Guest post by Joe Hoft

The Federal Reserve under Janet Yellen in December 2017 announced another Fed Fund rate increase of 0.25%. This was the fourth such increase since Donald Trump was elected President. The Fed increased rates only one time under Obama until the 2016 election.

After Barack Obama was elected President, on December 16, 2008, the Federal Reserve (The Fed) lowered the Fed Funds rate by an entire percent, from 1% down to 0% . The Fed had not lowered the Fed Funds rate by such a large amount (1% ) since at least before 1990, if ever. The Fed kept this 0% rate for most of Obama’s eight years in office.

CNBC reported in December 2015 that President Obama oversaw “seven years of the most accommodative monetary policy in U.S. history” (from the Fed). The Fed Funds rate was at zero for most of Obama’s time in office. Finally, in December 2015 after the Fed announced its first increase in the Fed Funds rate during the Obama Presidency.

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The only Fed Funds Rate increases since 2015 were after President Trump was elected President.

The Fed increased the Fed Funds Rate on December 14, 2016, on March 15th, 2017, on June 14, 2017 and again on December 13, 2017. Four times the Fed has increased rates on President Trump in 2017 after doing so only once during the Obama years.

The Fed Funds Rate greatly impacts the economy:

Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder.

If the Federal Reserve was political and wanted to prevent Republican Presidents from successful economic growth and debt decreases, then the Fed would increase the Fed Funds rates during Republican Presidents’ terms while decreasing the Fed Funds rates under Democratic Presidents’ terms. This appears to be exactly what the Fed is doing.

Increases in the Fed Funds Rate increase the cost of borrowing and the largest borrower in the world is the US government. With $20 trillion in debt, a 1% increase in interest payments equals $200 billion in annual interest payment increases.

Obama increased the US Debt amount by nearly $1 trillion more than President Trump in the first eleven months of his Presidency.

The Fed has increased interest rates by 1% in 2017 after President Trump’s election win. With no rate increases in interest rates, President Trump would arguably have a balanced budget to date. (Although the short term implications may not dictate this, the long term implications are clear.)

On Thursday Rep. Louie Gohmert called out the Federal Reserve for punishing Trump and stifling the Trump economy.