Anyone beside me realize how ridiculous it is for any one group of men to decide what the “right” interest rate should be in our economy?
I hope interest rates go to 2% more than inflation to stop the reckless borrowing, and insure retirees can get a safe positive return on their bank deposits.
Well…I would certainly rather have the Federal Reserve set interest rates than our clown administration or Congress…
What if the market set the interest rate via supply and demand of credit & capital, instead of by fiat?
Supply & demand is how all other goods & services are priced. Are we so unimaginative that we can’t envision a situation in which bureaucrats do not exert unilateral control over our finances?
WEll…I would submit that we wouldn’t have seen two housing booms and the stock market wouldn’t have performed as well as it did if the market determined interest rates.
And you would be partially wrong.
The housing “boom” was followed by a collapse, had the free market been allowed to work it would have had natural ups and downs.
And I would argue the Stock Market probably would have been better without meddling from the Fed Reserve.
I’ll reword your statement:
Wealthy people wouldn’t have become obscenely more wealthy in their stock & real estate portfolios if politicians and bureaucrats had not manipulated interest rates for over a decade.
Aren’t leftists supposed to be against filthy rich people seeing massive increases in their net worth simply by owning things?
And what did they do to interest rates following the collapse? And after that - housing has increased at more than double the inflation rate for all the years that those interest rates were kept low. And people started buying houses like crazy and continued to do so. IT’s kind of funny…our former president cited this in a debate. He called it a “highly political fed”. That “wasn’t allowed to do it’s job” And after he appointed a less political new guy who raised rates just an eensy bit, the stock market did not like it at all - as Trump predicted in 2016. And he howled because that fed was fucking up his wonderful stock market. And the Fed chair backed off…maintaining artificially low rates for 4 more years.
And maybe the stock market WOULD have done better…after a period of short term pain as people adjusted. But we never had the opportunity to find out.
I think you ar accidentally making the case to dissolve the Fed!
As always it’s Trump’s fault isn’t it?
Interest rate suppression steals from the poor via price inflation & gives to the rich via asset value inflation.
This isn’t a Trump thing dummy. It’s all presidents, most politicians, all Fed chairs. Spare me your selective outrage. 
When the Fed artificially keeps rates low, you have a couple of choices:
And wait for the inevitable crash.
Fuck that. Stocks, bonds, and real estate will still accrue value without (temporary) artificial help from the Fed.
You are saying that you would prefer falsified housing and stock market prices and the inflation that goes with it?
It has ever been so. currency debauchment, especially when suppressed interest rates accompany it, results in frenzied speculation instead of productive activity.
Seed money should come from SAVINGS, not be conjured out of thin air by a central bank.
Productive enterprises that invest capital wisely and minimize debt will, at least. Stupidly run companies like FTX and AT&T won’t.
Nope. I’m saying that without all the fiddling, the great stock market ans skyrocketing home vaiues might not have happened to the degree they did.l
Everyone I know that has bought a home and invested in the stock market have a much higher net worth than those who didn’t at the same age.
You are right. The Fed goosed the stock and real estate markets by suppressing interest rates and buying government bond issues.
The gains were artificial. I would trade our artificial gains for an honest market any day. Our gains considering inflation are not really that impressive. Inflation is a great confuser of people. If your portfolio increase 8% in value and consumer price inflation was 8%, you have made nothing at all. But yet you pay capital gains tax on the nominal gain. Meaning you lost money. How fair is that?
Think about this: With honest asset-based currency, prices would go down with productivity gains, not up. We would be very happy with 2 % gains in the stock market and 2% interest on money on deposit in banks, as our REAL gain would be 3% or more considering consumer price DEflation.
You’d piss off a lot of “investors” if that happened. See…a lot of people liked to point to those artificially low rates under Obama and claim the economy gains were artificial. Then Trump got elected…rates stayed extraordinarily low, just like they had been…but those same folks blasting the fake results of Obama embraced this “policy” of Trump. Because in a 2016 debate, Trump was saying the same thing you are. Once elected and the rates rose just a little bit, he had a shit fit. They stayed low and we enjoyed the greatest economy in the recorded history of man…and spent like a drunken sailor despite this thriving economy.
It is incredible how you turn everything into a partisan argument. Trump was an idiot for wanting suppressed interest rates. Not surprising, as all real estate investors do.
Yes, the economy was doing great under Trump until COVID hit, but savers were still getting screwed. They are still getting screwed. Nobody cares about responsible people who don’t borrow money and save for a rainy day.
Luckily we have the world’s reserve currency, at least for the moment. Argentina doesn’t, and it has Biden clones in charge over there. A business partner told me the inflation is now 100% per annum, as no one want to buy Argentine debt issue. so the central bank has to monetize it.
Let us hope the higher interest rates send overleveraged firms into oblivion. I hope the first are private equity dental corporations. The purpose of a recession is to return money to its rightful owners, where it is treated the best.
That will definitely happen to us. The question is when.
Could be in a few years. Could be in a few hundred.