Treasury Secretary Steven Mnuchin Discusses Wall Street and Monetary Policy….

Treasury Secretary Steven Mnuchin discusses the strength of the U.S. economy, and the apparent disconnect between Main Street’s growth and Wall Street’s multinational risk exposure.  [Pro Tip: go back and read the dimensional shift]

Secretary Mnuchin (correctly) stays away from discussing the federal reserve and highlights the strength of Main Street.   CTH readers well understand what is driving this dynamic; and it will continue until 30-years of divergence is corrected, and parity achieved.

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Traditional economic principles have revolved around the Macro and Micro with interventionist influences driven by GDP (Gross Domestic Product, or total economic output), interest rates, inflation rates and federally controlled monetary policy designed to steer the broad economic outcomes.

Additionally, in large measure, the various data points which underline Macro principles have been viewed as two dimensional. As the X-Axis goes thus, the Y-Axis responds accordingly… and so it goes…. and so it has historically gone.  This ain’t that.

Traditional monetary policy has centered upon a belief of cause and effect: (ex.1) If inflation grows, it can be reduced by rising interest rates. Or, (ex.2) as GDP shrinks, it too can be affected by decreases in interest rates to stimulate investment/production etc.

However, against the backdrop of economic Globalism -vs- economic Americanism, CTH is noting the two dimensional economic approach is no longer a relevant model. There is another economic dimension, a third dimension. An undiscovered depth or distance between the “X” and the “Y”.

I believe it is critical to understand this new dimension in order to understand Trump economic principles, and the subsequent “America-First” economy he’s building.

As the distance between the X and Y increases over time, the affect detaches – slowly and almost invisibly. I believe understanding this hidden distance perspective will reconcile many of the current economic contractions. I also predict this third dimension will soon be discovered and will be extremely consequential in the coming decade.

To understand the basic theory, allow me to introduce a visual image to assist comprehension. Think about the two economies, Wall Street (paper or false economy) and Main Street (real or traditional economy) as two parallel roads or tracks. Think of Wall Street as one train engine and Main Street as another. (continue reading)

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This entry was posted in Big Government, Big Stupid Government, Decepticons, Deep State, Donald Trump, Economy, President Trump, Trade Deal, Uncategorized, US Treasury, USA. Bookmark the permalink.

42 Responses to Treasury Secretary Steven Mnuchin Discusses Wall Street and Monetary Policy….

  1. 4sure says:

    SD, I think this sums it up. sum

    Liked by 1 person

    • 4sure says:

      Hit post button by mistake.
      SD, I think this sums it up and makes it easy for me to understand.:

      “When Main Street was purchasing the legislative influence the outcomes were beneficial to Main Street, and by direct attachment those outcomes also benefited the average American inside the real economy.

      When Wall Street began purchasing the legislative influence, the outcomes therein became beneficial to Wall Street. Those benefits are detached from improving the livelihoods of main street Americans because the benefits are “global” needs. Global financial interests, investment interests, are now the primary filter through which the DC legislative outcomes are considered.”

      It all depends on who is purchasing our politicians? Who has the most purchasing power right now?

      Liked by 2 people

      • swampratterrier says:

        Communist Chinese do.

        Liked by 4 people

        • swampratterrier says:

          Ding Dong the Fed is Dead, the Wicked Old Fed is Dead!!!!!!!!

          Liked by 1 person

        • jeans2nd says:

          No. The U.S. has the most purchasing power, whether it be consumer purchasing or politician purchasing. It is called the U.S. Chamber of Commerce.
          Sad but true, re: politicians.

          Liked by 4 people

        • Carrie2 says:

          swamp, stop blaming China and think big banks and corporate conglomerates that control most of the money. Personally, I think the Fed Reserve, which is a big private bank, should no longer be used and find a true federal bank that does not run things through that will benefit them big time.

          Liked by 2 people

          • VoteAllIncumbantsOut says:

            The Fed was set up properly at inception, it was Congress who destroyed it.

            Congress opened the door to the lobbyists when they realized the easy money was flowing in. I try very hard not to follow videos that are conspiratorial because it infects what I know to be true and factual.

            As a trader who trades one of the most difficult markets in the world (DOW) I’ve learned one thing… MEDIA lie! They don’t know crap about markets and they only spew what is put in front of them.

            I’m seriously contemplating a YouTube channel to help those who want to really know the ins and outs of the markets which has taken me years to understand. What makes me hesitant is I don’t want to be blamed for manipulating the direction of any market if the site grows massively because that’s what governments do best when they have competition.

            The markets were already set to pullback and I’ve said this before. Markets go up, media finds narratives to fit, markets go down, same, same. When markets crash, governments always look for the cause and blame the speculators because they’re idiots who understand nothing. Notice Varney blames Mnuchin then switches to China?

