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re: What Caused the Historically Low Interest Rates.?
Posted on 5/26/24 at 1:04 pm to CharlesUFarley
Posted on 5/26/24 at 1:04 pm to CharlesUFarley
quote:Then wanted to raise them as soon as Trump got into office, but he pressured them to keep them low and the economy took off.
The FED wanted to prop up Barak Obama's shite-show economy.
Always thought they should have raised them while Trump was in office, his pro-business policies could have handled the rate increases and we would be in a much better situation today.
2
Posted on 5/26/24 at 3:06 pm to Tifway419
quote:
Always thought they should have raised them while Trump was in office,
The rates were on the rise prior to Covid. The fed rarely if ever raises rates in large increments to prevent shocks to the system.
Posted on 5/26/24 at 3:12 pm to Oenophile Brah
Yep. Fed was bumping the rate consistently and then China happened.
This post was edited on 5/26/24 at 3:41 pm
Posted on 5/26/24 at 3:31 pm to Bard
quote:
The Fed finally began gradually raising rates just before COVID, but (as you can see from the graph) it was only about halfway to where it should have been.
I disagree with this and the couple guys that parroted it. The fed tried to raise rates and got a few hikes in… the market freaked tf out in Q4 2018 and they stopped and made a couple “mid-cycle adjustments” and “not QE” after the repo rate blow up in September 2019. It’s even on the chart provided.
They tried to hike, but had completely reversed policies like a bunch of scared bitches precovid. Covid just provided cover to continue blowing the bubble.
Little disappointed you missed this Bard. You’re one of my favorite bears in here. Tsk tsk.
Posted on 5/26/24 at 4:58 pm to UpstairsComputer
quote:
The fed tried to raise rates and got a few hikes in
8 hikes in 2 years. More than a few but not a lot. They cut 3x starting in Q3 2019 and Covid was in the news for the Final Cut.
We can all agree the fed is influenced by politics, both ways. My concern is what I consider bad policy (slow/no growth) is incentivized in the short term by an overly accommodative fed. It allows for easier gaming of economic data around election season.
Posted on 5/26/24 at 6:43 pm to Fat Bastard
quote:
applied for a business LOC with my banker today.
I currently am paying 8% on a 2.5 million LOC
Posted on 5/26/24 at 7:12 pm to Tifway419
quote:
Always thought they should have raised them while Trump was in office, his pro-business policies could have handled the rate increases and we would be in a much better situation today.
They did. They acted aggressively in 2018. Many economist warned it was too much too soon. The stock market suffered, but the economy continued to grow. Probably Jerome Powel was trying to prove he was independent.
Posted on 5/26/24 at 7:54 pm to Oenophile Brah
That was coming off of ZIRP for what was essentially eight years and what at the time seemed like insane QE. So we got up to 2.25-2.50. 8 hikes got us to 2.25! lol I just can’t consider 8 hikes in 17(?) meetings that barely budged the rate more than a few.
So we hiked 9 times in a decade but got it back to zero in 15 months.
Anyway, the point was it wasn’t Covid that caused them to change course.
So we hiked 9 times in a decade but got it back to zero in 15 months.
Anyway, the point was it wasn’t Covid that caused them to change course.
Posted on 5/27/24 at 6:38 pm to UpstairsComputer
quote:
The fed tried to raise rates and got a few hikes in… the market freaked tf out in Q4 2018 and they stopped and made a couple “mid-cycle adjustments” and “not QE” after the repo rate blow up in September 2019. It’s even on the chart provided.
They tried to hike, but had completely reversed policies like a bunch of scared bitches precovid.
quote:
Little disappointed you missed this Bard. You’re one of my favorite bears in here. Tsk tsk.
quote:
From that point, any time the Fed even hinted about an increase the market would throw a fit and the Fed would back down (the market had its sustained low-rate environment and clung to it like an addict does their back of crack).
Posted on 5/27/24 at 8:01 pm to faraway
9/11 started it in my view
Posted on 5/27/24 at 8:52 pm to Traffic Circle
There is a good ole Married with Children Clip of Marcy explaining the Fed and interest rates. Just be warned it may not be safe for work.
