Just one more indication of how little Donald Trump knows (or cares) about economics: after the US Federal Reserve finally had the cojones to raise interest rates, in direct opposition to Trump's frantic exhortations to drastically reduce interest rates, Trump tore the whole organization off a strip. His rationale? "Interest Rates in the United States should 1% or less, because we are the Best Credit in the World - BY FAR."
Setting aside the fact that he is living is a fantasy world, and that the US's credit rating is actually AA+ according to most rating agencies, compared to the AAA rating of countries like Canada, Australia and many European countries (see graphic below), that is not the point.
Credit ratings are not what drives interest rates, Mr. Trump.
The Fed - under new Trump appointee Kevin Warsh, who was widely expected not to have the gall to stand up to - voted unanimously to increase interest rates by a quarter of a percentage point to 3.75-4.00%, and warned that it would probably raise them again next month. HIS rationale? The plain fact is that inflation is too high and has been for too long."
Now that is a sensible rationale. And for that the US President blustered, "The board is very hostile. They're very political. They're doing the wrong thing. They're a bunch of politicians. They're raising rates to make Trump do as bad as they can possibly do."
Ah, so interest rates are actually all about Donald Trump! Now I get it.
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