            I really do want to help people make money so we’ll see.

            Liked by 3 people

  2. Edit above:
    “I believe understanding this hidden distance perspective will reconcile many of the current economic contradictions [x-contractions].”

    Liked by 6 people

    • fleporeblog says:

      I agree BKR! I was listening to Bloomberg Radio this evening and the had the former Fed President from Minnesota who now teaches at Rochester College.

      He said that Chairman Powell was struggling with the fact that the unemployment rate was so low and yet inflation doesn’t seem to want to move upwards. He actually admitted in may go down.

      He than said that the job of the Fed was to take our economy away from 3 percent growth and bring it to 2 percent growth.

      At first I was shocked but than my mind brought me back to what SD and others have been saying.

      There biggest dilemma right now is that MAIN STREET workers are doing to well and prospering. Their wages are increasing yet their cost of living isn’t consuming their check. They are able to save and put money into their retirement.

      Never forget that 70 percent of our GDP comes from consumer spending. The Fed, Globalist, RINOS, Democrats, MSM, CoC etc. Know that and that is what they are trying to destroy but nothing they have done is working.

      Wall Street is paying the price for MAGAnomics! The Dow is close to 4,000 points from their high in January of last year. For those that rely on their 401K in retirement, my heart goes out to you. You are these BASTARDS collateral damage.

      The world economy also gets destroyed with these Fed hikes. Especially Emerging Markets. They borrow to run their countries. However, the cost of interest continues to rise. Costing them more for each dollar they borrow.

      For those that can wait this out, there will be a reversal. At some point the Fed will have to stop because they are killing the markets and sending the entire world into a recession. They will fail to bring our economy down. Even the Head of the IMF admitted we are on pace for a real GDP rate of 3.7 percent next year.

      Main Street will be dictating their decisions in the foreseeable future!

      Liked by 12 people

      • Valuable perspectives, Flep.

        Synopsis: Countries that have been “living/leaching” off American-Trade surpluses, Interest-Rate free lunches and Currency-Manipulation support will suddenly have to EARN their GDP!

        Implication: Governments that are slow to replicate MAGAnomics will face YUGE unrest and likely overthrows.

        President Trump’s geopolitical policy for each Region to OWN mutual defense is being implemented by withdrawing overseas forces that regional “allies” fail to fund, and constructing Bilateral Alliances encompassing Defense-Energy-Agricultural Trade with an American military “Reserve Backstop” rather than a “Tip of the Spear” role.

        Liked by 7 people

      • America’s Trading “Partners” are learning two HARD lessons:

        • Trump’s Geopolitical and Trade RESET means we regain BALANCED RECIPROCITY at the expense of their Production gravy trains.

        • Trump’s MAGAnomics RESURGENCE means we RECONSTITUTE American MANUFACTURING and RESTORE American AGRICULTURE to “Global Leadership Levels”, which will create excess capacity and supply at the expense of their Profitability gravy trains.

        Liked by 9 people

      • Indicator of things to come:

        The FedEx decline in global freight volumes is our “Canary in the Coal Mine”, portending massive sourcing shifts and economic contractions across China, the EU and the Developing World.

        Those who survive best will cut the first and best Bilateral Trade Deals!

        Liked by 11 people

      • The “fed” (read feral) is slowly being put out of business… as it has existed previously at least. “Maybe” it can be structured differently and maintained honestly in different hands. Maybe.

        A thing of serious beauty!

        Liked by 5 people

        • We need to “AUTOMATE” what the Fed does, limiting it to ONLY “Executing” Inflation Control through Cause Levers (e.g., what % Inflation Level Change over what Period of Time should trigger a standard 0.25% Interest Rate Change) to keep Inflation (only) within an “acceptable range”.

          • Interest Rate Hikes should be “slow” to trigger (e.g., driven by a full 1% Inflation Increase in a quarter) to avoid suppressing GDP and Wage growth.

          • Interest Rate Reductions should be “fast” to trigger (e.g., driven by 0.5% Inflation Decrease in a quarter) to encourage resumption of Investment and GDP growth.

          This will enable us to REPLACE the Fed’s Board of Govenors with the Council of Economic Advisors, giving them the ROLE of “Advising” the President and Congress regarding proposed tweaks in the Cause Levers.

          Liked by 2 people

  3. Dude1394 says:

    So I’m looking for investment advice on the Main Street economy. The closest I have found has been Berkshire Hathaway.

    Liked by 1 person

  4. Dude1394 says:

    I guess individual companies would be good investments but I don’t like individual stocks very much, more of an etf guy.

