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[Brandson]

Over the last couple of days I have been giving the presidential campaign a lot of thought. So much of Trump's campaign was so outlandish and absurd that there must have been more to it. It shouldn't have been taken at face value, much like his wild accusations about Obama that he couldn't expect any reasonably intelligent person to take seriously. But he didn't care about convincing those people to vote for him.

His entire campaign was a smokescreen to gain support from voters where he could find it. His only path to victory was to rile up rural America to a frenzy. I don't think he believes in most or any of the ideologies he was presenting, except for the extent they overlap with making money. The US media did an embarrassingly pathetic job of calling him out on this. His supporters will be very disappointed to find out that he cares about them about as much as any career politician. He will not be governing for their benefit. He just used them, together with a certain subset of rich, white voters, to get elected.

This article articulates my thoughts and helps to explain Trump's bizarre campaign and real motivations: http://www.vox.com/policy-and-politics/2016/11/9/13573294/donald-trump-financial-regulation

Trump's primary goal is and has always been deregulation, of banks, financial markets, tax administration, environmental protections, FDA, SEC, FCC, etc. He views regulations as an impediment to corporate growth and making money. He is not wrong, but deregulation has traditionally been very bad for low-income, low-skilled workers because regulations are intended to protect the public by preventing corporations from engaging in unethical, exploitative, discriminatory, harmful, and sometimes deadly practices. Trump wants to change that approach entirely. The Republican party wants that as well. They want businesses to be free to make any decision purely for the benefit of the business, at any cost to the public. Any ancillary benefits by way of job creation would be welcomed, but only at the discretion of the respective employers, and solely for their ability to make money. Trump won't be forcing businesses to do anything that will negatively affect revenues.

Trump will entrench deregulation into the legislative machine of the federal government to such a degree that any future regulations would have to be voted on individually by Congress. Future governments would have no ability to disentangle this mess unless they too control all levels of government:

In short, we’d be back to where we were in 2006 in terms of overseeing the overall stability of the American financial system.

The House Republican proposal also features a clever idea to help ensure that Trump’s regulatory freeze could outlast his term in office. It does this by essentially inverting the normal order of operations in the American regulatory process. Traditionally, Congress, which has a democratic mandate but limited technical expertise, issues a broad directive to the executive branch, telling it to write rules that do such-and-such. The executive branch, which employs a lot of smart bureaucrats, then writes the rules. Companies regulated by the rules who feel the executive branch has abused its discretion can sue if they like, and courts will check whether the rules constitute a reasonable implementation of congressional directives.

The House GOP’s plan calls for subjecting each new rule to an affirmative congressional vote, creating an enormous new bottleneck in the process, and allowing for regulatory activity to be quietly killed by legislative majorities who simply don’t call it up for a vote. This wouldn’t freeze the Trump regulatory agenda into place for all time. But it would ensure that as long as the GOP has a majority in at least one house of Congress, it could de facto keep the freeze in place no matter what Trump’s successor wants.

Summary: Trump stumbled upon an issue that resonated with voters, building a wall with Mexico, and took that basic idea on a journey of hate and discrimination because he saw a large voting block in the US that would support him if he said those things. They certainly wouldn't vote for him if he said he wanted to deregulate Wall Street to benefit the wealthy.

 

[SlipperyFishes]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

 

[Ithil]

Those very same low income rural working class people that voted him in are going to suffer greatly under his leadership. Ironically they would have been helped under Clinton's (or Sanders') policies.

But hey, one of them had a catchy slogan and the other didn't.

 

[Jarmel]

Well I guess it should be historically interesting to see what fuckery pure capitalism will bring about.

Let's get rid of those stupid monopoly regulations too.

 

[Firebrand]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

Wow. Such anti-establishment.

 

[jelly]

Funny thing is it might work but inevitably take the world down again with it later down the line and Trump won't be in office, he will be an actual billionaire or hopefully in jail.

