Investors: Federal Reserve’s Inflation Fight Moves From ‘Passive’ To ‘Active’ Tightening – Powell’s Promised Pain (Forbes)

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    • #498187
      mrdmk
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      • Total Posts: 4,423

      The Federal Reserve’s interest rate rise from 0.25% to 4% was remarkable, but not because the 3.75% increase was historically large or fast. Unlike times past, rates had to climb out of a 0% basement. With that accomplished, we can now view 4% as the new ground level – the place from which the interest rate rising begins to bite.

      Why is 4% a ground level?

      To answer that question, let’s review how capital markets set interest rates when the Federal Reserve is not overriding the process.

      In capitalism, the price of money (the interest rate) is based on inflation risk (of purchasing power erosion), maturity risk (of adverse future developments) and credit risk (of borrower inability to make payments).

      Note: This combination of factors determines the “normal” interest rate level. It can be altered by money demand-supply imbalances, government regulations and, of course, Federal Reserve actions.

      The Fed’s 4% rate (the upper limit of the Fed’s current Federal Funds range of 3.75%-4%) is the primary basis of the 3-month U.S. Treasury Bill yield. Because a quarter-year is often used as a one-unit holding period, the 3-month T-Bill is viewed as “riskless” as to maturity and credit. That leaves compensation for loss of purchasing power as the operative rate determinant.

      LINK–Forbes, Investors: Federal Reserve’s Inflation Fight Moves From ‘Passive’ To ‘Active’ Tightening – Powell’s Promised Pain

       

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      If you cannot dazzle them with brilliance, baffle them with bullshit WC Fields

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    • #498192
      doh1304
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      • Total Posts: 1,905

      In 1997 I finally bought a home because the mortgage rate had fallen – to 8.16%. What? Well, I also finally had a steady income and a stable cost of living. And the mortgage was only $57,000. I paid it off in 7 years. Whole nother world.  Yes, no family, no car, no health insurance premium. If the ACA had been in effect Imy savings would have been so low ($0) I would not have qualified for a $57 loan, much less $57k. I went to the ER once in the 80s and twice in the 90s. The most I ever paid? $125. Whole nother world.

    • #498198
      soryang
      Participant
      • Total Posts: 2,555

      If you think of the various economic scams in the US- the medical scam, the various insurance scams, the war scams, the energy scams, the epidemic scams, sanctions scams, distribution scams, the housing racket, and just plain old monopoly price scams, these people want free money. Are they really going to let the air out of the bubble? I’ve noticed that despite the prime going up to 3.75 as they say, some large banks still don’t pay interest on deposits, and are charging their customers “service fees” for depositing money. I’ve been getting ripped off by banks (and other sectors) for decades, one way or another, I’m always on the wrong end of the transaction. But don’t mind me, I’m just a cranky old man.

      惑世誣民 혹세무민

    • #498256
      Average Gazoo
      Participant
      • Total Posts: 741

      They evaluate high school based on how many of their graduates go on to college and the debt that comes with that.

      It is a leap but I am not convinced that the debt industry had nothing to do with overturning Roe v Wade. The birthrate has been declining:

      “For every 1,000 women of childbearing age (15 to 44), 55.8 of them gave birth in 2020, compared to 69.5 in 2007, a 20 percent decline. The “total fertility rate,” which is a measure constructed from these data to estimate the average total number of children a woman will ever have, fell from 2.12 in 2007 to 1.64 in 2020. It is now well below 2.1, the value considered to be “replacement fertility,” which is the rate needed for the population to replace itself without immigration.” –Brookings, 2021

      Financial entities dictate government policy and foreign policy. One analyst theorizes that this usurpation of government power is a reason for the decline in the quality of politicians. IOW if you have verbal skills and truly want to influence things you go into banking, not elected offices. Banksters pushed hard to make Kamala Harris the “next Obama” but had to settle for VP but Biden, aka MBNA Biden, championed the laws that made it impossible to write off student debt while loading up Americans with the kinds of expenses, such as ACA, that keep them heavily in debt.

      Be the Change

    • #498259
      doh1304
      Participant
      • Total Posts: 1,905

      So you say you need 2.1 children per woman (actually per 1 couple) That would mean either much more women are having fewer than 2 children than more than 2 or we have one hell of a bad infant mortality rate.

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