Posted on 08/15/2010 6:46:17 PM PDT by Graybeard58
Ping to a Republican-American Editorial.
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I vote with Michaelson.
It the Fed raises rates, we will instantly be in an inflationary spiral as businesses try to spend the trillion dollars in cash reserves they have on their books right now.
If you were on FOMC, would you vote to raise the rate?
Only after the Republicans retake the House.
Banks are discouraged from lending to job-producing companies because they can invest their near-zero-interest loans in zero-risk government bonds. Low rates also failed to produce the promised spike in consumer spending because shell-shocked Americans are deathly afraid the recession may deepen and the government's response will make things even worse. This same fear and loathing has companies, even those making record profits, sitting on their cash reserves, now estimated at nearly $2 trillion. “
Sounds like Peter Schiff
Super Low interest rates boost the stock market and some sales like home and cars but has long term consequences that are bad, as well as those above.
Why the F#$%%$ does the federal government pay more interest on bonds than the federal reserve is charging for the money?? Is it long term vs short term?
If the Fed just raises interest rates it will be catastrophic in this economy with this President, Congress and Cabinet full of radical left wing activists. I think it would be great to have a rate floor that is something above zero, but right now I have no idea how we could get there.
We need a cogent plan from the Fed and the Administration that makes sense, along with a modest (1/4 point?) increase in interest rates to begin repairing things; but I don’t see any kind of deep thinking along those lines coming out of Ben Bernancke or Premier Hussein any time soon.
So when has Keynesian economic theory ever worked?
And why is it a credible theory? Why are its “religious zealots” awarded Nobel Economic Prizes?
They don't, until you get to 3 year and longer Treasuries.
Now, now ... mustn’t put our resident cheerleader in a bind.
We dont know what the terms are of the money the banks are getting from the fed do we? Or is the bank gambling that interest rates will stay low, the terms of the bond.
Sorry, forgot the ‘?’
We have Kenyanesian Economics, which has never been known to work..
The discount rate is 0.75% (up to 1.25%) and the term is overnight to a few weeks.
Our zero rate policy has been effectively a “tax” on savers and retirees for the benefit of speculators.
Savings = investment. Savings require higher interest rates.
Never. It isn’t. Politics.
Any other questions?
So we watched Japan fail using the Obama plan and went ahead and did it anyway.
Did Obama and his suckbutts in the Congress want us to fail?
Insanity is trying the same thing and expecting a new result.
So banks have so renew the loans to the fed every two weeks when they loan it to the federal government per t-bill bonds for two years?
If interest rates are lowered, people need more principal to compensate. Thus, potential retirees and other savers are holding on to those jobs and accumulating more cash to compensate.
The feds have put themselves in quite a bind. How will they ever pay the interest on the accumulated debt if the interest rates get real?
I know one of the reasons for the low interest rates was so the stock market looked more desirable. It probably backfired. Responsible people concerned about their financial well being are likely to avoid the risk taking if they need more savings to generate any meaningful cash.
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