 

[djkimothy]

Those very same low income rural working class people that voted him in are going to suffer greatly under his leadership. Ironically they would have been helped under Clinton's (or Sanders') policies.

But hey, one of them had a catchy slogan and the other didn't.

You mean hats? They had hats. Damn you valve!

 

[piratepwnsninja]

Those very same low income rural working class people that voted him in are going to suffer greatly under his leadership. Ironically they would have been helped under Clinton's (or Sanders') policies.

But hey, one of them had a catchy slogan and the other didn't.

They'll find a way to blame Obama, though.

 

[kess]

Don't forget Forrest Lucas, who will probably open up federal lands to oil and gas interests and whose wife is best known for comments like this

 

[Ron Mexico]

Like so many other things, there's a (small?) amount of deregulation that could be beneficial (and sadly, I almost feel as I need to preface this by saying I voted Clinton but as a pragmatist I'm looking to any potential positives). So here's a copy of a PM I exchanged with another member after talking about Trump's first 100 day list-- I'll preface again by saying I'm not convinced this deregulation happens, but I would be in favor if it did:

So Dodd-Frank essentially replaced Glass-Steagall. With it came a ton of regulation, which while it was meant to keep the big boys (BoA, WF, Chase, etc etc) in line, what it inadvertently accomplished is making those same big boys even more powerful and by proxy further reinforced the mantra of too big to fail. The smaller banks couldn't afford to keep up with the cost of remaining in compliance and you saw unparalleled mergers and acquisitions unlike anything we had seen since the roads were paved for interstate banking. The big boys had the sense of scale to be able to manage the additional regulatory oversight without costing significant resources that the smaller guys just didn't have. Think WalMart crowding out your mom and pops.

Now for what Glass-Steagall would impact. So assuming you're comfortable with at least the basic concepts of the '08 meltdown, it was all about how the banks were going to make money next. With the struggling rate market and the exposure of all the faults in the subprime markets, interest margin income wasn't the same as it used to be. The banks could no longer live comfortably off the spreads alone.

They certainly weren't going to cut expenses-- after all they just spent all this additional money in compliance oversight. So they need a new revenue stream-- fee-based income. Even before Reg E wiped out the overdraft fees, fee income was not holding up its end of the bargain on your typical bank's balance sheet. Enter the investment links now allowed after the fall of the original Glass. The big thing about investments and allowing them to blend in to the front of the house also opened up another vein for the banking junkies to exploit-- investments are a wonderful means to generate a large amount of fee income in no time flat. Management fees, etc pay out quickly and consistently with the added "benefit" of growing the share of wallet for the banks as now they had yet another route into your wallet. Now all you need is an audience that you can mine for that fee income.

Enter the baby boomers. Historically large number of people all coming to their retirement age-- an age that carried them from pensions and profit sharing to the beginnings of the 401k. Since they're portable, they can be moved. Since they can be moved, they can generate fee income. And away we go. Banks (especially the larger ones with strong links to their investment houses) now use their existing client base as means to fish for portable retirement plans. Reach a point of saturation? No worries! Acquire one of your smaller competitors who couldn't afford the cost of the regulations through Dodd-Frank and those who failed through making poor decisions during the lead up to '08. Now you convert their top boomers to investment clients. Lather. Rinse. Repeat.

Results of this mean investments in technology are stifled. Subsequent generations are ignored. Product breadth becomes increasingly stale. If you haven't been to your bank lately, they love you for it. If you're there for anything other than a sale, you're costing them money because that time could be spent chasing another boomer to bring into their investment platform.

So how would reintroducing Glass-Steagall benefit us all? The big boys are forced to divert their plans and reinvest in making things better for those of all income levels. When they can't, they're forced to divest their business into smaller, more regional and community outfits. Those smaller institutions no longer are so heavily burdened by the regulatory requirements of Dodd-Frank that they can survive on their own. Now you have more competition on a local level, pushing each other to innovate and develop strategy to cater to the needs of a now more local client base. As we can see from the election, there's a wide disparity in socio-economics across the country. Why should the farmer in the midwest and the tech guru in Silicon Valley be using the same products with the same pricing? Madness. Yet to one of the large corporate banks, the individual needs of the community are homogenized by looking over such a wide empire.

