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Message
Do experts on the money board agree with what the feds did today?
Posted on 3/20/24 at 8:52 pm
Posted on 3/20/24 at 8:52 pm
Pausing rate increases and then cut rates later this year? I'm curious to your opinions.
Posted on 3/20/24 at 8:54 pm to Civildawg
They don’t need to raise since they’re well above the neutral rate. They don’t need to cut because the economy itself is perfectly adequate. Doing nothing is better than guessing on the next direction.
Posted on 3/20/24 at 8:55 pm to Civildawg
What reason is there to cut rates?
Inflation targets not in sight
Stocks near ATH
Crypto Mooning
Healthy unemployment rate
The ONLY reason they NEED to cur rates is because the government won't stop spending money and we can't afford the debt payments.
How long can we kick this can down the road? Who the hell knows.
Inflation targets not in sight
Stocks near ATH
Crypto Mooning
Healthy unemployment rate
The ONLY reason they NEED to cur rates is because the government won't stop spending money and we can't afford the debt payments.
How long can we kick this can down the road? Who the hell knows.
Posted on 3/20/24 at 8:58 pm to I Love Bama
Really the only reason they need to cut rates is the interest payments to service our debt - it is unsustainable over medium term. However, that isn't really the Fed's problem, so they won't cut rates for all the reasons you mentioned.
This post was edited on 3/20/24 at 8:59 pm
Posted on 3/20/24 at 9:16 pm to I Love Bama
For the reasons you listed, why wouldn't you increase rates? I feel like they need to go higher. I mean we are in an historical average interest rate territory with an inflated money supply/economy.
Posted on 3/20/24 at 9:18 pm to TigerTatorTots
quote:I'm managing my personal debt responsibly. I object to silent taxes our politicians use to enslave us.
our debt
Posted on 3/20/24 at 9:19 pm to Civildawg
They should never projected a 3 cut scenario to the public. Only bad can come from it.
The fed is in a bind for sure - MMT is being proven wrong nowadays. There is so much political pressure to not raise rates.
Today’s rates are below historical average - we just got drunk on ultra low rates for a long period of time and now have to face reality.
It will crash at some point though. The debt level is simply too much.
The fed is in a bind for sure - MMT is being proven wrong nowadays. There is so much political pressure to not raise rates.
Today’s rates are below historical average - we just got drunk on ultra low rates for a long period of time and now have to face reality.
It will crash at some point though. The debt level is simply too much.
Posted on 3/20/24 at 9:27 pm to Civildawg
Fundamentally I agree with you. They need to increase and force a deflationary crash to purge all of the excess capital from the system and bring asset prices back to some realm of normalcy…and by assets I mean anything you can buy on credit. This would also crush PE which is basically buying everything because they don’t know what to do with all the cash they have invested and low interest credit….and crush the banks which are the conduit for the inflation in assets we’ve seen and are out over their skis.
There would be a proverbial “bloodbath” if they did this though and the financial pain would be immense. This why they won’t do it…will lower rates again so we can afford to roll over our debt…and we’ll roll along with higher inflation until we have a financial collapse that can’t be avoided.
That’s my take anyway.
There would be a proverbial “bloodbath” if they did this though and the financial pain would be immense. This why they won’t do it…will lower rates again so we can afford to roll over our debt…and we’ll roll along with higher inflation until we have a financial collapse that can’t be avoided.
That’s my take anyway.
Posted on 3/20/24 at 9:29 pm to SquatchDawg
Yep, short term pain would be better for everyone in the long run but they are too scared to do it.
Posted on 3/20/24 at 9:32 pm to Civildawg
quote:
For the reasons you listed, why wouldn't you increase rates? I feel like they need to go higher. I mean we are in an historical average interest rate territory with an inflated money supply/economy.
There’s an election this fall
Posted on 3/20/24 at 9:35 pm to LSUFanHouston
But most people on this board tell me the Fed isn't political... are they wrong? I tend to to think the Fed is bending to political pressure
Posted on 3/20/24 at 9:38 pm to Civildawg
I don’t really have a problem except that they keep talking about it and it creates a wait and see scenario which hurts some industries like auto and real estate
People are just waiting for the rate drops to start coming before they buy and it’s created a freeze on the current real estate and auto market
I just wish they’d stop talking about lowering and either do it now or just stfu
People are just waiting for the rate drops to start coming before they buy and it’s created a freeze on the current real estate and auto market
I just wish they’d stop talking about lowering and either do it now or just stfu
This post was edited on 3/20/24 at 9:42 pm
Posted on 3/20/24 at 10:18 pm to SlidellCajun
quote:
and it’s created a freeze on the current real estate and auto market
Pass me some of what you are smoking please
Posted on 3/20/24 at 10:33 pm to LSUFanHouston
quote:
There’s an election this fall
And then it's time to start campaigning for the most important election in our lifetimes, 2026. Repeat.
