A Quote by Donald Trump
I do like low interest rates. I'm not making that a big secret. I think low interest rates are good. I like a dollar that's not too strong. I mean, I've seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar.
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And so Fannie Mae produces very strong results for investors in - when interest rates are high and when interest rates are low, in recession and during booms.
To the extent that the Trump administration doesn't like a strong dollar, something has got to give, and just yelling at other countries for devaluing when you're raising rates and they're cutting rates is not going to work.
For equity markets, the combination of low interest rates, strong economic growth and low inflation has proved very beneficial, with global share markets rising solidly in each of the past three years. This has been underpinned by strong growth in profits so that, notwithstanding the rise in share prices, P/E ratios have been declining on average.
The key is if the economic data stays soft, maybe we don't have to worry much about interest rates anymore. Then we need to worry about earnings. What gave us a really strong move in stock prices from late May until about two weeks ago was this heightened optimism that maybe interest rates are at that high. That gave you a relief rally. Now reality is setting in - if we've seen the worst on interest rates then we've seen the best on earnings.
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
Weaker currencies abroad mean a strong dollar, and a stronger dollar, together with a weak global environment, is a drag on the U.S. economy. So it's important, as it affects overall levels of production and employment in the U.S. There are many domestic industries doing well in the United States, notwithstanding a strong dollar.
When interest rates are high you want the average direction in which interest rates are moving to be downward; when interest rates are low you want the average direction to be upward.
A strong dollar reflects a strong country and a strong economy, and we need to make sure that we get the - stop the practice of devaluing the dollar.
I don't want to see the dollar strong because the rest of the world is crumbling. I would like to see the dollar strong because the Fed has said it wants it to be strong in the future.
China should have a currency which is a much higher value relative to the dollar and other things. What they're doing is keeping it low, artificially low. And I mean seriously artificial. I don't just mean a little bit low. I mean major low.
Debt certainly isn't always a bad thing. A mortgage can help you afford a home. Student loans can be a necessity in getting a good job. Both are investments worth making, and both come with fairly low interest rates.
With interest rates artificially low, consumers reduce savings in favor of consumption, and entrepreneurs increase their rates of investment spending.
Here's the interesting thing: the fact that QE and lowering interest rates almost to zero has worsened inequality, does not mean that raising interest rates will help reduce inequality.
Monetary policy has less room to maneuver when interest rates are close to zero, while expansionary fiscal policy is likely both more effective and less costly in terms of increased debt burden when interest rates are pinned at low levels.
The real challenge was to model all the interest rates simultaneously, so you could value something that depended not only on the three-month interest rate, but on other interest rates as well.
The good news is that a competitive dollar in the global market and a strong dollar at home are compatible in both the long run and during the transition to a more competitive dollar.
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