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How long are they going to "stimulate" the damn economy with these low rates? It's insane, I mean so if the economy heads back into a mild recession, then what are they going to do for stimulation if they have everything done everything?
The rates being this low for THIS long is a damn shame. Increase the rates and stop propping up/over-inflating this casino that is "The Stock Market".
How long are they going to "stimulate" the damn economy with these low rates? It's insane, I mean so if the economy heads back into a mild recession, then what are they going to do for stimulation if they have everything done everything?
The rates being this low for THIS long is a damn shame. Increase the rates and stop propping up/over-inflating this casino that is "The Stock Market".
The rates are gonna go negative. The bank will pay you to borrow. that will stimulate borrowing
Where I live home price has exceeded home price/income ratio of 6. A hike in interest rate will kill home sale for the typical working class.
If rates go up prices either go down or stay. If they go down the people who had a 20% down at 500k but didn't at 650k can now go in the market. If prices drop lots of other people who were priced out can go back to the table. Their money has higher purchase power at 500k than 650k.
If prices don't drop you simply have a ever shrinking buyer pool and inky the ones who can afford the high price and higher rate will buy. So the market will stagnate in this case.
The rates may go up but I don't believe it will be a lot. I feel they won't go higher than 5% if they do go up at all
While the economy has gotten *better* there are still many households too heavily reliant upon credit. Worse a good number have not paid down balances on credit cards and or have run up debt. As interest rates rise from the Feds so will all sorts of lending rates including credit cards with variable interest rates. If recent history is any guide those resets are going to come a shock to some.
By float I meant change at will with the market (free market) and not be decided by a bunch of bankers. The Fed keeping rates low is similar to price controls on a certain item.
Why wouldn't it be "decided by a bunch of bankers"? Isn't that like saying the price of apples should float, instead being decided by a bunch of farmers? Prices can't literally float, somebody has to decide on a price to sell at. Right now demand in spending is low, so the price of money (the rate) is down. The Fed keeping rates low is no different than a farmer cutting the price of apples when he has a huge surplus.
Why wouldn't it be "decided by a bunch of bankers"? Isn't that like saying the price of apples should float, instead being decided by a bunch of farmers? Prices can't literally float, somebody has to decide on a price to sell at. Right now demand in spending is low, so the price of money (the rate) is down. The Fed keeping rates low is no different than a farmer cutting the price of apples when he has a huge surplus.
Not even the same. A farmer can price his product (in this case apples) at whatever price he wants, but he might be undercut by another farmer selling apples based on supply and demand. If there was a Fed Reserve for farmers and they set basically price controls, while then that would be essentially the Fed. It would be like a monopoly.
There simply is no supply and demand regarding interest rates. Central banks around the world decide what they want them to be and everything falls in line. For the last 5+ years we have a currency war and a race among central banks around the globe to devalue their currency against everyone else. Right now and for the last roughly 6 years the Fed and central banks are basically trying to make everyone borrow and make it terrible for anyone trying to save money.
Why it shouldn't be decided by a bunch of bankers is because 1) they will only look out for their own interests and 2) they don't have any idea what the market will do. Nobody can control a force like the market can. The market is way bigger and moves way faster then any person can control or manipulate. If you think the Fed can raise or lower interest rates and keep the economy stable, well then you haven't been paying attention since the beginning of the Fed. Look how many times the Fed was wrong during the housing bubble they helped create. The Fed will say their job is to control inflation and the money supply, but yet they use and manipulate their own statistics to argue their was no inflation. They continue to change the basket of goods used for inflation to say prices haven't gone up.
Seven years of ZIRP has allowed speculative positions of a monumental magnitude to accumulate. Even a quarter point hike will send asset prices plummeting and the Fed will quickly be forced implement a negative interest rate policy and QE4eva to support asset prices. The speculators know the Fed has their back, so the dip after the interest rate raise will be bought aggressively.
Just enjoy these years since you can speculate risk free and make money without any of the sacrifice of saving and hard work of running a company. If your looking for a Fed that supports savers and investors over speculators, Yellen is not for you.
So I was wrong. It didn't even take a quarter point rate hike to cause plunging asset prices, just a somewhat credible threat to do so. The next fed interest rate change is a cut (yes that means below 0%) and will be accompanied by more quantitative easing (QE4ever). Once the market capitulates, load up on equity positions. The fed has your back.
P.S. Its opinions like this that put a much needed floor under the market (in fact its the only credible reason to buy any financial asset at this point). If the fed doesn't play their part, then look out below.
Not even the same. A farmer can price his product (in this case apples) at whatever price he wants, but he might be undercut by another farmer selling apples based on supply and demand. If there was a Fed Reserve for farmers and they set basically price controls, while then that would be essentially the Fed. It would be like a monopoly.
There simply is no supply and demand regarding interest rates. Central banks around the world decide what they want them to be and everything falls in line. For the last 5+ years we have a currency war and a race among central banks around the globe to devalue their currency against everyone else. Right now and for the last roughly 6 years the Fed and central banks are basically trying to make everyone borrow and make it terrible for anyone trying to save money.
Why it shouldn't be decided by a bunch of bankers is because 1) they will only look out for their own interests and 2) they don't have any idea what the market will do. Nobody can control a force like the market can. The market is way bigger and moves way faster then any person can control or manipulate. If you think the Fed can raise or lower interest rates and keep the economy stable, well then you haven't been paying attention since the beginning of the Fed. Look how many times the Fed was wrong during the housing bubble they helped create. The Fed will say their job is to control inflation and the money supply, but yet they use and manipulate their own statistics to argue their was no inflation. They continue to change the basket of goods used for inflation to say prices haven't gone up.
Wouldn't bankers want to charge higher interest rates and make more money?
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that will stimulate borrowing
