Tuesday , October 22 2019
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New home sales, Manufacturing surveys, Trump on Fed, Pence, Turkey

Summary:
Up some for the month, but remain weak and depressed historically, especially on a per capita basis: Manufacturing surveys continue to forecast weakness: I think what he wants rate cuts because he (and most everyone else) believes that will make the dollar go down which he further believes will reduce the trade deficit and support economic growth: And the VP isn’t far behind the big guy: Pence says other countries should ‘emulate’ US economic policies to catch up Vice President Mike Pence said Thursday that other countries should “emulate” US policies.However, he also said the US should imitate the policy of other nations who keep their interest rates anchored near zero. Looks to me like Turkey has got it right- inflation will fall and the currency firm as they cut

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WARREN MOSLER considers the following as important:

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Up some for the month, but remain weak and depressed historically, especially on a per capita basis:

New home sales, Manufacturing surveys, Trump on Fed, Pence, Turkey
Manufacturing surveys continue to forecast weakness:

New home sales, Manufacturing surveys, Trump on Fed, Pence, Turkey
I think what he wants rate cuts because he (and most everyone else) believes that will make the dollar go down which he further believes will reduce the trade deficit and support economic growth:

New home sales, Manufacturing surveys, Trump on Fed, Pence, Turkey

And the VP isn’t far behind the big guy:

Pence says other countries should ‘emulate’ US economic policies to catch up

Vice President Mike Pence said Thursday that other countries should “emulate” US policies.
However, he also said the US should imitate the policy of other nations who keep their interest rates anchored near zero.

Looks to me like Turkey has got it right- inflation will fall and the currency firm as they cut rates. But I don’t expect it to help the economy, but instead the rate cuts will likely weaken it, begging a fiscal adjustment to support employment and output:

Erdogan Says Turkey to Soon Cut Interest Rates to Single Digits

President Recep Tayyip Erdogan said Turkey will lower interest rates to single digits soon and inflation will follow suit.

“We are lowering and will lower interest rates to single digits in the shortest period,” Erdogan said in a televised speech on Sunday. “After it falls to single digits, inflation will also slow to single digits.”

The drop in inflation after rate cuts is an apparent reference to Erdogan’s personal belief that price gains slow when the cost of borrowing is reduced. Most economists think the opposite is true.

WARREN MOSLER
Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, in the US Virgin Islands, where he owns and operates Valance Co., Inc.

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