“MUST CUT INTEREST RATES, NOW, AND BIGGER THAN HE HAD IN MIND. HOUSING WILL SOAR!!!” — President Trump on Truth Social, 9/15/2025 (see #1)
What is the “this” in the title? It’s the president’s push to lower interest rates by as much as 2.5 points, maybe 3. That’s a lot in monetary and interest rate terms. The president finds the Fed’s recent quarter point drop “too little, too late”. He wants 10 times that. Is the Fed Board suffering from TDS? Hardly. There are sound reasons to be cautious about lowering interest rates. The president is playing with fire.
What is the “bane” of populism? Vox populi is NOT vox dei, or “the voice of the people is NOT the voice of God”, a necessary reformulation of an old Roman saying. Popular opinions are erratic, often reliant on deeply embedded falsehoods, incoherent, and a slave to the moment. And to be honest, some “elites”, as well as almost all populists, are soiling themselves almost daily. The populace at times may seem to be a better fount of wisdom, until they aren’t.
In an election greatly influenced by Biden’s high inflation, meaning too many dollars chasing too few goods and services, President Trump, the so-called populist, seems intent on reinflating the inflation balloon. The last few incidences of galloping inflation and economy-wide maladjustment – the 1970s, 2007-8, and 2022 – were not euphoric traipsings through the economic daisies.
In this respect, before I get started, we have to remind ourselves that Donald Trump is a real estate tycoon. Real estate magnates love low interest rates, and so does the Dow. They focus like a laser on goosing demand for real property and securities. Their portfolios soar in value when money is easy. It’s great for the holders of these things, bad for everyone else looking to buy. Low interest rates help disguise in cheap loans the artificial leap in prices, the inflation. People are invited to run up more debt.
Everyone wins, right? Hogwash. The government swamps the economy in easy money until personal finances go underwater. The bubble bursts, asset values plummet, and people suddenly realize that they owe more than the thing is worth. Hello, tulip bubble of 1637. Hello, the 2007-8 financial crisis, and anyone who bought a new car in 2023. The 2007-8 crisis helped elect Obama and a coming to power of a party ideologically hard-wired to goose demand in all ways possible and ignore the supply half to the equation.
In this respect, Trump wants to inject heroine into the economy like the Democrats. The Democrats wish to make addicts of us through fiscal policy, like the Schumer/Pelosi/Biden trillion-dollar bills to refashion the nation to fit their dreams – adding $3.7 trillion to our national debt from 2022 to 2024. Floods of dollars sloshed around on the heels of the Covid lockdowns. Supply was disrupted as demand was goosed. This didn’t end well. Inflation leapt to 9% in summer 2022.
Trump is eager to repeat the formula. He disrupted supply with his declaration of a trade war on the world. Supply chains became tenuous, like during the COVID lockdowns, as suppliers reeled from Trump’s jump in tariff rates of up to 25% (or more) against everyone and nearly everything. When suppliers and producers adapt to this new environment, it won’t redound to lower prices. Compound the problem by the president’s refusal to do, or propose, meaningful fiscal restraint. The elevated fiscal floor of Biden and the Democrats essentially remains intact, with or without a DOGE, as the big-dollar entitlements (Social Security, Medicare, and Medicaid) remain untouched on their path to insolvency.
The CBO in January expected the 2025 deficit (annual overspending) to hover around $2 trillion. The total federal debt (total accumulated tab) is pegged at $37.41 trillion as of this month (Sept.). Has overspending been cured by Trump, or DOGE? No. Add this fiscal heroine to the economy’s bloodstream. Mmmmm, rattled supply chains and a bloated money supply, have we seen this movie before?
The Big Beautiful Bill (BBB) won’t be of much help. Tax cuts are a great idea since they keep more money in the creative private sector. The tax cuts in the BBB were mostly, technically speaking, not a reduction in tax rates but a continuation of existing ones from 2017, with a few bribes for favored political constituencies in states like Nevada and organized labor in Michigan and Pennsylvania (the spiel of the tax-free tips, overtime, and Social Security benefits). One spur for growth – the lowering of the capital gains tax bite and generous depreciation allowances – won’t produce substantial economic benefits for a few years at a minimum. It took the money-supply belt tightening of Fed chair Paul Volcker and Reagan’s tax cuts a couple of years to create the climate for the Reagan boom.
Deregulation will have the same delayed effect. Now, to tide us over till the benefits of the business tax cuts and deregulation kick in, Trump wants easy money. So, any mid- and long-term economic advantages of the bill will be negated by worrisome inflation. Throw his tariffs into the mix and the benefits of the BBB and deregulation will not be felt till way over the horizon, if ever. Then, the whole enterprise will be short-circuited by a return to power of the neo-socialist Democratic Party riding a wave of popular displeasure over declining fortunes, the same circumstance that made Trump 45 into 47. With the Dems in power, any relief from the Leviathan will be thrown into reverse.
