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Right. The interest rate on new debt sold at auction might climb, but interest payable on the existing $18.2 trillion worth of debt outstanding would stay exactly the same. It's amazing how many people just completely misunderstand that.
They are continuously stalling because they know that if they raise rates market sentiment could change and send the US into recession again. But how long could they possibly keep rates near zero? Everyone claims inflation is super low so why would they be motivated to raise rates?
What are the negative effects we are seeing due to the zero interest rate policy?
Ah, I think you got it. The Fed will eventually raise rates ..... slightly... and there will be NO effect on the economy from that increase. What will change? "Sentiment" is one way of describing it. I call it more bluntly as stupidity. The big time investors are those who move the markets. These are the people who should understand the economy but instead they act like they were (1) STUPID and (2) Fickle. When the Fed finally does raise the rates, the big time investors are likely to panic and claim that the SKY IS FALLING.
I think folks are looking out ahead at when the debt(s) may roll-over.
Tens of billions of dollars worth of debt matures every month. A sizable chunk of what is maturing today was originally issued in the Fall of 2005. Interest rates then were higher than what they are now, so roll-overs of such debt are lowering our interest costs. These lower rates of interest will remain on the books for many years regardless of what either primary or secondary markets might do in the meantime.
They are continuously stalling because they know that if they raise rates market sentiment could change and send the US into recession again. But how long could they possibly keep rates near zero? Everyone claims inflation is super low so why would they be motivated to raise rates?
What are the negative effects we are seeing due to the zero interest rate policy?
The rates will spring back to normal as soon as Barack is gone. They are kept artificially low to prop up his regime. We are all being screwed by not earning any interest on our savings.
In fact, they are not being kept artificially low or just for Obama. They are kept low because there is little or no inflation and the fed wants more inflation. It helps the bankers make more money and keeps the financial system solvent. Inflation is also an incentive for people to spend, as their money becomes less valuable every year. Plus inflation pushes people into higher income brackets so they pay more taxes. The Fed wants inflation, and hates deflation. Deflation would trash the economy, and could ruin the banking system.
The economy is not good. Another bad jobs report is coming. The Fed is not going to raise rates in a recession, which has already begun.
They are continuously stalling because they know that if they raise rates market sentiment could change and send the US into recession again. But how long could they possibly keep rates near zero? Everyone claims inflation is super low so why would they be motivated to raise rates?
What are the negative effects we are seeing due to the zero interest rate policy?
You don't know of any negative effects from these artificially-low interest rates?
There's the manipulated stock market, for one. As long as TINA (There Is No Alternative) is in effect, the market is artificially propped up, too. Then there are savers (many are elderly) who've gotten scrooed thanks to near-zero interest rates that have robbed them of thousands of dollars in interest.
Oh, and don't believe the noises our Fed Head is making about raising interest rates in December. Because she just said the economy is doing great but [just in case it gets any worse [b]we may have to impose negative interest rates.
And all that that implies....
Hold onto your wallets, folks.
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is making about raising interest rates in December. Because she just said the economy is doing great but [just in case it gets any worse