 

[Breads]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

Look at these outsiders.

top_men.jpg

Consider the swamp drained.

 

[Merino]

Yeah this I see as the biggest of problems as well (leading to environmental issues, bigger inequality issues, etc.).

This is exactly where the Republican party and him align (and exactly where his voters got duped) and what is directly going to cause most of the permanent damage to the country and the world at large.

 

[Joni]

So let's hope Europe, China and other financial centers shield their banks from this, kinda forcing European rules in them if they want to work together.

 

[Brandson]

Like so many other things, there's a (small?) amount of deregulation that could be beneficial (and sadly, I almost feel as I need to preface this by saying I voted Clinton but as a pragmatist I'm looking to any potential positives). So here's a copy of a PM I exchanged with another member after talking about Trump's first 100 day list-- I'll preface again by saying I'm not convinced this deregulation happens, but I would be in favor if it did:

That's a really well-reasoned post. I agree that many regulations have unintended consequences that inadvertently make problems worse. This can be true in environmental regulation as much as financial regulation. However, eliminating most regulations wholesale is going to have some serious unintended, and intended, consequences as well.

 

[Ron Mexico]

So let's hope Europe, China and other financial centers shield their banks from this, kinda forcing European rules in them if they want to work together.

Be careful what you wish for. I went into it in much more detail above but there's a lot more to it than deregulation = bad.

And that was just one small bit of the financial industry-- figured the parts with the most customer-facing impact would be the most clear.

That's a really well-reasoned post. I agree that many regulations have unintended consequences that inadvertently make problems worse. This can be true in environmental regulation as much as financial regulation. However, eliminating most regulations wholesale is going to have some serious unintended, and intended, consequences as well.

We're in total agreement here. You'll never once here me argue for deregulation across the board. To be fair, you'll also never once hear me say the current regulatory setup is the best we can do. Now, I'm not in a position where I can articulate as well about environmental regulations, etc as that's not my line of work, but just want to shed a bit more light on things that can be easily overlooked.

 

[Curufinwe]

Get ready for another financial meltdown.

 

[Joni]

Be careful what you wish for. I went into it in much more detail above but there's a lot more to it than deregulation = bad.

And that was just one small bit of the financial industry-- figured the parts with the most customer-facing impact would be the most clear.

Some might be good, complete deregulation is bad. I don't trust the GOP enough to hope for the first.

 

[Brinbe]

The rich get richer... Enjoy being Kansas on a national level.

 

[MikeyB]

He views regulations as an impediment to corporate growth and making money. He is not wrong, but deregulation has traditionally been very bad for low-income, low-skilled workers because regulations are intended to protect the public by preventing corporations from engaging in unethical, exploitative, discriminatory, harmful, and sometimes deadly practices.

Nope. Regulatory measures are often a means of instilling confidence in the marketplace and encouraging consumption and thus profit.

Industries ask for and often draft regulation. Sometimes it is regulatory capture that lets them rig the system in their favour, sometimes it sets a baseline of quality.

 

[gamechanger87]

Be careful what you wish for. I went into it in much more detail above but there's a lot more to it than deregulation = bad.

And that was just one small bit of the financial industry-- figured the parts with the most customer-facing impact would be the most clear.

To further add to your point, the Fed has kept us at essentially a ZIRP policy crushing banks ability to generate income from traditional banking. This combined with their inability to invest from their balance sheet and garbage trading profits (from the Fed juiced stock market) has forced them to run around and try and find other ways to make money.

 

[Deleted member 1235]

Those very same low income rural working class people that voted him in are going to suffer greatly under his leadership.

good. People should reap what they sow.

 

[Boney]

This is on Clinton just addressing this as Trumped upped reaganomics once in 2 debates.

