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Started By
Message
Low Interest Rate Climate
Posted on 10/17/16 at 3:17 pm
Posted on 10/17/16 at 3:17 pm
LINK
Seems to me at least to be disagreement within the Fed. I tend to agree with him, but that is neither here nor there, it's just interesting stuff to me.
Seems to me at least to be disagreement within the Fed. I tend to agree with him, but that is neither here nor there, it's just interesting stuff to me.
3
Posted on 10/17/16 at 3:39 pm to Iowa Golfer
It's a fascinating situation. Will be interesting to see how it plays out once they start raising them after the election.
Posted on 10/17/16 at 5:28 pm to Iowa Golfer
It's quite depressing.
Posted on 10/17/16 at 7:46 pm to LSUTigersVCURams
quote:
It's a fascinating situation. Will be interesting to see how it plays out once they start raising them after the election.
You know exactly how it will work out.
If Clinton wins, rates stay low.
Trump wins, they raise them.
Posted on 10/18/16 at 12:43 am to Iowa Golfer
quote:
“Changes in factors over which the Federal Reserve has little influence — such as technological innovation and demographics — are important factors contributing to both short- and long-term interest rates being so low at present,” he said.
This gem makes me doubt anything additional he has to say.
Posted on 10/18/16 at 5:26 am to BamaCoaster
I wake up to this comedy piece from Thompson Reuters "Once jobless and uncounted, eager workers could slow Fed rate hike"
Posted on 10/18/16 at 8:27 am to LSUTigersVCURams
quote:
LSUTigersVCURams
From the article:
quote:
Adults who are neither in jobs or looking for work are not considered part of the labor force. Their numbers have risen by a third in the last 15 years to more than 94 million, and grown as a share of the over-16 population from 32 percent to 37 percent.
Whoa.
Posted on 10/18/16 at 9:26 am to BamaCoaster
Any reasonable person should want to raise the rates. Take the pain on gradually instead of setting ourselves up for another crash. If that happens with rates near zero, the Fed has no tools left to minimize impact. 
Posted on 10/18/16 at 9:42 am to seawolf06
quote:
Take the pain on gradually instead of setting ourselves up for another crash. If that happens with rates near zero, the Fed has no tools left to minimize impact.
Absolute agreement.
Posted on 10/18/16 at 10:16 am to cave canem
quote:
This gem makes me doubt anything additional he has to say.
Why? What is your issue with said statement, out of curiosity?
Posted on 10/18/16 at 10:42 am to BamaCoaster
Word on the street is that the Fed would use Helicopter Money to prop the economy or they will start buying equities to boost up the stock market.
Posted on 10/18/16 at 10:44 am to Lou Pai
quote:
Why? What is your issue with said statement, out of curiosity?
That either one of those two "important factors" has much impact on current as well as both long term and short term interest rates.
We will remain with low rates for one reason and one reason only, the fed is scared to death of causing ANY drop in the market due to politics.
Posted on 10/18/16 at 10:51 am to cave canem
It won't be a popular opinion on here, but I disagree with that. It is the exact reason they have been timid the past couple of years, and why doves like Summers argue for structurally lower (or negative) rates. While the statement is quite broad, there is a lot of evidence to support the claim. I don't know if I agree with the policy prescription or not FWIW.
This post was edited on 10/18/16 at 10:51 am
Posted on 10/18/16 at 10:52 am to Lou Pai
quote:
It won't be a popular opinion on here, but I disagree with that. It is the exact reason they have been timid the past couple of years, and why doves like Summers argue for structurally lower (or negative) rates. While the statement is quite broad, there is a lot of evidence to support the claim. I don't know if I agree with the policy prescription or not FWIW
Care to flesh out why you agree with him?
Posted on 10/18/16 at 11:11 am to cave canem
I am by no means an expert, just a casual observer. But while the labor market has "tightened up" on the surface in terms of jobless claims, other metrics the Fed uses to gauge the labor market (LMCI) are very poor. Labor productivity is looking quite weak and has for several years now.
This is a departure from previous cycles, eg in the computer boom. There is also a stark dislocation with employment matching vs. prior recoveries. People argue that we are just inefficient in training people up for the correct jobs, but there could be a more problematic concept emerging with the emergence of automation. Demographics also point to an aging populace. We aren't Japan, but we are definitely aging with limited obvious prospects for growth.
This is a bit afield of this discussion, but part of me thinks we may be running out of arbitrage opportunities, thus growth opportunities and inflation. Given that employment and investing (retirement) are tied to growth (which is shite right now), this could be a huge problem looming. Or it may not matter since cost of living will be really low.
I would probably lean on raising rates myself with my limited knowledge, but I can understand their hesitancy both short term and long term.
This is a departure from previous cycles, eg in the computer boom. There is also a stark dislocation with employment matching vs. prior recoveries. People argue that we are just inefficient in training people up for the correct jobs, but there could be a more problematic concept emerging with the emergence of automation. Demographics also point to an aging populace. We aren't Japan, but we are definitely aging with limited obvious prospects for growth.
This is a bit afield of this discussion, but part of me thinks we may be running out of arbitrage opportunities, thus growth opportunities and inflation. Given that employment and investing (retirement) are tied to growth (which is shite right now), this could be a huge problem looming. Or it may not matter since cost of living will be really low.
I would probably lean on raising rates myself with my limited knowledge, but I can understand their hesitancy both short term and long term.
Posted on 10/18/16 at 11:57 am to Lou Pai
quote:
This is a bit afield of this discussion, but part of me thinks we may be running out of arbitrage opportunities, thus growth opportunities and inflation. Given that employment and investing (retirement) are tied to growth (which is shite right now), this could be a huge problem looming. Or it may not matter since cost of living will be really low.
This we agree on actually, the reasons why we may differ on.
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