Loading ...Is This Why The FED Keeps Rates High?
Zero rates for years was a definite policy mistake that contributed to bubbles, speculation and inflation. However the FED has stayed with 5.25% for way too long and this is probably why.
They are keeping the returns high for the banks they work for while crashing the economy of the country. They should all be fired, the FED disbanded and let the marketplace set short term rates, as it does long term rates.
The Fed Posts Historic Operating Losses As It Pays Out 5.40 Percent Interest to Banks
https://www.youtube.com/watch?v=QeRv4IHoP70
I remember seeing this previously. Maybe here at Goldtent, possibly it was you GB who posted it? Always relevant.
Yes. Always relevant 😉
As most who dig into this territory know, the Fed doesn’t set short term rates.
The market for 90day treasuries does, and the Fed follows. (Chart it!!)
Cue the wizard behind the curtain.
Disagree. 90 day treasury bills never would have stayed at zero for all those years if the FED wasn’t setting their rates at zero and doing wwhatever it took to keep them there. The bond market sets long term rates, the FED is able to force short term rates where they want them to be. It causes distortions, inflation etc. But they control the very short term rates.
Myth
good explanation here
https://aswathdamodaran.blogspot.com/2015/09/the-fed-interest-rates-and-stock-prices.html
Rates aren’t high. Just because they are considerably higher than the ridiculous low rates of the recent past, doesn’t make them excessive. Central bankers may be con artists, but that doesn’t mean the rest of us are pure. People living in million dollar bungalows aren’t cursing bankers. They are patting themselves on the back for being good with money. They’ll start cursing bankers when the bungalows get repriced. The solution is for prices to reset over time to reflect true value. Short circuiting the process by lowering interest rates, which is almost certain to happen, will only delay the inevitable, and make the suffering worse when the inevitable occurs.