What a shit show

 

[akileese]

Well I guess it should be historically interesting to see what fuckery pure capitalism will bring about.

Let's get rid of those stupid monopoly regulations too.

Trump is actually (or at least claims to be based on his comments about breaking up Comcast and blocking the TW/AT&T merger) against monopolies because they go against the idea of pure capitalism. What we have now isn't capitalism, it's crony capitalism. Trump seems to actually want to return it to pure capitalism, which I doubt he'll be able to do.

 

[Goldenroad]

The sad fact of the matter is that Trump's economic policies stand to benefit the Clinton's more than Clinton's policies did. I'm not saying she didn't put up a good fight, but it's gotta be nice knowing that even if you lose, you still win.

 

[Goodstyle]

This is on Clinton just addressing this as Trumped upped reaganomics once in 2 debates.

What a shit show

She addressed it several times throughout her campaign and went into detail on numerous occasions. "An economy that works for everyone and not just people at the top" was one of her (only) core messages. Clinton did a lot wrong in this election, this wasn't one of them. It's on poor white America when Trump destroys their lives further.

 

[Ron Mexico]

Some might be good, complete deregulation is bad. I don't trust the GOP enough to hope for the first.

See, that's a separate issue which can and should be argued on its own merit. Regulation/deregulation on their own as a concepts aren't intrinsically good or bad. It's how their implemented and how they're evaluated that becomes important.

Otherwise, you get this:

Get ready for another financial meltdown.

Which I don't agree with whatsoever-- or rather, not on these grounds. As a matter of fact, from just this one facet, I believe the polar opposite. I believe the financial industry was in a much healthier, more competitive place before the advent of the megabank.

forced them to run around and try and find other ways to make money.

Which you and I both know is never good for the end user-- they're the ones left holding the tab at the end of the day.

 

[Joni]

See, that's a separate issue which can and should be argued on its own merit. Regulation/deregulation on their own as a concepts aren't intrinsically good or bad. It's how their implemented and how they're evaluated that becomes important.

Of course. But the people executing the change determine everything. If Clinton wanted to change it, I would be less worried. She is not. In this case it is a party that liked to mess this stuff up in the past.

 

[Kinyou]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

"We need a businessman, not a politician"

 

[Ron Mexico]

Of course. But the people executing the change determine everything. If Clinton wanted to change it, I would be less worried. She is not. In this case it is a party that liked to mess this stuff up in the past.

So here's just some food for thought-- her husband ended Glass-Steagall with the passage of the GLBA.

Mind you I still voted for her. I'm not shying away from that. But on this, I did not agree with her.

 

[ZOONAMI]

Wow. Such anti-establishment.

Look at all those old white rich men in charge.

Honestly this is what trump supporters were talking about, drain the swamp means get rid of any white people or minorities in charge in DC (Obama's going away so don't let Hillary take his place).

 

[Tal Shiar Agent]

If you thought the Great Recession was bad, get ready.

 

[Man-is-Obsolete]

Wow. Such anti-establishment.

Perhaps the most infuriating thing about my interactions with Trump supporters.

Hillary is the establishment and corrupt....uh uh I mean look at that photo.

 

[Laiza]

Trump is actually (or at least claims to be based on his comments about breaking up Comcast and blocking the TW/AT&T merger) against monopolies because they go against the idea of pure capitalism. What we have now isn't capitalism, it's crony capitalism. Trump seems to actually want to return it to pure capitalism, which I doubt he'll be able to do.

Sounds incredibly unrealistic.

Is he also going to revamp the patent system and un-Disneyfy the copyright system? Something tells me no.

 

[Ron Mexico]

If you thought the Great Recession was bad, get ready.

I'd love for you to expand upon this.

 

[Soldiussnaku]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

Pictured, the seven co-presidents of the USA.

 

[Laiza]

I'd love for you to expand upon this.

There's not much to it.

