenced by Washington politics. Janet Yellen, in particular, is under pressure to do exactly what the president wants. Otherwise, she could lose her job when her position comes up for re-appointment in February.
And Trump has made it exceedingly clear that he will appoint a Fed Chair that will favor low interest rates.
Heck, he said it himself in an interview with the Wall Street Journal last month. Here’s a rambling quote from Trump on the issue of the U.S. dollar:
TRUMP: “I do like low interest rates. I mean, you know, I’m not making that a big secret. I think low interest rates are good. I like a dollar that’s not too strong. I mean, I’ve seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar.”
There you have it… Trump is in favor of low interest rates, and against a strong U.S. dollar.
It makes sense when you think about it…
If the U.S. dollar is strong, that means other international currencies are weak in comparison. If the euro, yen, and yuan are weak, it becomes harder for international consumers to buy American products.
So weakening the U.S. dollar is one of the best ways to make American products competitive in international markets.
And the best way to make the U.S. dollar weak is to lower interest rates.
Low interest rates give international savers less incentive to own dollars. After all, they can’t earn much of a return on those dollars if rates are exceptionally low.
So to make America competitive, Trump is pulling for low interest rates and a weak U.S. dollar.
How to Protect Your Wealth Against a Falling Dollar
While a weak dollar may help to make U.S. companies more competitive, this is bad news for those of us who have worked hard to sock away savings for retirement.
Think about it for a second…
The dollars you have in your bank account… The dollars you have invested in stocks or mutual funds… The dollars that you will spend to cover life expenses for years to come…
They’re all becoming worth less!
Not only that, but with interest rates low for the past 10 years — and likely to stay low for the foreseeable future — those dollars won’t be multiplying very quickly.
For retirees in the U.S. — and for future retirees — the political and economic environment is not just challenging, it’s downright hostile!
But despite this frustrating set of circumstances, there’s actually good news if you know where to look.
The thing about a lower U.S. dollar is that when the dollar falls, the value of precious metals rises. This is true for two primary reasons.
First, a weak dollar simply means that it takes more dollars to buy the same amount of goods or services. In other words, prices rise in dollar terms. In particular, prices for gold and silver rise because it takes more weak dollars to buy each ounce.
The second reason a weak dollar boosts the value of precious metals is because of strong demand. You see, as investors start to realize that Yellen is going to be reappointed — or at the very least replaced with a “Yellen 2.0” puppet, they will naturally flock to gold and silver. After all, these metals are the best way to protect wealth against low rates and a falling dollar.
Trump specifically said that he intends to make a decision on the next Fed Chairman before the end of the year. The announcement will be a major catalyst to send gold and silver prices higher. But if you wait for the announcement to be made, you’ll likely miss much of the rally. And you’ll certainly have to pay higher prices than the price available today.
So today, I encourage you to start moving a portion of your wealth into gold and silver. Even a modest investment can make a big difference in protecting your wealth from low interest rates and the decline of the U.S. dollar.
But make sure you act quickly — before prices of gold and silver move sharply higher!