Trump vs. Yellen – Is the U.S. at an Economic Crossroads?

Gold Price FloutsTrump vs. Yellen. Ring a bell? Does it make any sense at all? Is this a private squabble we’re just learning about? Or is it more like the Gun Fight at The OK Corral – out-and-out disagreement about how to manage the economy?
 
After all, according to most accounts, Fed Chair Janet Yellen is a quiet, modest and affable person. In 2013, just about 4 months before she ascended to the Fed Throne, a profile at Alternet.com portrayed her as a brilliant economist who is “accessible” and “likable.” While she believes that the U.S. economy needs some inflation to achieve growth, she’s of no mind to let it explode. To do so, she believes, will invite trouble – quite possibly a recession. True to her character and training, then, Yellen prefers a measured approach. She wants to keep the brakes on the nation’s economic growth.
 
President Trump begs to disagree. A hit-and-run entrepreneur by temperament, the new Commander-in-Chief is hellbent on accelerated, even explosive, growth for the U.S. economy. He wants to keep his campaign pledges at all costs – reshape the nation’s infrastructure, create jobs, deport immigrants, and build up the military.
 
He’s made no secret of his feelings about Janet Yellen. During his campaign, Trump accused her of keeping rates low or nonexistent to make then-President Obama look good. And now that he’s President, he’s forced to put up with a Fed Chief who wants to make him look just the opposite. Or so he thinks.
 
But from everything we know about Fed Chief Yellen, her stance on Trump or, for that matter, any president at the helm, remains neutral. Not just because she happens to be a non-combative personality, but because the nature of her job, as she interprets it, happens to be more of a team monitor of the Federal Open Market Committee (FOMC) than a central bank autocrat at the interest-rate switch.
 
Not only that, Yellen knows full well that Trump, in his inimitable fashion, can’t simply say to her “you’re fired.” In keeping with the Banking Act of 1935, the United States President appoints the seven members of the Board of Governors of the Federal Reserve System who, in turn, are confirmed by the Senate and serve for 14 years. The president also selects the chairman and vice-chairman from among the sitting governors who, in turn, need to be confirmed by the Senate. Once confirmed, they serve for 14 years.
 
In short, when it comes to the Federal Reserve, President Trump has his hands full. By law, he can only fire Janet Yellen for cause. He can try to stimulate growth all he wants, but he can’t, as Commander-in-Chief, tweak interest rates already set down by the Fed’s Board of Governors. And these rates are what ultimately prime the engine of growth. So any news of the President and the Fed Chair on a “collision course,” as the New York Times recently put it, is a bit overstated.
 
When the FOMC convenes in the next two days, they will most certainly hike interest rates. They will do so because they believe the U.S. economy is functioning at a “maximum sustainable pace,” a belief in direct conflict with what President Trump happens to believe or, rather, wishes to be the case.
 
As investors, we’ll all have to deal with the effects of the Fed decision on the economy. Will the stock market continue to blaze forward? Or will it crash and burn?
And will the President forge ahead with his spending plans?
 
The uncertainties now associated with your investment in paper assets suggest a strong basis for your adding physical gold to your portfolio.
 
You simply can’t risk the exposure to your nest egg to do otherwise.
 
Request more information now or call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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