Trump, the Fed, and the Distorted Reality of ZIRP: The Hidden Economic Risks Behind the Stock Market's Euphoria
This article analyzes Trump's attempts to interfere with the Fed's independence and the distorting effects of the long-term zero interest rate policy (ZIRP) on the economy. Trump's attempt to fire a Fed governor is motivated by a desire to force interest rate cuts, threatening the Fed's independence and potentially leading to economic catastrophe. The article points out that ZIRP led to irrational expectations about future cash flows, fueling tech bubbles and financial risks. The stock market's optimistic response to Trump's actions contrasts sharply with the bond market's concerns about economic risks – a divergence that will eventually lead to market correction. The author argues that the Fed's independence is crucial and that the long-term effects of ZIRP represent a serious economic risk.