Why Would the Fed Even Consider Raising rates? (loans, free market, buying)
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The Fed is forecasting 2% GDP growth and 2% inflation (or less) for the next 3 years. Why would they even consider raising rates in that environment. There's no justification, nor need, to raise rates.
Probably because that's their job.
Also, they are some of the smartest PhD economists on the continent who know know more than you do.
They can't raise it. The entire economy is based on the premise of 0% interest rates. Housing prices, stock prices, Wall st. speculating with cheap money and pouring money into assets etc. etc. everything... raise the rates and all of the players will throw a major fit, the entire economy grinds to a halt. You know what happened with the rates went up .25% last time? Wall St. had a MAJOR moment...
The entire economy isn't based on 0% interest rates, that's completly false
Outside of that can you post information on what wall st did over say the last 20 years of rate increases?
The Fed is forecasting 2% GDP growth and 2% inflation (or less) for the next 3 years. Why would they even consider raising rates in that environment. There's no justification, nor need, to raise rates.
Of course there is justification for raising rates. How's this? The FED should have raised rates in 2001, when organic a and real growth ended. And they are supposed to continue raising rates for a long time. Why? The next organic and real growth can only start after Deflation is allowed to do its job. That is the ONLY TIME when there is geniuine economic growth possible.
The illusion that we can "extend" the real organic growth is no more than the rich and powerful becoming fearful that they will lose some of their precious earnings and attempting to steal money from taxpayers during the no real growth period. Raise rates; accrue interest-rate earnings that will act as a pot of gold for the next investment cycle.
Number 2.
We need higher rates because we want a stronger US Dollar. Why do we want a stronger US Dollar? We want the US Dollar strong because it makes America richer, makes rich foreigners buy US Dollar assets, makes foreign money flow into the US.
Do we like having the US Dollar as the global currency? Or would we rather have some other currency as the blood system driving the global economy? We want a stronger Dollar NOW, and a weaker Dollar later, when the Deflation does it's job and real recovery begins.
The recession was officially over June 2009. Why are we still near 0% six years later ?
The Fed missed their opportunity to raise rates about 2-4 years ago. you don't keep rates at zirp the whole cycle unless you're a complete idiot ignorant of all economic theory and that includes Keynesian.
The simple fact is the Fed has stopped even following Keynesian thought and is dumb at best and corrupt at worst.
Why does GDP even matter, the Fed said it doesn't. Their inflation number is bogus
Curious = how is the Fed's inflation number bogus?
I mean it might be (hell I don't know) but I've noticed usually when people claim an official inflation figure is bogus they don't even really understand how it is calculated, just that political motivations or anecdotal experience tells them it must be.
I always assumed Fed uses inflation numbers from other organizations like BLS but I guess I've never actually checked.
Also, they are some of the smartest PhD economists on the continent who know know more than you do.
And yet they chose not to raise rates this week...
And for your information, the Fed's job is keep interest rates as low as possible without igniting inflation, in order to achieve the maximum growth possible in the economy.
Of course there is justification for raising rates. How's this? The FED should have raised rates in 2001, when organic a and real growth ended. And they are supposed to continue raising rates for a long time. Why? The next organic and real growth can only start after Deflation is allowed to do its job. That is the ONLY TIME when there is geniuine economic growth possible.
The illusion that we can "extend" the real organic growth is no more than the rich and powerful becoming fearful that they will lose some of their precious earnings and attempting to steal money from taxpayers during the no real growth period. Raise rates; accrue interest-rate earnings that will act as a pot of gold for the next investment cycle.
Number 2.
We need higher rates because we want a stronger US Dollar. Why do we want a stronger US Dollar? We want the US Dollar strong because it makes America richer, makes rich foreigners buy US Dollar assets, makes foreign money flow into the US.
Do we like having the US Dollar as the global currency? Or would we rather have some other currency as the blood system driving the global economy? We want a stronger Dollar NOW, and a weaker Dollar later, when the Deflation does it's job and real recovery begins.
I always assumed Fed uses inflation numbers from other organizations like BLS but I guess I've never actually checked.
Yes. they do, though they might look a little deeper into it than just Table A-1. Of course, to the untrained riff-raff, all "government numbers" are being deliberately distorted by Obama He's apparently a pretty busy guy.
And yet they chose not to raise rates this week...
Which non-crackpots will tell you was an eminently sensible thing to do.
Quote:
Originally Posted by carolinadawg2
And for your information, the Fed's job is keep interest rates as low as possible without igniting inflation, in order to achieve the maximum growth possible in the economy.
Actually,the Fed's purpose is to provide the nation with a safer, more flexible, and more stable monetary and financial system by influencing monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rate. This three-pronged mission is so often and so widely noted in the fields of economics and finance that it becomes hard to figure out how some can have missed it.
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