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Started By
Message
re: Why would the Fed lower the interest rate today?
Posted on 7/31/19 at 8:27 am to Gaspergou202
Posted on 7/31/19 at 8:27 am to Gaspergou202
quote:
The Fed allowed effective 0 rates to become normal and they raised them too early in the recovery and too much. They are now trying to repair the damage from their interference.
Executive fiscal policy from Obama admin pretty much forced the fed to stick with a easing bias. Once Trump entered the executive branch U.S. business was more apt to take more risk b/c they calculate that risk from the executive branch is all but eliminated under Trump (practically speaking that means no fear of increasing healthcare, minimum wage and other costly regs from the executive branch directly and via the legislative branch). So the fed changed gears and went into a tightening bias, and as you say they raised the rates too early, predicting that the executive branch (with the help of the legislative branch particularly with tax cuts) would over-stimulate the economy.
ETA: IMO as long as food and energy supply remain high Trump can put pressure on the labor supply (though immigration), that is good for the economy. This is the formula you currently see in action. This formula keeps inflation in check due to high supply of energy and goods and wages rising due to a tightening labor supply.
This post was edited on 7/31/19 at 8:33 am
0
Posted on 7/31/19 at 8:31 am to Pvt Hudson
quote:
There’s no good reason for the Fed to cut rates today.
World economy is weak as shite. Europe is at negative interest rates. Trying to get ahead of the curve.
Posted on 7/31/19 at 8:32 am to GumboPot
quote:
2. Likely mostly due to other central banks (Europe and China) debasing their currency making ours stronger decreasing U.S. inflation (and high food and energy supply)...so the fed responds with a downward bias.
Interesting Gumbo. I read an article recently where chini subsidizing their exports to offset the tariffs was also allowing us to import deflation with the goods, keeping our own inflation in check.
Posted on 7/31/19 at 8:38 am to BestBanker
Ya, man. I love it. Lower rates so we can fund and monetize trillions of dollars of debt and so Congress never has to be held accountable for a balanced budget and the size of government can grow perpetually. Genius take. The Fed has the governments back, not ours. They are going to drive inflation through the roof, and easily within two years we will be back in another round of QE.
Posted on 7/31/19 at 8:40 am to trinidadtiger
quote:
I read an article recently where chini subsidizing their exports to offset the tariffs was also allowing us to import deflation with the goods, keeping our own inflation in check.
Makes sense. This creates a high supply of goods which weighs on low side of inflation. But IMO the biggest factor keeping inflation in check is low energy prices. Fracking has really done wonders for our economy. For every fracking well you need 40 conventional wells. When these wells are produced the hydrocarbons need a home. We just have a shite ton of it now making gasoline, plastics (from ethylene via ethane), natural gas, electricity from natural gas, fertilizer from natural gas, heating from natural gas, other refined products from crude, propane, butane...the entire gamut from a fracking wells cheaper. It's a quiet energy revolution.
Posted on 7/31/19 at 8:53 am to GumboPot
You guys are thinking too hard. Lower rates allows me to grow my business more quickly, hire more employees and compete more successfully against mega companies who overwork and underpay their employees.
The government is going to grow and spend more of our money. Get used to it. It’s not going to change. If lower rates saves YOU money, which it will on any debt you have, that’s a good thing. If lower rates save small and large companies money they’ll be more profitable and in a better position to pay their really good employees more. It’s not that complicated.
The government is going to grow and spend more of our money. Get used to it. It’s not going to change. If lower rates saves YOU money, which it will on any debt you have, that’s a good thing. If lower rates save small and large companies money they’ll be more profitable and in a better position to pay their really good employees more. It’s not that complicated.
Posted on 7/31/19 at 9:04 am to BestBanker
quote:
we are the government and the governed simultaneously
No.
Posted on 7/31/19 at 9:21 am to MrCarton
Yes.
Posted on 7/31/19 at 10:02 am to BestBanker
quote:IIRC, the Fed did something similar in 1995.
is this the first time a sitting President of the US made it happen, with a rebounding economy and good news all around it?
quote:Yes
Usually the opposite occurs.
Posted on 7/31/19 at 10:06 am to Pvt Hudson
quote:Global economics is a very good reason.
There’s no good reason for the Fed to cut rates today.
Put another way, Greek rates are lower than ours. Think about that.
I believe this is the first time Fed rates ever exceeded those of every other first-world economy for > 90 days.
Posted on 7/31/19 at 10:14 am to BallsEleven
don't the cut in overnight rate has already been priced into mortgage rates.
Posted on 7/31/19 at 10:30 am to BestBanker
Because Trump has the backing of a dark force and they have to do what he wants.
Posted on 7/31/19 at 10:39 am to BestBanker
quote:
This isn't cash for clunkers, guys and gals!
Man that guy was a piece of shite.
Posted on 7/31/19 at 11:01 am to NC_Tigah
quote:
Global economics is a very good reason. Put another way, Greek rates are lower than ours. Think about that.
You want to use the Greek economy as our measuring stick? Kind of makes my point. There is a ying to every yang.
Posted on 7/31/19 at 11:14 am to BestBanker
Kowtowing to the dicktator.
Posted on 7/31/19 at 12:11 pm to Ripley
quote:
You forgot to post through your BestBanker alter.
Unrelated poster. Although i should get a new handle to prevent confusion.
Posted on 7/31/19 at 12:59 pm to Pvt Hudson
quote:
There is a ying to every yang.
quote:and then there are yingyangs.
Pvt Hudson
quote:What in all of College Station enticed you to say that?
You want to use the Greek economy as our measuring stick?
Are you under the impression a country as economically unstable as Greece would normally sell its debt at lower rates than the US. Does the US economic risk of a disproportionately strong and further strengthening dollar in a globally weak economy not register? Does continuing sub 2% inflation not justify the .25% cut we just got?
Posted on 7/31/19 at 1:16 pm to NC_Tigah
The argument made in response to my post was that I should somehow feel bad that the Greeks have a lower base rate than the US.
Posted on 7/31/19 at 1:27 pm to Pvt Hudson
quote:Are you being intentionally dense?
the Greeks have a lower base rate than the US.
I ask because I'm trying to understand whether it's worthwhile discussing. The FOMC voted 8-2 to drop rates. Several members were contemplating a 50BPS cut. 25BPS was not a close call. You wondered why. I told you.
Posted on 7/31/19 at 1:49 pm to BestBanker
quote:
Why would the Fed lower the interest rate today?
Two words:
Currency manipulation.
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