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re: 30-year fixed-rate mortgages reach 7.15%
Posted on 10/19/22 at 9:00 am to stout
Posted on 10/19/22 at 9:00 am to stout
****This is not a defense of Biden and/or his shitty policies****
Interest rates were NEVER supposed to be ZERO forever. It was bad policy that we had to pay for at some point. We have an entire generation that has no idea what the net present value of money is because interest rates were non-existent.
Interest rates were NEVER supposed to be ZERO forever. It was bad policy that we had to pay for at some point. We have an entire generation that has no idea what the net present value of money is because interest rates were non-existent.
Posted on 10/19/22 at 9:05 am to Aubie Spr96
quote:
Interest rates were NEVER supposed to be ZERO forever
Exactly. Rates had to rise at some point. There will always be tradeoffs and adjustments to get to some market equilibrium.
The market favored investors for too long.
Posted on 10/19/22 at 9:57 am to Aubie Spr96
quote:Most people don't realize that historically in order for the Fed to use the fed funds rate as a policy prescription, the Fed has to raise their rates to roughly 2% ABOVE the rate of inflation. Otherwise raising the Fed rate doesn't work to tame inflation.
Interest rates were NEVER supposed to be ZERO forever. It was bad policy that we had to pay for at some point. We have an entire generation that has no idea what the net present value of money is because interest rates were non-existent.
So, assuming the above, and the rate of inflation at 8.3%... 10+% Fed funds rate? I know the projections are for 4.25%-4.50%, but that shite don't work historically. Further, if the Fed funds rate is at 10+%, where are mortgage rates going to be?
Keep in mind USD hegemony has to be protected at all costs, so inflation has to be tamed. I don't know of many other policy prescriptions other than shrink the Fed balance sheet. The Fed rate is designed to slow money velocity and retracts USD in circulation. Anything else? I'm no econometrics nerd so I'm swimming in deep water.
This post was edited on 10/19/22 at 9:59 am
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