Posted on 3/21/24 at 4:12 am to RoyalWe
quote:
our debt
I'm managing my personal debt responsibly. I object to silent taxes our politicians use to enslave us.
I don’t think they are worried about your debt. They are worried about the fools in Washington that spend money like a Kardashian on Rodeo Drive even when they don’t have the income to support that level of spending.
Eventually, if rates stay high, the interest on the debt will surpass tax revenues. At that point, then what will the Fed. and Washington do. The only way would be inflation making the buying power of a dollar less while inflating the economy to match a new economic situation where tax receipts also increase to match GDP growth while interest rates stay low and wages increase to match growth to lessen the effects of inflation.
This maybe a dumb idea from someone who doesn’t play the bond market. The idea is to purchase back at a discount some long term low interest bonds, that people are willing to sell and convert to cash.
For example, Joe has a 30 year treasury bond, he is getting 1% interest on it. He wants to sell it to liquidate the bond to buy new bond that pay 5% or invest in the stock market Instead of finding a broker to buy it at a loss, the Fed buys back the bond at a discount price similar to what broker would pay let’s say 85% of the purchase price. To make it appealing, the bond holder could then write off the loss as a loss of income deduction reducing taxable income. Obviously, you would need to create some stipulations or limits on the tax deductions otherwise someone could use this strategy to zero their tax burden.
Posted on 3/21/24 at 6:37 am to Civildawg
quote:
Pausing rate increases and then cut rates later this year? I'm curious to your opinions.
I've said for a while now that we needed another hike back in Q4, the continued rise in CPI and PPI only strengthen my belief in that. That said, a pause isn't exactly horrible right now but I would have rather heard a warning of a possible hike this year rather than more attempts at promising cuts.
Latent demand and excess liquidity has continued to keep inflation sticky above 3%. Economic activity usually picks up as we get into Spring and Summer so there's no reason to expect inflation to fall below 3% anytime soon. That makes the continued language about 3 cuts this year even more unreasonable as it would mean cramming them into 6 months (or less). The amount of latent Demand we are seeing doesn't just disappear, so cutting rates too soon risks bringing back inflation (see: 1970s inflation).
Understand this: rates aren't cut because the economy is good, rates are cut because the economy is seen to be slowing down. If you're cutting rates 3 times in a year, that means your economy is slowing quite a bit. If it's going to be 3 cuts within 6 months (ranging from 1.25 to .75 between June and December), you're effectively saying you are trying to stave off a recession.
Along with that, rates aren't cut if inflation is staying well above the targeted 2% mark nor going up, rates are cut if inflation is nearing 2% or dropping below.
We've been seeing both strong GDP growth and inflation staying stalled above 3% (much less the 2% target). Inflation has doggedly refused to go to 3% or below since it finally dropped below 4% in June of last year. There is very little right now that looks to change any of this into conditions more favorable for rate cuts by June. At this point I'm starting to write off any chance of a cut over the summer and am looking at September for the earliest chance. This, of course, means that as the number of instances of cuts for 2024 also drives down the depth of those cuts.
Posted on 3/21/24 at 8:00 am to Civildawg
Bank of England also kept their lending rate the same but indicated that they’d be cutting rates too as they point out that their economy is moving in the right direction.
England’s inflation rate has come down from 11% in October 2022 to 3.4% in February of this year.
Also, the Swiss bank cut their rate today by a qtr point.
I think it’s clear that the track is pointing to rate cuts for us in the coming 2 qtrs.
England’s inflation rate has come down from 11% in October 2022 to 3.4% in February of this year.
Also, the Swiss bank cut their rate today by a qtr point.
I think it’s clear that the track is pointing to rate cuts for us in the coming 2 qtrs.
Posted on 3/21/24 at 8:06 am to Tarps99
quote:Of course they don't.
I don’t think they are worried about your debt.
To be clear, I feel like I'm being deviously taxed in a non-transparent way with representation. I just threw a box of Nestle's tea into my pond.
Posted on 3/21/24 at 8:41 am to SlidellCajun
Yes they are saying rate cuts are coming but I don't agree with it and my question was do others agree with it
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