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rangerrebew

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Fed Logic: Let’s Raise Rates So We Can Cut Them
« on: October 26, 2016, 05:27:11 pm »
Fed Logic:  Let’s Raise Rates So We Can Cut Them

October 24, 2016
Fed Logic:  Let’s Raise Rates So We Can Cut Them
Fed Logic: Let's Raise Rates So We Can Cut Them

U.S. Chicago Federal Reserve Bank President Charles Evans on Monday said he would like interest rates to eventually rise from where they are now so the Fed will have the room to cut rates to stimulate the economy if hit by a shock.

The U.S. central bank does not have the authority to buy corporate bonds or take other extraordinary monetary easing methods used by the European Central Bank and elsewhere, he said.

He also on Monday sketched a picture of a strengthening U.S. economy but one that's unlikely to break out of its current moderate growth path no matter what the Fed does or doesn't do.

http://www.trunews.com/article/fed-logic-lets-raise-rates-so-we-can-cut-them
« Last Edit: October 26, 2016, 05:27:49 pm by rangerrebew »
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Offline Frank Cannon

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #1 on: October 26, 2016, 05:34:14 pm »
They're out of bullets and they know it. They are just looking busy until the whole damn thing collapses.
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Offline IsailedawayfromFR

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #2 on: October 28, 2016, 01:30:44 pm »
That is the whole liberal philosophy in a nutshell:  make the govt in charge.

Right now the rates are so low the fed is impotent.
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Offline bilo

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #3 on: October 28, 2016, 05:14:11 pm »
Quote from: IsailedawayfromFR on October 28, 2016, 01:30:44 pm
That is the whole liberal philosophy in a nutshell:  make the govt in charge.

Right now the rates are so low the fed is impotent.

The low rates are killing the middle class retirees who did all the right things and rewarding all those who don't do the right things. Retirees who saved during their lifetimes used to be able to put that money into CDs and supplement their social security and pensions, if they had one. Now with low rates they have to use the principal and the money is gone in no short order.

Also the low rates have created massive malinvestment in real estate. Pricing has gone out of this world with money costing so little and when rates do climb people will find their mortgages becoming very expensive and the value of their property declining. In investment real estate the problem is even worse. Because investors can't find a return for their money they are now forming groups that buy multi family apt. bldgs and have driven the prices up to the point that there is no return on investment unless you have no debt, or convert the property to condo's. These bubbles will pop and there is nothing that can be done to stop it.

It all could have been avoided, but that would have ment letting those banks that bought and sold bad MBS's live with the consequences of their stupidity. Now we will all suffer.
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Offline IsailedawayfromFR

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #4 on: October 29, 2016, 04:04:17 pm »
Quote from: bilo on October 28, 2016, 05:14:11 pm
The low rates are killing the middle class retirees who did all the right things and rewarding all those who don't do the right things. Retirees who saved during their lifetimes used to be able to put that money into CDs and supplement their social security and pensions, if they had one. Now with low rates they have to use the principal and the money is gone in no short order.

Also the low rates have created massive malinvestment in real estate. Pricing has gone out of this world with money costing so little and when rates do climb people will find their mortgages becoming very expensive and the value of their property declining. In investment real estate the problem is even worse. Because investors can't find a return for their money they are now forming groups that buy multi family apt. bldgs and have driven the prices up to the point that there is no return on investment unless you have no debt, or convert the property to condo's. These bubbles will pop and there is nothing that can be done to stop it.

It all could have been avoided, but that would have ment letting those banks that bought and sold bad MBS's live with the consequences of their stupidity. Now we will all suffer.

Being Able To Afford A HOUSE Due To Low Rates Is  Not A BAD thing.

I am retIred and living on Dividend stocks which pay 3.5 to 4%, taxed at cap gains rates instead of ordinary income.  ALSO not bad.
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No punishment, in my opinion, is too great, for the man who can build his greatness upon his country's ruin~  George Washington

Offline InHeavenThereIsNoBeer

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #5 on: October 29, 2016, 04:31:05 pm »
Quote from: IsailedawayfromFR on October 29, 2016, 04:04:17 pm
Being Able To Afford A HOUSE Due To Low Rates Is  Not A BAD thing.

I am retIred and living on Dividend stocks which pay 3.5 to 4%, taxed at cap gains rates instead of ordinary income.  ALSO not bad.

If low rates mean you can afford to buy a house, you can't afford to buy a house.
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Offline bilo

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Re: Fed Logic: Let’s Raise Rates So We Can Cut Them
« Reply #6 on: October 29, 2016, 11:28:30 pm »
Quote from: InHeavenThereIsNoBeer on October 29, 2016, 04:31:05 pm
If low rates mean you can afford to buy a house, you can't afford to buy a house.

Great point!

Also, if low rates are the difference between owning and not owning a home what happens when rates go up. The home will lose value because the cost of money is higher.
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