Posted on 10/04/2022 10:26:00 AM PDT by EBH
I'm highlighting the awful editing of that article.
Ok. This helps me look at it another way. We aren’t trying to calculate what 0.5% of 300 is, as I was in essence doing. So I see the difference. However, the reality is that as GDP declined each .5% would be smaller than previous one in absolute terms. So you can’t really say 150%. Enjoyed the discussion!
WHEN THE HELL are we gonna throw those freeloading communist bastards OUT of this country ?
Poster cabal for the old adage ‘useless as tits on a bull’.
I have to give Biden some credit. He has not, as I would have suspected, stood in the way of the Fed raising rates. I’m sure there has to be many in the Democrat Party screaming at him for derailing the stock market.
You are still wrong, because you are mixing percentages and decimals. Let me prove it with some simple math.
The article claimed that every basis point increase in the interest rate could cause a 0.5% decrease in GDP, right? So let’s assume for the sake of this example that the world GDP is $17 trillion. That is $17,000 billion. To shave a few zeros off, let’s just use $17,000.
So based on this information, a 1 basis point increase would be calculated thusly:
$17,000 x 0.5% = $85 or
$17,000 x .005 = $85.
With me so far? Based on these numbers, a 1 basis point increase in the interest rate would cause a decrease in the $17,000 GDP of $85.
Now what the other poster pointed out was that there has already been an increase of 300 basis points in the interest rate. So based on the logic of the article, the effect should be 300 times the effect of one basis point. So what you should see is:
300 basis points x $85 (the effect of one basis point) = $25,500.
To get the percentage of change the formula is:
(Total dollar value of change in GDP divided by the original GDP) times 100 or
($25,500 / $17,000) x 100 = 150%
Since the cumulative total is more than the original amount, the percentage of change MUST be over 100%
If they're correct, our GDP will be 1.5% lower. Thanks Brandon!
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