>Can Obama Take the Credit?
>
>Many market observers have pointed out
>that the stock market's run
>under Obama may not have
>been all or even mostly
>Obama's doing.
>
>The 44th president of the United
>States got a huge assist
>from the Federal Reserve, which
>took the unusual position of
>keeping short-term interest rates near
>zero for almost the entire
>duration of Obama's two terms.
>The Fed, in fact, only
>lifted rates two times --
>for a total of half
>a percentage point -- near
>the end of the Obama
>administration.
>
>That unprecedented policy, which was enacted
>to prevent the economy from
>slipping into a deflationary spiral
>in the aftermath of the
>global financial crisis, was designed
>to promote risk taking in
>the economy. Investors who were
>earning virtually nothing by parking
>their money in cash or
>government bonds were forced to
>plow their money into equities
>to generate any return to
>speak of -- and that
>gave the markets a lift.
>
I have a question about this then. If we have had free money since 2008 and now the economy is roaring back how does a tax cut help our debt and deficit? What does the FED do when the party starts rocking? It is supposed to take away the punch bowl and raise interest rates.
Every 1% increase in borrowing costs, adds $200 Billion to our interest payments. So in order to grow the economy enough to begin to "pay" for both the tax cuts and the added deficit spending, without doing a single thing to the debt would require annual growth of over 10%. Once that begins the FED would have to raise rates to avoid an inflationary problem. Plus it has to deleverage it's own balance sheet which will require further raising of interest rates.
https://www.thebalance.com/will-the-u-s-debt-ever-be-paid-off-3970473
