Santa Monica Observer - Community, Diversity, Sustainability and other Overused Words

By Stan Greene
Observer Staff Writer 

As President, Hillary Clinton Will Raise Interest Rates, says Goldman Sachs and Other Banks

She will appoint more hawkish Federal Reserver governors. The era of zero interest rates is about to end.

 

October 25, 2016

It is not entirely clear why, but Donald Trump says he would fire the queen of low rates, Federal Reserve Chairman Janet Yellen. He is 6 points behind in national polling, and will likely never get that chance.

The election of Democratic candidate Hillary Clinton as President will lead to higher interest rates, starting with a 25 basis point increase at the Federal Reserves December meeting. This according to CNBC and other sources.

While the Fed has raised the overnight interest rate just once in 9 years, "Goldman Sachs economists now see a 75 percent chance of a Fed rate hike by the end of the year, with odds rising as Republican Donald Trump's chances of winning the White House have fallen." http://www.cnbc.com/2016/10/11/goldman-sees-rate-hike-odds-rise-as-trump-slides-in-polls.html

Wikileaked speeches given to banks such as Goldman Sachs, show that Mrs. Clinton has promised bankers higher interest rates. Bank stocks are at 4 year highs in some instances, as a result.

I should disclose that I, a Gary Johnson supporter, regard higher interest rates as a good thing. The purpose of the Federal Reserve is not to support big business at the expense of small (who can't get low interest lines of credit--they don't qualify). I see the wave of homelessness in our community as a result of low interest rates, which have created insanely high property values in Santa Monica (Santa Monica City hall's favorite developer, NMS, rents one bedroom apartments to internet kids for $3500 a month; I'm not making this up). It's time to end the subsidies.

In a note, the economists point to a swing in the election outcome toward Democrat Hillary Clinton as well as better economic growth as reasons for raising the odds from 65 percent.

As President, Hillary Clinton Will Raise Interest Rates, says Goldman Sachs and Other Banks

According to their "subjective probability," the chances for a November rate rise are 10 percent and for a December hike are 65 percent. Donald Trump has said he would keep interest rates low, but that he would immediately fire Federal Reserve Chairwoman Janet Yellen. It's not entirely clear just what Yellen did to displease the Great Ex-communicator, or whether she could be fired before her term expires in 2018. But Mr. Trump will likely never get the chance to say "You're fired" to Yellen.

They point to betting markets and poll aggregators, which show the probability of a Trump win falling to 10-20 percent, down from 30-35 percent two weeks ago.

"This is important because market participants seem to view a Trump victory as a potential trigger for a significant tightening in financial conditions, which in turn could result in another delay for the FOMC," says CNBC.

The dollar is at a 7 month high as national banks world wide anticipate Mrs. Clinton's election and a rate increase.

 

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