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Old Yesterday, 04:13 PM
 
Location: Bellingham, WA
887 posts, read 1,121,482 times
Reputation: 1029

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It becomes cheaper for the government to service it's own debt when the rates are lower.
Most of the "hold-up" in many industries is due to many of the trades being backed up and engineering/design falling behind. Have projects where design is barely done by the time the items are supposed to be delivered. Some entities are unsure if our current policies will continue, and are pulling back (readying for a reversal of the corporate tax cuts and tariffs-"lets cancel that US factory build, move our HQ and production back to China").
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Old Yesterday, 04:30 PM
 
15,635 posts, read 4,145,106 times
Reputation: 11238
Quote:
Originally Posted by Mircea View Post
Oh, yes they most certainly do.

You don't even understand the purpose of interest rates.

.
Well, then why haven't they done it in 10 years?
And why do they admit themselves they are doing it due to weak manufacturing numbers and the effects of the trade war and chaos?
And why don't even many Fed members agree with the cut?

It's enlightening that you seem to know more about the Fed...than both History and the Fed Members themselves!

"The Fed lowers interest rates in order to stimulate economic growth."

"The Fed on Wednesday cut its key interest rate for the first time since 2008, when the U.S. economy was reeling following the housing crash"

I suppose we have the same Holiday Inn Express attitude now...anyone can do it. Cut them some...achieve stimulus for economy. Cut them even more? More stimulations.

Cut them to zero? Ok, even more stimulation. Negative interest rates....well, that's effectively where we are since no one in their right mind would lend money to others at these rates.

If you followed along, and I am sure you did, the Fed declared long ago that they only intended to raise rates...normalization. The only change from that was when Orange told them not to....and told them to cut them, which isn't supposed to be how the Fed runs. But trying to falsely move the markets or make up for his self-created mess requires bullying them.

IMHO, of course. But what do I know? I've only followed this stuff for 40 years...and invested...and started and ran businesses based on rates.
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Old Yesterday, 04:32 PM
 
15,635 posts, read 4,145,106 times
Reputation: 11238
Quote:
Originally Posted by lchoro View Post
The Fed cut rates because they were well above the Treasury yields which are largely a function of the manipulation by US and foreign central banks. Yields on treasuries dropped nearly 1 percentage point since March when the Fed announced they would buy 20 billion dollars a month. I think Powell did what he did because there is a large amount of debt that needs to be issued after the new debt ceiling becomes law and needs to be financed at the lowest possible yield. Perhaps 750 to 800 billion dollars of new debt will need to be borrowed in Q3 to rebuild the Treasury cash balance as well as fund government operations. The need may be larger to restore funds that were borrowed according to special temporary measures to avoid exceeding the debt limit.
In summary, too much free money was given away and promised so we had to cut the cost of borrowing?

Sooner or later the *** will be up. In fact, it's quite close now. Isn't our interest on the debt something like 800 Billion a year? That's like 1/3 of all Fed. Income tax collected...just for interest!
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Old Yesterday, 04:33 PM
 
Location: Salisbury,NC
10,707 posts, read 4,459,321 times
Reputation: 4734
Quote:
Originally Posted by craigiri View Post
More MAGA - for a few on Wall Street.....maybe.....for others? Nope!

"The Dow is up nearly 300 points after a poor manufacturing report.

A weak manufacturing report has given investors hope that the Fed will once again cut rates later this year. The Institute for Supply Management said US manufacturing activity was at its lowest level since August 2016."
Oh well Trump opened his mouth and put his foot (bad heel and all) in it. Dow dropped about 600 points.

Another great day for Trump.
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Old Yesterday, 04:35 PM
 
Location: Houston
5,440 posts, read 2,760,767 times
Reputation: 3386
Quote:
Originally Posted by Tall Traveler View Post
Thank you 2018 Blue Wave, you've managed to slow down growth Dims...Congrats!

Considering Nancy crashed the world's economy last time she was Speaker, there's hope she can do it again.

Explain, in detail, how the Democrats slowed down the growth.
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Old Today, 01:29 PM
 
Location: Ohio
20,057 posts, read 14,310,256 times
Reputation: 16212
Quote:
Originally Posted by craigiri View Post
Well, then why haven't they done it in 10 years?
Why haven't they done what in 10 years?

There are different interest rates.

If you're referring the prime rate, not they haven't cut it in ten years.

The purpose of the prime rate is to control Monetary Inflation, but since 2000 you've only had less than 5% Monetary Inflation.

All of your Inflation has been Demand-pull and Cost-push Inflation and the prime rate doesn't impact them. Well, if you raised the prime rate to 30% you'd start impacting Demand-pull Inflation (but not Cost-push Inflation).

Since there hasn't really been any Monetary Inflation, there was never a reason to raise the prime rate in the first place.
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