    Liked by 1 person

  5. Sundance, allow me to toss out a proposed 3-D “Curves” framework to stimulate discussion:

    X-Axis: INTEREST RATE
    (Cause)

    Y-Axis: GDP or INFLATION
    (Effect-Curves)

    Z-Axis: MONEY SUPPLY
    (cause-and-effect interactions with X & Y)

    Curve Shape/Level-Shifters: Federal POLICIES
    • TAX Drags/Incentives
    • REGULATORY Drag/Accelerators

    Liked by 4 people

    • G. Combs says:

      Took a couple reads through, but I understand and can visualize what you are saying. 👍

      Liked by 2 people

      • When you add the Z-Axis to reflect Sundance’s “depth”, I should have noted the X-Y “curves” become X-Y-Z “bending surfaces” like we see in 3-D Holograms.

        Liked by 1 person

      • We can envision the interplay between the Main Street and Wall Street economies, imagine those 3-D “surfaces” to be 2 layers of colored sand:
        • The “base” layer is the “real” Main Street Economy.
        • The “covering” layer is the “contrived” Wall Street Economy.

        The Main Street layer is growing largely at the expense of the Wall Street layer, but faster than the Wall Street erosion, causing the overall surface level of GDP to grow at an accelerating rate.

        Our Manufacturing Renaissance and Agricultural Restoration are like pumping sand into the lower layer as offshored production returns and Big Ag suppression of planting fades.

        Like

  6. 4sure says:

    I love, love, love President Trump’s economic team. Brilliant minds.

    It shows us what a group of professional successful business people like Trump and his economic team can achieve vs. a bunch of bought and paid for career pols. The contrast is like night and day.

    And they can easily understand what Trump’s economic agenda is all about.

    I know the economy is in great hands. I am certain that they will make changes that will set the future course of the economy for decades.

    If we get back to a mfg. economy vs. a service economy, and all the fair trade policies get ironed out w/the rest of the cheaters in the globe, I don’t think we will ever go back to being duped by the globalists,

    Liked by 3 people

  7. Elric VIII says:

    Obama said two percent growth is the new normal. I reckon the Fed is going with that, come hell or high water. We’ve got to be normal.

    Like

  8. notfaded1 says:

    It’s really great to have a VSG that stands behind us for a change. I can’t thank him enough for making many of my biggest fears possibly not an outcome. God bless our country, VSG President Donald J Trump and the United States of America. Each day since November I count my blessings and thank God for the course we are on together. You have to believe that good people though can see a better way through the dark times that it sometimes seems we are in. I have to have Faith that together we can prevail over evil and that basically… Simply… What goes around comes around. Sometimes when the darkness seems like it’s just overshadowing all that’s good… A bright light comes about and can be seen. There is hope. Goodness can prevail. We really do reap what we sew. Birds of a feather flock together and I know what flock I want to be part of. I’ve found a home here and with our President DJT.

    The third dimension is us… It’s a hovering dimension over the regular two dimensional playing field over what most politicians existed in before.

    THIS IS NEW.

    For the previous maybe 15 to 20 years I asked myself… Why does America keep electing politicians??? It always seemed to me it would make much more sense to elect a business person with experience and an honest faith dedicated to restoring the country to greatness. Our prayers have finally been answered but… The status quo aren’t wired like this anymore after decade’s lost to artificial belief. I think if we can stay the course and continue to put America first… We can again be the shining light on the hill.

    We are and have been the envy of the world. We can’t forget how we got here. We are principled and follow the rule of law for all not one. We have to hold those who would contort our media accountable. THIS HASN’T been happening and needs to change!

    I don’t think it’s really that complicated. We need to crowd source the fk out of this! It’s our duty.

    I honestly believe other God loving Americans feel the same way. We have to fight this untrue narrative. We need to get back to having our children sing the banner before school… That’s the kind of country we need again. One nation under God.

    Let’s play 3rd dimension again.

    Liked by 1 person

  9. notfaded1 says:

    It’s main Street versus wall Street stupid. VSG is so proud of the things he’s reaped as a citizen that’s it’s NOT all about him how. Why else would he do what he’s doing??? He wants to pay us back for what he’s benefited from and it’s as honorable as it can get! Liberals can’t even comprehend what he’s doing… It makes it that much more honorable. Go VSG go!

