[ari-freedom]

the real problem is bad monetary policy. The problem is that the fed, not the market, sets interest rates. First it is set artificially low and people will take advantage of it. Then the rates are jacked up too high and that screws people. Then everyone needs a bailout.

It’s the same as price control. Make the price too low and watch as store shelves are cleared. Then you have shortages and long lines.

[SAJ]

Don't know where you picked up THAT piece of nonsense, but you are factually incorrect, start to finish.

The Fed has control over exactly one interest rate: the interbank lending rate, aka the ''discount rate''. It does NOT have control over the celebrated Fed Funds rate. It merely sets a preferred target for that rate. The Fed has a good deal of suasion in this latter rate, but control it simply does not have.

Most of the time, lending institutions find the Fed's target reasonable and adhere to it, or very close to it. Today, the Fed Funds target is almost 30 bp too low for lending institutions, as demonstrated by the skew between the Eurodollar and Fed Funds markets.

The Fed controls interest rates? Nonsense. Learn your finance, ari. You've simply stuck your, er, finger in the electric fan here.

[Proud_USA_Republican]

http://www.mtgprofessor.com/Tutorials2/Libor_Loan_Tutorial.htm

Your required reading for today.

[Alberta's Child]

The Fed does have some measure of control over interest rates, but not when it comes to mortgages. Mortgage interest rates are typically tied to the yield on 10-year Treasury notes, which is a function of the supply and demand of U.S. government debt. Mortgage interest rates have been at or near historical lows in recent years because rates on government bonds have been so low.

The rates on government bonds ARE set by "the market."