He's going to remove a lot of protections workers have while also hitting a lot of the laws that are meant to protect against risky financial behavior, putting us in position to jump into another financial bubble while automation hits full swing and workers still don't get the jobs they're pining for (or worse, mass layoffs as automation becomes cheaper than hiring new people).

If people at the bottom don't have money to spend, you get a recession. It's that simple. The economy's wheels cannot turn purely on the spending of people in the upper stratas of society. In fact, I wouldn't be surprised if we got The Great Depression 2.0 in the wake of his policies.

What we actually needed are forward-facing policies to help spread the wealth around and increase consumer spending (while also hitting fossil fuels harder to counteract climate change as much as possible, but that's not strictly an economic thing). Concentrating the wealth further will only lead to further suffering, and of course, lots and lots of civil unrest. People WILL grow disillusioned with The Trump and he WILL have the lowest approval ratings of any president ever. No one will be happy except the fat cats.

 

[Ron Mexico]

There's not much to it.

He's going to remove a lot of protections workers have while also hitting a lot of the laws that are meant to protect against risky financial behavior, putting us in position to jump into another financial bubble while automation hits full swing and workers still don't get the jobs they're pining for (or worse, mass layoffs as automation becomes cheaper than hiring new people).

If people at the bottom don't have money to spend, you get a recession. It's that simple. The economy's wheels cannot turn purely on the spending of people in the upper stratas of society. In fact, I wouldn't be surprised if we got The Great Depression 2.0 in the wake of his policies.

What we actually needed are forward-facing policies to help spread the wealth around and increase consumer spending (while also hitting fossil fuels harder to counteract climate change as much as possible, but that's not strictly an economic thing). Concentrating the wealth further will only lead to further suffering, and of course, lots and lots of civil unrest. People WILL grow disillusioned with The Trump and he WILL have the lowest approval ratings of any president ever. No one will be happy except the fat cats.

The regulations protecting against risky behavior (looking at Dodd-Frank specifically here) created its own risky behavior by making the largest banks the only ones able to cope with its costs. The big banks become too big to fail and you have the bubble you so certainly feared.

Your second paragraph we agree a fair bit. However, that's also why you need to shift the power away from the big boys and back into the hands of the smaller, more regional-focused institutions. Didn't this election teach us that the country is anything but homogeneous?

Again, we agree at the end-- I'm not in favor of concentrating the wealth whatsoever. It's the exact reason why I'd support the end of Dodd-Frank and a reintroduction of a Glass-Steagall.

Will he have the lowest approval ratings ever? Probably. He didn't get my vote. But it wasn't for this.

 

[hydragonwarrior]

GOP knows about the long term. They'll fuck up every rule to give them control of House and Senate for a good, long while. They might add some rules to gerrymandering too.

Get fucked, DNC. You guys know the RNC more than we do so you should have been more fucking scared of this scenario than us. Your bubble screwed you over.

Either way, 2018 is coming up. If the DNC is smart, they'll start motivating people now.

 

[-Minsc-]

That's a really well-reasoned post. I agree that many regulations have unintended consequences that inadvertently make problems worse. This can be true in environmental regulation as much as financial regulation. However, eliminating most regulations wholesale is going to have some serious unintended, and intended, consequences as well.

Coming from a dairy farm I have somewhat an understanding of how piled on regulations can make things difficult. I'm not exactly against regulation and I know many farmers neglect preparing for new regulations. This said, there is a noticeable pressure to invest/spend money implementing regulations while at the same time receiving less income for product. Personally I'd rather farms to be smaller, which would require regulation. At the same time, this regulation can also be twisted to push out smaller farms.

 

[gamechanger87]

The regulations protecting against risky behavior (looking at Dodd-Frank specifically here) created its own risky behavior by making the largest banks the only ones able to cope with its costs. The big banks become too big to fail and you have the bubble you so certainly feared.

Your second paragraph we agree a fair bit. However, that's also why you need to shift the power away from the big boys and back into the hands of the smaller, more regional-focused institutions. Didn't this election teach us that the country is anything but homogeneous?

