President Donald Trump's comments that the dollar is getting too strong and that the Fed should keep rates low may be sending a clue about how the president would approach both tax reform and infrastructure spending.
That could be by issuing more U.S. debt, while Congress has been trying to come up with a plan to take the corporate tax rate to 20 percent without raising the deficit.
"If any of his budgets are really realized, they're deficit-inducing and he wants to keep interest rates low. Any president that's wanted to keep interest rates low has ended up with a lot of inflation, like Truman, Johnson and Nixon," said Diane Swonk, CEO of DS Economics.
In an interview with The Wall Street Journal, the president Wednesday also made much warmer comments about Federal Reserve Chair Janet Yellen. He said he respects her but has not decided whether to ask her to remain after her term expires early next year. In response to a question about whether she's toast, he said, "No, not toast."
"It's interesting. This also illustrates the gap between the administration and the House and Senate. The House and Senate have consistently wanted someone more hawkish at the Fed than Janet Yellen," said Swonk. "It doesn't surprise me one bit."
"His position on Yellen has changed a lot since he was candidate Trump," said Ward McCarthy, chief financial economist at Jefferies. "Now that he's President Trump, a low interest rate policy is not so bad because he wants the economy to grow well."
Trump was a real estate developer and used debt freely to expand his empire. Trump has said, in the past, that he likes debt and in fact called himself the "king of debt." Trump wants to do a big infrastructure package.