Because of this tax cut, the Fed will aggressively raise interest rates to head off inflation

[Yavin4]

You cannot have low interest rates, low taxes, and the current level of federal spending all at the same time. We've had almost 10 years of zero percent interest rates, and only recently they've gone up to 1.75, still a historical low. Goldman Sachs predicted 4 rate hikes in 2018 taking the rate to 2.75. My prediction is that they won't stop until the rates are at 4.5% which will dramatically slow down the economy.

In 2019, if the Dems assume congressional majorities, they may be facing a full blown economic recession for which they will be blamed by low information voters.

Mark Zandi, chief economist with Moody’s economy.com, said that if massive tax cuts aren’t offset with correspondingly large tax increases or reductions in government spending, the Fed’s response could even cause the economy to contract.

“If the tax cuts are deficit financed, that is going to juice the economy and it will overheat, significantly raising the odds of a recession early in the next decade,” Zandi told HuffPost.

https://www.huffingtonpost.com/entry/donald-trump-federal-reserve-offset-tax-cuts_us_5a2076cae4b03350e0b55f99

[roamer65]

1. The Fed will hold fairly constant and further cook the inflation numbers.

There is only one way out of this much debt...inflate. The Fed will not risk a depression by increasing rates substantially.

The bread and circuses are about to cost us a LOT more denarii.

[Yavin4]

2. You cannot inflate. You'd risk hyper inflation if you do.

Right now, there's no fiscal constraint. You cannot have tax cuts, low interest rates, and current levels of govt. spending all at the same time without it triggering hyper inflation.

[roamer65]

14. I dont see hyperinflation because a lot of demand has been lost in our economy over the past years.

But 10-20 pct? Yes. That rate of inflation can and has been hidden in the past.

[quartz007]

7. Election next November will be fun to watch!

Trumpy's party is gonna lose big!

[flamingdem]

3. Housing is going to take a hit

but not the developers who got a 600 billion gift included today..

[Yavin4]

4. Anyone with debt is going to take a hit when the Fed raises rates.

Whatever little tax cut you got, it will be gone with higher interest payments on your mortgage, student loans, credit cards, etc.

[flamingdem]

5. This should create quite an outcry

When do regular Joe and Jane begin to complain loudly?

[Yavin4]

6. Again, this won't happen until 2019 or 2020 when the Dems may be back in control

Trump and the Republicans will blame them.

[flamingdem]

9. The dems had better message this with that in mind

but they have to have the right leaders and money to pay for all of that

[radical noodle]

8. Get fixed rates if you can

for anything you buy. Especially mortgage.

[NutmegYankee]

10. Ideally the debt is fixed rate anyway.

And higher interest will help a lot of retired people get some decent earnings from savings and CDs.

[Roland99]

11. That includes US treasury issuances. Well be paying more in interest on govt debt

[Lucky Luciano]

12. WIth a fixed rate, you are ok. With a lot of debt at a low fixed rate,

Last edited Wed Dec 20, 2017, 08:17 PM - Edit history (1)

...inflation may not be so bad.

[benld74]

13. They talked about raising it since August

Like it was known to be a done deal then