Again, we agree at the end-- I'm not in favor of concentrating the wealth whatsoever. It's the exact reason why I'd support the end of Dodd-Frank and a reintroduction of a Glass-Steagall.

Will he have the lowest approval ratings ever? Probably. He didn't get my vote. But it wasn't for this.

Dodd-Frank was and still is a complete nightmare to deal with. The number of regulatory hurdle put in place do nothing but require the large banks to staff up with massive back offices and gave the SEC more firepower to add manpower.

In regards to you proposing that GS be re-introduced, how do you balance that with the fact that the Fed has essentially crushed traditional banking with its rate policies? A lack of GS enables banks to try and figure out a way to make money because they can't under the current rates.

IMO, the Fed's willingness to keep rate lower than they should be has forced everyone to chase yield and plow money into the equity markets rather than safer investments. The stock market is artificially inflated and has thus given off the perception that the economy is doing great when in reality its just an allocation of asset from debt to equity.

The Fed backed themselves into a corner and I don't know how you add GS back unless they feel like bumping rates quite a bit.

 

[Scrooged]

Perhaps the most infuriating thing about my interactions with Trump supporters.

Hillary is the establishment and corrupt....uh uh I mean look at that photo.

It's amazing how they can't see that Trump ran his campaign like any other politician. By saying what the base wants and lying his ass off.

 

[Stead Fast]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

Row, row, Fight the Powa!

 

[djplaeskool]

#RefillTheSwamp

 

[Ron Mexico]

Dodd-Frank was and still is a complete nightmare to deal with. The number of regulatory hurdle put in place do nothing but require the large banks to staff up with massive back offices and gave the SEC more firepower to add manpower.

In regards to you proposing that GS be re-introduced, how do you balance that with the fact that the Fed has essentially crushed traditional banking with its rate policies? A lack of GS enables banks to try and figure out a way to make money because they can't under the current rates.

IMO, the Fed's willingness to keep rate lower than they should be has forced everyone to chase yield and plow money into the equity markets rather than safer investments. The stock market is artificially inflated and has thus given off the perception that the economy is doing great when in reality its just an allocation of asset from debt to equity.

The Fed backed themselves into a corner and I don't know how you add GS back unless they feel like bumping rates quite a bit.

So if I had a perfect answer to this question I wouldn't be sitting in my office writing this post, but I'll take a crack at it.

I think you hit on the first thing right off the top-- the feds are going to have to bump rates at a pace that might (who am I kidding-- absolutely will) cause some (read: a metric fuckton of) turbulence. It's going to hurt. In some cases, it'll hurt badly but you're not going to be able to put the toothpaste back in the tube. When the rates dropped 400 basis points in a year from '08-'09, you're not going to recover by nervously dipping your toes in to a couple of 25 bps increases (and the 2nd one is making a somewhat dangerous assumption that they'll even raise rates at the next meeting) .

That said, leaving a GS-esque policy out is going to be just as dangerous once the boomers begin to die off and that vein isn't as strong as it once was. My prediction is it would lead to more punitive fees which would then hammer the underserved in the same way keeping rates artificially low were trying to avoid. Except how much further can you realistically go there? Again, given the nature of the cost of current regulation, I don't see a banking environment comprised of only Wells, Chase and BoA period being all that far-fetched of a concept as they're the only ones with a suitable sense of scale to keep up. Hell, maybe only 1 or 2 of them survive as they cannibalize each other. And what happens when there's no alternatives? It's Comcastic!

Neither one sounds good whatsoever in the short term. I don't have a solution for that. That said, bringing back the target rate to something more realistic is a better hedge for a more successful future than the environment we have right now. Essentially, status quo means things will be shit for the foreseeable future. Bringing back something like a GS would means are going to be really shit now with the promise of a more sustainable long-term play.

It would take someone who gave exactly zero fucks about how unpopular the short term would be to pull it off. If only there was someone like that...

And no, all that said, I'm not optimistic. And no, he still wouldn't have gotten my vote. This is but the tip of the iceberg but again, credit where credit's due.

