Posted on 10/03/2023 6:51:24 AM PDT by Kaiser8408a
Fear the talking Fed! Various Fed Presidents are talking this week and when they do. WATCH OUT!
The latest fear mongering will be … inflation is persistent and they might have to keeep raising rates.
The two-year Treasury remains above 5% and the 10Y-2Y T-Curve remains inverted.
The likelhood of another Fed rate hike is growing.
While inflation is cooling (but still elevated), The Fed could choose to rate hikes again.
Best picture of Lael Brainard, Director of the National Economic Council of the United States and former Federal Reserve member and talking head. Or screaming head.
(Excerpt) Read more at confoundedinterest.net ...
I need help translating Progressive Speak. When I bring up the $1T in interest payments we will have to pay, the response is “We owe that to ourselves.” WTH does that mean?
The largest holders of U.S. debt (treasuries) are US govt entities. The last I read the Fed Reserve as #1 (quantitative easing since 2008) and Soc Security was #2. But the Fed Reserve may no longer be #1 because they've been letting their treasury portfolio expire without replacing them as much (quantitative tightening).
#3 would be all of the state pensions if you were to lump them together as one entity. Somewhere after that are foreign governments like China and Japan (usually China is the largest foreign owner of US debt, but every now and then they sell of some and Japan buys some making Japan the largest foreign debt holder).
So their argument is that when the US pays interest on treasury debt, most of the time it's going to entities within the U.S. IMHO that's a bad argument for their excuse to downplay our debt amount (and the rise in interest rates for future debt). But that's what they mean.
rates will stay high for a while.
You know the FDIC rules put in place after the run on the banks in the Great Depression (last part of the classic movie It's a Wonderful Life)? One of the FDIC rules for decades is that a bank can't call it FDIC insured unless it keeps a portion of it's assets in cash (in case account holders want their money). If they have too low a portion of their assets in cash then the bank can lose it's FDIC insurance or at least will have the premiums go up.
That was slacked off a few years ago (IIRC it was the process Jerome Powell famously referred to as "not-QE") so that a portion of a bank's "cash" holdings can be US treasuries but still be treated as the "cash" requirement for FDIC. End result: treasury demand stayed high (high prices for existing treasuries such as in the TLT or ISTB funds) and when the government makes interest payments it goes to banks to help them stay solvent.
With federal debt at $33 trillion and growing, high interest rates and inflation are inevitable.
“Warren Buffett quipped about passing a law that says anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”
https://www.snopes.com/fact-check/hometown-buffett/
That would ease federal spending and interest rates.
I suggest using $1 trillion instead of 3% of GDP.
In other words the biden crime administration is getting set to leave a huge problem for the next president.
The home at 1 Typical Lane is sold for $350,000.
The Buyers shall pay $200,000 of the purchase price with a 7% loan.
The Buyers furthermore will pay for an additional $50,000 interest when mortgage rates fall below 6%.
The Buyers furthermore will pay for an additional $50,000 interest when mortgage rates fall below 5%.
The Buyers furthermore will pay for an additional $50,000 interest when mortgage rates fall below 4%.
This holiday season, instead of purchasing some jackass gift; pay off a bill. Your family will thank you later.
Warren Buffett made his suggestion about 12 years ago.
In 2014 and 2015 the deficit/GDP ratio was under 3%.
https://www.thebalancemoney.com/us-deficit-by-year-3306306
When our kids came of working age my wife and I told them that if any one of them saved some of their paycheck to invest in his or her future, we'd start a Roth IRA in his/her name. Each of the kids did so, and we did. Since then we ask the "kids" if they want a gift or a contribution to their Roth IRA's. They almost always choose Roth IRA. LOL
“’We owe that to ourselves.’ WTH does that mean?”
It means we will continue to spend until there is no more money to borrow. At that point we will determine who will pay and it won’t be “ourselves” it will be you.
It’s nonsense. We’re not taking out a loan to cover the national debt, we sell bonds to cover it. So the interest is cooked into the bond maturing, and we have to pay that to whoever buys the bonds, not to “ourselves”.
Rates are and will be high because, odd as it seems, our currency is managed by people who do not or do not wish to understand capitalism
A truly capitalistic economy would solve the inflation problem promptly by increasing production of the goods in demand.
Period.
Beating prices down by putting millions out of work, thus not having money to purchase is a fool’s choice....or that of a socialist/communist.
One of the reasons for the whole “Climate Change” ruse is to get people to spend more.
Capitalism constantly needs new markets and forcing people to spend to keep it afloat. If everybody is happy with what they already have, consumption dries up, and the economy collapses.
So, what do you do. Tell people they cannot continue to use what they already have, they must go and purchase a new version of the thing, that was already working perfectly fine, hence EVs.
Correct. Unless by some miracle we have a mini-revolution in technology or something that fuels a giant boost in productivity that can compensate. Or maybe we go to war and plunder some other countries.
These guys should have lived through the Carter era.
Rates are just now getting into the long-term ‘average’ rates.
Too many got too used to cheap money of the last 15 years.
We don’t go to war to plunder other countries, although that might be a side effect.
We go to war so the Biden clan, the Bush clan and their ilk can plunder us..you, me and our children.
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