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What color is the sky where you live? You talk alot but don't have anything to back it up. Show me how "if the interest rates were 5 percent and then raised it would cripple the economy".
What's the premise here? Sooner or later the Fed will get lucky and things will work out? How about looking a bit deeper into things and ask at what cost?
What's the next piece of rubbish from you? "The Feds policies of artificial interest rates don't cause bubbles, people do."
keep going back to the poisonous well.
The Fed tamed inflation by raising interest rates. The lower the rates are to start with, the lower they'll still be if rates need to be raised. When Volker was put in charge of the Fed in August of 1979, the prime rate was ALREADY around 12%. To combat inflation, he raised rates (first under Carter, then under Reagan). By raising interest rates roughly 8 points (to 20% or so) inflation was brought under control. With current rates near ZERO, a similar raise (assuming one was even needed) would put rates at around 8% - a bit high, but not unreasonably so (when I bought my house back in 1989 my mortgage rate at the time was 10.5%). If the current prime rate was 5% or so, then a similar raise in rates would put the prime rate at 15% - which is pretty darned high and would most certainly cripple the recovery. 8% though - probably not so much.
It's really pretty easy to understand. Get an education and then get back to me.
LOL. CBO doesn't project inflation above 2% at any time between now and 2020. You've got some better insight into this because???
There are lots of things the CBO didnt project. The housing bubble, the stock market crash, the internet bubble.. And before you proclaim their job isnt to project bubbles, their job indeed is to project tax revenues generated from such bubbles..
Quote:
Originally Posted by saganista
Again for the benefit of those not paying any attention at all, the current Fed does not face any threat of inflation at all, either now or into the foreseeable future.
What color is the sky where you live? You talk alot but don't have anything to back it up. Show me how "if the interest rates were 5 percent and then raised it would cripple the economy".
What's the premise here? Sooner or later the Fed will get lucky and things will work out? How about looking a bit deeper into things and ask at what cost?
What's the next piece of rubbish from you? "The Feds policies of artificial interest rates don't cause bubbles, people do."
keep going back to the poisonous well.
Think of the national debt if interest rates were to raise.. Right now we are barely making it because the 10 year notes yield is around 3.6%, if interest rates were to climb by a few percentages, the 10 year note would also rise, and the national deficit would substantially rise as well.
The Fed tamed inflation by raising interest rates. The lower the rates are to start with, the lower they'll still be if rates need to be raised. When Volker was put in charge of the Fed in August of 1979, the prime rate was ALREADY around 12%. To combat inflation, he raised rates (first under Carter, then under Reagan). By raising interest rates roughly 8 points (to 20% or so) inflation was brought under control. With current rates near ZERO, a similar raise (assuming one was even needed) would put rates at around 8% - a bit high, but not unreasonably so (when I bought my house back in 1989 my mortgage rate at the time was 10.5%). If the current prime rate was 5% or so, then a similar raise in rates would put the prime rate at 15% - which is pretty darned high and would most certainly cripple the recovery. 8% though - probably not so much.
It's really pretty easy to understand. Get an education and then get back to me.
It is obvious what Volcker did. I'll repeat myself. Show proof it would cripple the economy. When you can answer the question get back to me.
Well, you might start by looking at what it did the unemployment rate - driving it from down around 7% or so to well over 10%. Driving interest rates to 20% was PAINFUL. As I said, fortunately THIS time around interest rates are HISTORICALLY LOW to start with (as is inflation actually). All in all the Fed is in a remarkably strong position to shut down any incipent inflation should it arise. At the moment we have NEITHER inflation NOR high interest rates.
This is actually rather humorous.. Curbing inflation between 1981 and 1983 was all Volcker's work, but the recession and unemployment caused by the rate spike was all Reagan's fault. LOL.
It is obvious what Volcker did. I'll repeat myself. Show proof it would cripple the economy. When you can answer the question get back to me.
If I thought this argument had any merit I'd be buying Real Estate. I made a bundle in the Carter Reagan years on houses
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How about looking a bit deeper into things and ask at what cost? 