 

[maruchan]

good ol neoliberalism... its worked so well...

 

[Ron Mexico]

good ol neoliberalism... its worked so well...

Again, I'll say the same thing as above to another poster-- I'd love to hear you expand upon this. How do you feel this ties into neoliberalism, what's the better answer, etc.

We've had a pretty well-thought out discussion so far. Has been refreshing tbh-- let's keep that trend going.

 

[PsychoSoldier]

#RefillTheSwamp

Most of those are swamp in human form, so #CondensetheSwamp?

 

[PSqueak]

And when you look at the people in the photo below you begin to realize how fucked up everything in the United States is going to be for deregulation.

Funny, for a campaing that ran so heavily on xenophobia and nationalism, that's a lot of foreign sounding surnames.

 

[Brandson]

A possible approach to help mitigate the consequences of dramatic financial deregulation could be if clients demand verifiable transparency from financial institutions who have their business. In a free market, if certain institutions offer services that provide the ability for clients to verify what their brokers are doing for them, and also verify anything the brokers may be doing counter to their client's interests, while being able to legitimately trust that verification process, then those institutions would presumably be able to market that feature over their competitors. Clients would then be free to put a value on that kind of transparency, or not, by moving their business.

Presumably outright pyramid schemes, embezzlement, and money laundering would still be regulated, but something like this could possibly help to encourage brokers to continue to act in the interests of their clients, even if the government wouldn't require that they do so.

 

[gamechanger87]

So if I had a perfect answer to this question I wouldn't be sitting in my office writing this post, but I'll take a crack at it.

I think you hit on the first thing right off the top-- the feds are going to have to bump rates at a pace that might (who am I kidding-- absolutely will) cause some (read: a metric fuckton of) turbulence. It's going to hurt. In some cases, it'll hurt badly but you're not going to be able to put the toothpaste back in the tube. When the rates dropped 400 basis points in a year from '08-'09, you're not going to recover by nervously dipping your toes in to a couple of 25 bps increases (and the 2nd one is making a somewhat dangerous assumption that they'll even raise rates at the next meeting) .

That said, leaving a GS-esque policy out is going to be just as dangerous once the boomers begin to die off and that vein isn't as strong as it once was. My prediction is it would lead to more punitive fees which would then hammer the underserved in the same way keeping rates artificially low were trying to avoid. Except how much further can you realistically go there? Again, given the nature of the cost of current regulation, I don't see a banking environment comprised of only Wells, Chase and BoA period being all that far-fetched of a concept as they're the only ones with a suitable sense of scale to keep up. Hell, maybe only 1 or 2 of them survive as they cannibalize each other. And what happens when there's no alternatives? It's Comcastic!

Neither one sounds good whatsoever in the short term. I don't have a solution for that. That said, bringing back the target rate to something more realistic is a better hedge for a more successful future than the environment we have right now. Essentially, status quo means things will be shit for the foreseeable future. Bringing back something like a GS would means are going to be really shit now with the promise of a more sustainable long-term play.

It would take someone who gave exactly zero fucks about how unpopular the short term would be to pull it off. If only there was someone like that...

And no, all that said, I'm not optimistic. And no, he still wouldn't have gotten my vote. This is but the tip of the iceberg but again, credit where credit's due.

TBH, Trump has lashed out recently at Yellen for keeping rates low so I wouldn't be surprised to see him shake it up. He's criticized Yellen by saying that she is keeping rates low because Obama doesn't want the economy to show how inflated the bubble is before the election. I 100% agree with him, because a long term ZIRP policy creates a large problem on the back end and once you start that you may as well go NIRP to fix it. We needed rates raised years ago to take our lump and re balance the markets. The longer it drags out the worse it gets and 1-2% growth isn't worth a ZIRP policy.

I expect him to shake it up and rates to increase. There will be movement in the markets to account for it, but hopefully you will see businesses actually plow cash into capex and investments rather than share re-purchases.