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The dispute between Trump and Powell (the head of the Fed, that is, in fact, the main functionary of the "Western" global project, along with the head of the IMF) was devoted to the discount rate. Powell wanted to raise the rate (and this process even began), since the return on equity today is negative and this has created serious problems for banks. Trump, who abandons the Bretton Woods model and wants to return production to the United States ("Let's make America great again!"), Needs domestic demand, which, against the background of household debt burden, will fall sharply if the rate is raised. Accordingly, he demanded to lower it again.

And he won. But then the next round of the crisis began, which demanded a sharp emission. He again gave rise to a dispute over who will get the money, the state or the banks. And again Trump won, the main redemption of assets - from enterprises of the real sector. And the problems (for some reason) are not over. What's next, and by the way, why didn't it end?

Let's start with the second question. American households spend a little more than they actually earn, so as soon as the crisis begins, demand drops sharply. It can be compensated in three ways. The first (the growth of commercial lending) is no longer working because banks do not believe that the money will come back. Two options remain. The second is direct support of citizens (that is, a sharp simplification of the incentive system is simple) and the third is emission lending to small and medium-sized businesses. Emission lending differs from commercial lending in that banks in the first case act simply as operators, they do not bear the risks of loan defaults, they only distribute them, taking a small margin.

So, the problem is not that these mechanisms cannot compensate for the drop in demand (although they have not yet been able to in some sectors of the economy, which is evident because deflation has begun in the United States), but that they destroy the complex mechanism for stimulating demand. Since they are a priori irrecoverable, people begin to make inadequate purchases, and business owners are completely unwilling to keep jobs (that is, demand still falls), instead, they bankrupt businesses and leave the money received partly for personal consumption, and partly as a "pillow" for future, see the article cited above. If everything goes up, we will open a new business, if not, why waste money?

As a result, attempts to compensate for the shortcomings of the demand stimulation mechanism lead to its even greater destruction. And there is a very interesting picture. Households receive approximately $ 3 trillion a year. They spend this money (purchases of goods, services, loan repayments), they go to sellers, who pass them further along the chain, and so on. And as a result, these three trillion are moving step by step. By itself, 3 trillion is not that much (more has already been printed). The trick is different: if the mechanism for promoting money begins to collapse, then compensation is needed at every step!

Or, otherwise, giving 3 trillion to households will not work, you will need to give the same amount to sellers and their suppliers, and so on. Because in the conditions of the crisis, no one will fulfill their obligations, but will “hamstering” money as much as possible. Of course, at the first stage of the crisis, not three trillion is needed, but less, but the multiplier still works. They gave it to people, small enterprises, and banks ... And the more they give, the worse the mechanism works, the more money is needed at the next step.

Trump is trying to restart the mechanism. And he worked since 1981 at a constant rate cut. So what is needed? You need to stop handing out and start reducing the rate again. To the negative area. Powell, by the way, is not an idiot at all and knows that, from the point of view of macroeconomic theory, reducing the rate is tantamount to issuing money. The only problem is in the mechanism: emission is monetary, that is, an increase in the monetary base. A decrease in the rate leads to the issue of credit. Both of these increase the expanded money supply, but its structure is completely different, in the first case the credit multiplier is low, in the second it is high.

If it is high, then the main banks in the economy. And if it is low, then the state. That is Trump. And here is the main dispute. Who will be in charge, bankers who ruled for many decades, or industrialists who managed to get their representative, Trump, into the presidency of the country. This is the main collision of the modern economy.

Well, and one more aspect: if you stop printing (as Trump wants), then large banks will collapse (since in reality everything is not very good in their balance sheets, they also try to hide their problems from society under the guise of a crisis; and Trump is trying to audit FRS and bring the situation to clean water). So for them it is also a matter of life or death. Trump does not give a "luck" about this - there are a lot of small banks in the United States that can perfectly conduct monetary transactions, and the leaders of large multinational banks are his political opponents.

This is precisely the key issue of our time. And if the bankers lose (while they are losing), then their power in the world will come to an end. It will be very lively!