    Like

  10. Curt says:

    This current “correction” started the day after the mid terms. Investors and Wall Street knows that the Democratically controlled House of Representatives will try to do whatever they can to destroy Trump. That includes completely trying to undo the gains made since Nov of 2016. If it ruins the economy then that’s the price that will be paid as long as they regain political power. It wouldn’t surprise me if the Senate fails to approve the already negotiated trade agreements that the Trump administration has made with Mexico, Canada and Japan. They left, supported by a “majority” of Americans, will not allow this President to succeed. He’s already made great strides and they cannot, and will not, let that happen. It’s really just that ugly…

    Like

  11. Curt says:

    This current “correction” started the day after the mid terms. Investors and Wall Street knows that the Democratically controlled House of Representatives will try to do whatever they can to destroy Trump. That includes completely trying to undo the gains made since Nov of 2016. If it ruins the economy then that’s the price that will be paid as long as they regain political power. It wouldn’t surprise me if the Senate fails to approve the already negotiated trade agreements that the Trump administration has made with Mexico, Canada and Japan. The left, supported by a “majority” of Americans, will not allow this President to succeed. He’s already made great strides and they cannot, and will not, let that happen. It’s really just that ugly…

    Like

    • Rhoda R says:

      Well, even if the Senate doesn’t okay the USMCA they won’t get NAFTA back. What they’ll have is what was there before NAFTA and I don’t think that would bother the President over much.

      Like

    • Take solace in the comfort that President Trump will TARIFF the HELL out of Exports-to-America if the UniParty fails to pass trade deals.

      Funding then disappears for the UniParty, as their donors’ stocks PLUNGE.

      Funding then concentrates on Business Leaders that Trump vets to replace the UniParty Pols.

      Liked by 1 person

  12. Jane Smith says:

    Personally, I have felt that the stock market is over valued and needs a correction.
    A raise in interest rates can help savers.
    Worthwhile businesses will still take out loans despite higher rates.
    Worthwhile home owners will still take out mortgages despite higher rates.
    The economy is strong.
    Let Wall Street take a hit for a change.

    Like

    • Your Tour Guide says:

      Agreed. Had a boss years ago. Young guy,
      old for his years. Extremely observant. Long
      discussion that if the stock market was valued
      to it’s true worth, we’d get the country back.

      His reasoning ( which made perfect sense) was
      that the companies that paid off the politicians
      would have less money to bribe them with. So
      they’d have to start competing on their true worth.

      Consequently, some of the worst would fall by the
      wayside.

      Like

  13. Sloth1963 says:

    So many think our economy is a zero sum game. It’s not and if we treat it properly it can expand exponentially.

    Liked by 1 person

    • John Denney says:

      Leftists never talk of creating wealth. Their goal is to take it from “the rich”, instead.

      Yet it is obvious that wealth can be created. If one takes the time and effort to plant and care for a fruit tree, one will have a wealth of fruit. A skilled craftsman can turn a few ounces of metal and glass into a watch.

      Without production, there can be no consumption. One can be productive even if one has no “job”. My grandmothers sewed and grew food and canned it. Consider that a kernel of corn will grow into a stalk containing several ears of corn. How many kernels are on those ears? What is that return on investment? Best part: tax free. 🙂

      Like

  14. Fools Gold says:

    I think investors should move their portfolios to US owned companies across the board…

    Like

  15. nimrodman says:

    Sundance – if you will entertain a question:

    You say “it will continue until 30-years of divergence is corrected”

    I make that to be 1988

    That was the end of the Reagan administration and his policies, but is there a particular set of economic policies or trade treaties or business or banking practices you trace to 1988 that set us on the globalist and America-at-a-disadvantage path?

    Thx.

    Like

  16. 1989 repeal of the anti trust law, 1993 NAFTA, 1996 World Trade Org, 1999 repeal of Glass Steagall. Anti trust repeal set up the monopolizing,control and multi nationalists, NAFTA was the implementation of outsourcing manufacturing and the massive loss of jobs, WTO was another global maneuver to initiate the US into a service based economy and finally the repeal of Glass Steagall was the hammer which took down the barricade between investment and commercial banking.

    Like

  17. John Denney says:

    2 dimensions? 3? In my opinion, there are near infinite economic dimensions. Economics is a chaotic system, meaning that a change will have unforeseeable consequences, which is the gist of Hazlitt’s classic, “Economics In One Lesson”.

    350 million Americans each have a mind of their own, and will respond in different ways to economic changes; each individual is thus an economic dimension.

    Liberty is of paramount importance, so that the individual can best respond to his own unique circumstances.

    The individual will prosper via four character qualities:
    1) Can-Do attitude
    2) Diligence
    3) Continuous Learning
    4) Trustworthiness

    All of these rooted in love for one’s neighbor, coinciding with the Lord’s command.

    These traits can be given to no one, only encouraged, and their opposites discouraged. They apply to all, regardless of age, gender, ethnicity or even, “disability” — Charles Krauthammer became a quadriplegic as a teen, yet was still very successful.

    Like

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