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0 pointsseanmcdirmid6y ago0 comments

Which should have happened along time ago in the current economy but haven’t, you can’t cut rates in bad times if you don’t raise them enough in good.

0 comments

throw0101a6y ago

The Fed isn't seeing any inflation, so it's not seeing a reason to raise rates.

But you're right that it doesn't give them much monetary room--I guess if/when the downturn comes resorting to fiscal stimulus be the only answer. Not that the GOP deficit chickenhawks have given any room there: remember when GOP was against deficits? US$ 1T later Pepperidge Farms remembers.

x86_64Ubuntu6y ago

I'm an economic idiot, but the interest rates have started concern me. It's seemed like no one wants to cut them as that might put the brakes on "growth". There are also rumorings of a crash being around the corner. So if a crash does come about, what's the Fed going to do seeing as how rates are already bottomed out?

andrekandre6y ago

> So if a crash does come about, what's the Fed going to do seeing as how rates are already bottomed out?

potentially, negative interest rates, that’s what [1]

[1] https://www.investopedia.com/articles/investing/070915/how-n...

csa6y ago

> It's seemed like no one wants to cut them as that might put the brakes on "growth".

I assume you meant “raise” instead of “cut” here.

If so, you are correct, and the question about what the fed does when the market corrects/crashes is why a lot of folks are wringing their hands right now.

QuesnayJr6y ago

They started raising rates but then Trump successfully bullied the Fed.

Though inflation had remained low, so it's not clear that it was necessary to raise rates.

seanmcdirmidOP6y ago

Inflation remains low? Seriously, I have no idea how they are computing that rate when asparagus is $4.99/pound these days. It seems like low rates feed the housing bubble nicely, and if housing costs were more adequately represented in the CPI, it would be much higher.

QuesnayJr6y ago

Housing costs are reflected in CPI, as imputed rent. I couldn't find the exact weights with a quick search, but IIRC housing costs are around a quarter of the basket. Asparagus is less than that.

throw0101a6y ago

* https://fred.stlouisfed.org/series/FPCPITOTLZGUSA

If you doubt the official numbers, the Billion Prices Project goes out scrapes price data, and it matched pretty well with the CPI:

* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project

j / k navigate · click thread line to collapse

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throw0101a6y ago

The Fed isn't seeing any inflation, so it's not seeing a reason to raise rates.

x86_64Ubuntu6y ago

andrekandre6y ago

> So if a crash does come about, what's the Fed going to do seeing as how rates are already bottomed out?

potentially, negative interest rates, that’s what [1]

[1] https://www.investopedia.com/articles/investing/070915/how-n...

csa6y ago

> It's seemed like no one wants to cut them as that might put the brakes on "growth".

I assume you meant “raise” instead of “cut” here.

If so, you are correct, and the question about what the fed does when the market corrects/crashes is why a lot of folks are wringing their hands right now.

QuesnayJr6y ago

They started raising rates but then Trump successfully bullied the Fed.

Though inflation had remained low, so it's not clear that it was necessary to raise rates.

seanmcdirmidOP6y ago

QuesnayJr6y ago

Housing costs are reflected in CPI, as imputed rent. I couldn't find the exact weights with a quick search, but IIRC housing costs are around a quarter of the basket. Asparagus is less than that.

throw0101a6y ago

* https://fred.stlouisfed.org/series/FPCPITOTLZGUSA

If you doubt the official numbers, the Billion Prices Project goes out scrapes price data, and it matched pretty well with the CPI:

* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project

j / k navigate · click thread line to collapse