Posted on 12/17/2018 10:37:46 AM PST by Moonman62
With the Dow slipping from a peak of over 26,000 to (currently) 23,700, the Fed shouldn’t be taking actions that’ll drive it even lower.
Unless they want to hurt Americans, and hurt this administration. So, yeah, that’s their goal.
Correct, ARTICIALLY low interest rates do act as stimulant to the economy for the SHORT DURATION.
It is same as ingesting caffeine with coffee, it stimulates for short period, then you end up more tired later because you have withdrawn a lot of body energy resources.
There is no free lunch. If low interest rates were good for the long term, every country would be prosperous for ever. Artificial low rates are easy to enact. It is easy to sell politically. Europe has much lower rates than us, their economy is stuck in mud and they have no more stimulant left for the economy. Japan has low rates, and they keep padding national debt for ever to avoid riots. Japan’s national debt is higher than United States based on population.
What it boils down to is that economic cycles will exist so long as economy exists. It works best if economy is left to work it’s own cycles. It always rebounds. Artificially low rates create temporary bubbles in hard assets and it is always followed by harder crash later.
> You guys keep ignoring the fact that food prices are not included the FED’s inflation watching. <
That’s true. I believe that both food and energy costs are excluded. But the Fed has to be watching that data anyway, even if they can’t * officially * let it enter into their calculations.
Of course, I’m just guessing here. Last time I tried to crash a Fed meeting, two burly men with walkie-talkies rudely escorted me out to the front gate.
You mis-understood my post so badly, I won’t bother to offer a detailed response.
Repeal the 16th amendment.
And there you have it. Knowingly or not you have laid bare the end game.
I will argue that economic cycles are not possible because interest rates are strictly controlled. The reason is said to be inflation.
The real reason is that if the various governments had to pay “normal” interest rates, they would quickly go bankrupt.
It is my belief that in the long run, inflation is the only way to get rid of the debt at all governmental levels
There are four open seats on the Fed board for Trump to fill. Senate confirms them. There are seven seats total, Trump filled two of the current three seats that are full.
Not many know this.
No inflation?
Go to any grocery store and compare prices with one year ago.
A box of store brand crackers has jumped from $0.89 to $1.59.
Circular coffee filters for percolator jumped fro $1.19 to $1.69.
1. Maximize employment
2. Stabilize prices
3. Moderate long-term interest rates
Item #3 covers a lot of ground, doesn't it?
Agreed. The dollar will increase in value as interest rates increase. It crushes our overseas competitors.
Most of their rates are determined off the prime rate.
They have a formula. If the Fed raises the prime rate, they raise their interest rates.
When those rates get to high, people slow down purchasing things on credit, business stop expansion...
The Fed can really put a damper on the economy, if it wants to. And right now it wants to.
I consider it another Deep State tool.
Trump warned us about this all along.
Abolish the Fed.
Who is in the market for dollar-based fixed-income investments that have inconsequential returns? Basically, that's where we've been for the last ten years.
As one of the earliest Trump supporter on this or any other forum, FED is not sticking it to Trump. FED is doing what is best for the economy in the LONG run.
Europe has zero rates, some Europe countries have NEGATIVE rates. And yet Europe economy is stuck in mud. And Europe has no arrows left in their quiver to stimulate by lowering rates! Our FED has finally being lead by a wiser man than Janet Yellen & Helicopter Bernanke. He is trying to bring interest rates closer to real inflation rate. That also gives the FED some power to stimulate economy when next recession hits. It will have some room to lower the rates to stimulate.
Well yeah, but that box of crackers also went from 16 oz. to 12 oz. So you have that going for you!
Great post. Thanks!
If they can stuff ballot boxes with phony Rat votes, and have specious charges investigated for two years straight with no findings, what is a little cooking of the CPI index?
The Fed also propped up Obama's second term with a bull market (although a weak and slow recovery accompanied it) brought about by zero interest rates.
Now that they hate the incumbent, it's time for them to tank the economy leaving Trump holding the bag in 2020. Sickening.
We need to secede, or we will just be enslaved by these evil Rats for the rest of our lives.
The market selloff is NOT because of China or anything else; it is orchestrated and fake...wake up!!! Even Freepers seem to be blind to this.
Laws of economic cycles can not be abolished by the FED or the government. All they can do is artificially prolong the durations of low and high activity.
Economy can not grow in the long run higher than gains in productivity and population. Monetary or fiscal stimulation only creates more volatility.
And I am afraid you are correct, we have the tiger by the tail already, and we must hold on as long as possible. But eventually the tiger will kill us, in the form of hyper-inflation.
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