On Tuesday, during a largely farcical “address” to the Economic Club of New York, Donald Trump extolled the purported virtues of negative interest rates.
“We are actively competing with many nations who openly cut interest rates so that now many are actually getting paid, when they pay off their loan, known as negative interest”, Trump said.
“Who ever heard of such a thing?”, the president wondered.
As it turns out, one person who’s “heard of such a thing” is Rep. Don Beyer, who has “a friend in Switzerland who went to borrow $10 million and got a negative interest rate”. Don told Jerome Powell all about it during the Fed chair’s visit to Capitol Hill on Wednesday.
“They’re paying him $30,000 a year to borrow $10 million”, Beyer said, on the way to asking if Powell “sees any prospect for negative rates in the US economy?”
Much to Trump’s chagrin, Powell said he did not think negative rates would be appropriate for America at the current juncture.
“Negative interest rates would certainly not be appropriate in [this] environment”, Powell began. “We have growth, we have a strong consumer sector… so, the very, very low and negative rates we see around the world would not be appropriate”.
Oh well! There goes Trump’s pipe dream of “getting our interest rates down to ZERO, or less, and… then refinanc[ing] our debt”, as the president famously called for in September.
At the time, Trump resorted to all-caps to make his point. “INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term”, he shouted into the Twitter void.
In other words, Trump was asking Powell to cut rates into negative territory and simultaneously imploring Steve Mnuchin to issue century bonds which would come due sometime during the assumed reign of Barron Trump IV.
But alas, Trump seemed to realize he wasn’t likely to get his way.
“It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing”, the president said, just prior to the September Fed meeting, while lamenting what he called “a once in a lifetime opportunity” that the country is “missing because of ‘Boneheads'”.
On Tuesday, in New York, he told a reluctant audience that anybody who didn’t literally applaud his calls for negative rates was stupid.
“The smart people are clapping”, he said.