What should interest rates be?

It’s my understanding that the Fed sets interest rates based on current economic conditions, especially the inflation rate.

What should the current interest rate be?

Bonus question, if you think the interest rate is artificially low what is the reason the Fed would do that?

Simple - what the market determines. Not the Fed. Next question

Most financial institutions use the funds rate set by the Fed plus a couple percent, but they can charge or pay any amount they want.

Please explain the reason that the fed kept rates so low in a booming economy.

Because there was no need to raise them, inflation and the economy were doing fine.

What should they have set the rate to and why?

In your opinion what should they be today?

If the market determined the rate was 1% over the last 20 years would you complain about it being artificially low?

OH…okay. The economy is humming right along and inflation is under control. And history has shown that it will always be that way I guess. Someone got into my book and replaced that with this cyclic bullshit. But if interest rates are a 2% and the economy is humming right along - what do you do when the economy hiccups? In the past, they used to lower interest rates. But there is little to no “wiggle room” with rates that low. So what do they do to spur the economy in that case? Take them negative?

Where should they be? I dunno…I’m not an economist. But have read many who seemed to indicate that they were too low for too long and that shifted from spurring a recovery to promoting bad behavior.

You’re asking me a question about what I think rates should be and you ride my ass about not answering your questions - yet you asked this question:

And I gave you a link to a guy who said that and asked you why he would have said that. But you didn’t answer.

The president doesn’t set the rate, the Fed does. It doesn’t matter what he says.

Lol…that’s for sure, yet for some reason you think they were too low.

The Fed doesn’t just make up a number to set the rate at, they have a reason. You seem to want to just pull a number out of the air because you think it’s the right rate, but don’t even know what that rate should be.

That’s right…but he was saying the same thing that I am. Was he wrong?

And FWIW - the Fed, regardless of WHO is president, is still “very political”. The last guy who had them do anything that WASN’T political was Paul Volker. He was a Republican who was appointed by Jimmy Carter. The funny thing is - the rising interest rates were one more thing against Carter that caused him to lose in 1980. But you know something…he stopped inflation.

The market doesn’t determine the base rate. The market follows the Fed.

Yes. Unlike you I don’t agree with 100% of what a politician says. Interest rates are set by the Fed for a reason, it really doesn’t matter if you, Trump or anyone else agrees.

Exactly. Financial institutions can set their own rates but they could end up screwed when they need funds from another institution or the central bank.

Are you becoming a Conservative??
Come to the Dark Side!

And KC is staying, correctly, the the Fed should stay out of the equation.

Who should determine the interest rate that banks lend each other and borrow from the central bank?

The Fed uses that rate to control inflation otherwise we could be like a South American country that sees 25% inflation every few months. No thanks.

That’s because they can’t stop printing

If the US were to default on its debt, would we see negative interest rates or very high interest rates?

The real reason why we don’t have hyperinflation is because the USD is the reserve currency.

No idea, but it also will never happen.

Hopefully you’re right. I believe we’d have hyperinflation if our default was by printing money and whereby we were still the reserve currency. We’d need very high interest rates to curb this inflation

We’d have negative interest rates if by defaulting on our debt, our interest rate artificially skyrocketed due to us not paying the bill and then the economy collapsed as a result of the very high interest rates

Hyperdeflation would cause negative interest rates, maybe even double digit negative rates. That’s because people see money as more valuable tomorrow

If we default on our debt that means the economy has already collapsed and it’s the end of the world. It’s not going to happen.