Federal Reserve Rate Cut Odds Drop Despite Trump Due To Growing Financial Bubble

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Yesterday, the Federal Reserve released an FOMC edict in which it kept interest rates steady, despite calls from President Trump to lower interest rates down below 3%. He has stated he wants rates about 2% lower from where they currently stand in order to make financing the budget deficit using short-term bonds cheaper.

The odds of a rate cut in September have also fallen.

They now sit at less than 60%.

Many people want more interest rate cuts, because they think it will make the financial markets go up more for them, however, it should be obvious that rate cuts are not needed to grow the economy or make stocks go up. In fact, cutting rates when stocks are soaring risks creating a bubble bust and inflation surge.

But, in the thinking of the administration, rate cuts are needed to finance the debts, and at some point they probably will be proven correct - or if not rate cuts than a new Treasury operation like yield control.

This is why the US dollar keeps dropping and one reason why gold is in such a powerful long-term uptrend.

One thing that HAS NOT happened is that there has been no recession since the covid lockdowns ended and no bear market in the stock market since 2022.

There have been warning signs - such as an inverted yield curve, that reinverted last year, increasing bouts of volatility in the financial markets that come and go, which have no real precedent. I can’t find three previous spikes in the VIX in a 12 month period that did not lead to a new bear market. There have been signs of stress with consumers, but that stress is split between those with a large amounts of financial assets and the vast majority of Americans who actually own very little. Inflation has beaten them down in the past few years.

What has kept everything going is the simple reality that the US has economy is being fueled by growing bubbles in just about everything.