Posted on 5/27/24 at 9:07 pm to Iowa Golfer
quote:This is a defensible viewpoint. IMO, 911 started A LOT of stuff.
9/11 started it in my view
Posted on 5/29/24 at 12:14 am to baldona
quote:
Covid really should have never come into play though, rates should have been increased 2-3 years pre covid.
Im still young enough, but I don't really understand why more boomers didn't take more advantage early on of the low interest rates? Seems like guys that were still working and investing in things like real estate would have went hard into real estate with 30 year loans at 3% just because of the great rates. The younger generations really didn't understand how good those sub 4% rates were.
ETA: I'm kinda pissy my parents and in laws didn't tell me I should have just bought a bigger house early with a 30 year term. I haven't been in my dream house. I know that could appear to be a dumb idea, but waiting is not always perfect either. I wish I would have in the least invested in a "dream" lot when rates were good and prices were good.
Aren't you a grown arse man? Why didn't you do your own research and buy a bigger house?
Posted on 5/29/24 at 1:28 pm to OTIS2
Because the FED, or whoever informs them on what to do, wanted it to be? Low interest rates stimulate everything. Lower rates = more capital available for the principal, thus prospective mortgagers can afford more expensive homes as less income goes toward interest. It also frees up capital for businesses as they can refi/reservice pre-existing debt at lower rates. It also stimulates publicly traded companies as investors will move away from the money market, which is typically indexed to interest rates, and increase exposure in capital markets
In reality, it was a counter to a decade long recession experienced during the 2000's. People talk about 2007-2009, but overlook 2000-2003. The S&P 500 was consistently above 1,500 in July 2000. It didn't get back to that point until 2013
In reality, it was a counter to a decade long recession experienced during the 2000's. People talk about 2007-2009, but overlook 2000-2003. The S&P 500 was consistently above 1,500 in July 2000. It didn't get back to that point until 2013
Posted on 5/29/24 at 1:46 pm to OTIS2
The low rates were driven by low growth and an inbalance of risk which tightened credit to only the largest multinationals and governments. Same with the mortgage market. We are basically in a renactment of the great depression in the 30s. Prolonged period of below trend growth, fiscal dominance and if Treasury rates blow out, yield curve control.
Posted on 5/29/24 at 5:42 pm to wutangfinancial
quote:Can you dial this in more, please? I'm not sure what you're trying to say.
which tightened credit to only the largest multinationals and governments.
Posted on 5/29/24 at 6:11 pm to Big Scrub TX
It's not really that hot of a take. The low rates were only accesible to high net worth individuals and the most credit worthy businesses. Joe six pack isn't walking into a commercial bank to get a business loan for 3.5% during the time frame the discussions about 
It also coincides with the concentration of industry over several decades including all public securities markets.
It also coincides with the concentration of industry over several decades including all public securities markets.Posted on 5/30/24 at 12:25 am to wutangfinancial
quote:Oh ok. I don't know about Joe Sixpack, but bad companies certainly got plenty of cheapo debt.
It's not really that hot of a take. The low rates were only accesible to high net worth individuals and the most credit worthy businesses. Joe six pack isn't walking into a commercial bank to get a business loan for 3.5% during the time frame the discussions about
Posted on 5/30/24 at 6:56 am to Bestbank Tiger
quote:
Crap economy 2008-16 so they couldn't raise rates. Started bringing them back up in 2018 then the CCP virus happened.
This thread is going about how I thought it would - a lot of blaming Dems.
Trump bitched about the Fed trying to kill his economy more than any president in recent memory and fought extremely hard for lower short term rates.
Additionally, long term (10y) rates hardly budged during most of his presidency, and those rates are typically mired indicative of expected economic growth and inflation expectations.
The fact of the matter is different terms are impacted by different things, so there is no single answer to the OP, but relatively muted inflation and growth expectations drive rates.
Long term rates were basically in a downtrend for the last 30 years before 2022 happened, so the answer is multi-faceted.
Posted on 5/30/24 at 7:01 am to Iowa Golfer
quote:
9/11 started it in my view
I’ve got a hard time blaming 1980-2000 trend on 9/11.
9/11 was one event along a 40 year trend of events that were driving rates lower on the whole.
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