It’s the bane of populism. Populism can be reduced to “popular”, doing what is popular. And what is popular, once again, is fickle, contradictory, incoherent. It bounces around depending on the moment, group, circumstance, and frequently rides on a deep current of fables. “Elites” are held in disrepute after some disgraced themselves of late in their tenured positions and bureaucratic sinecures (Fauci, et al). For many among the populi, no one can be trusted except . . . Trump/MAGA. The bantering bilge flows with little check.
President Trump is the embodiment of populism. He pushes the BBB . . . and . . . his toxic tariffs. He excoriated Biden’s inflation as he repeats Biden’s mistake. Like he talks “peace through strength” while he shifts from hostility to nonchalance about the victim of the most flagrant act of aggression on the continent of Europe since Stalin incorporated all of Eastern Europe into personal satraps.
Like all populists, the dramatic gesture is preferred. Populist politicians are drama queens. A populist is a slave to headlines. Out comes the language and behavior of the drama queen, the belittling nicknames and quick strikes. The impulsiveness and insults fit into a medium – social media – which is not conducive to deep thought, to a populace growingly accustomed to thinking in social media’s rhetorical burps.
Sloganeering is the preferred mode of expression, if not thought. “No more forever wars” becomes code for an isolationism that cannot be said. Quick strikes – butcher-and-bolt – have a credible use in, let’s say, taking out Soleimani and Iran’s Fordow. But you have to possess more in the national security toolkit than a bunch of one-and-dones. Trump follows the headlines and loves to be in them, but don’t expect logical consistency or much of an eye for the long term. Trump is as flippant as fads, maybe more so. He has shown the capacity to embrace two things that undermine each other: condemn inflation while stoking it.
The last jobs report came out, it’s disturbing, so he fires Bureau of Labor Statistics commissioner Erika McEntarfer for delivering the bad news. For the populist leader, two beliefs came together in his mind: he’s convinced that a lurking deep state is at work, and he can never be wrong. He replaced her with a lackey, Heritage’s E.J. Antoni. Now, Trump has his Winston in Oceania’s Ministry of Truth. Life imitates Orwell’s art in “1984”.
President Trump wants easy money, the Federal Reserve Board seems reluctant, having been burned by lowering interest rates in summer 2022 which helped to ignite the 9% inflation. So, he replaced one retiring board member with his chairman of the Council of Economic Advisers, Stephen Miran. This guy had to square the circle of reducing inflation and inaugurating a trade war on the world. So much for credibility.
To make this move even more surprising, Miran didn’t resign from his position as Trump’s chief economic adviser. He took a “leave of absence” which expresses his desire to return to Trump’s inner sanctum and favor. If you believe that he’ll be an honest broker, stay away from the crazy uncle trying to convince you to invest in Mongolian tugrugs (currency).
Troubling signs are evident. The producer price index of services jumped 1.1% in one month, July (see #3). The last time it was that high for one month was the 1.3% in March 2022, the harbinger for Biden’s 9% inflation in the summer of 2022. Currently, inflation stays stubborn at around 3%, above the Fed’s target of 2% (see #2). The durable goods sector (autos, appliances, etc.) is in a tailspin. It’s what happens when you hammer supply chains with 25% tariffs. Trump absolutely needs easy money to cover the slide.
Add it all up and we have Trump’s mind: scatter-brained, fickle, and unintelligible. But what did you expect? He’s a populist. We’ll quickly learn that populists are no better than our disgraced elites. The populace doesn’t like inflation but like the things that bring it about. They love easy money and government bennies from all the spending. Trump is a leader, but a leader to where? This won’t end well.
RogerG
Sources:
1. “Trump calls for ‘bigger’ interest rate cut ahead of Fed meeting”, Reuters, 9/15/2025, at https://www.reuters.com/world/us/trump-calls-bigger-interest-rate-cut-ahead-fed-meeting-2025-09-15/.
2. “Current U.S. Inflation Rate is 2.9%: Why It Matters”, Nerd Wallet, 9/11/2025, at https://www.nerdwallet.com/article/investing/inflation#:~:text=The%20current%20U.S.%20inflation%20rate%20is%202.9%25%20for,release%20from%20the%20Bureau%20of%20Labor%20Statistics%20%28BLS%29?msockid=287a0b967a9564c61c991f537b2f65ee.
3. “Beware the Return of Inflation”, The Editors, National Review, 8/15/2025, at https://www.nationalreview.com/2025/08/beware-the-return-of-inflation/.