Re:Will the rich world’s worker deficit last?
by adam_arthur on Wednesday August 18, 2021 @01:21AM
(#28217995)
Real interest rates will certainly increase if Fed increases nominal rates.
The real rate is of course the inflation adjusted rate, and Fed policy has been one of the prime drivers of higher inflation.
If they weren't printing 120B a month, or monetizing government spending, real rates would go up. Treasury yields are artificially suppressed by their bond buying.
Beyond asset purchases, simply raising short term rates would immediately dampen inflation, though has economic consequences as well (slow business activity).
Unfortunately the Fed seems more interested in supporting markets than doing what's right for the longer term health of the economy. Wealth inequality has been primarily perpetuated through monetary policy... Though fiscal plays a role too, of course.
The real rate is of course the inflation adjusted rate, and Fed policy has been one of the prime drivers of higher inflation.
If they weren't printing 120B a month, or monetizing government spending, real rates would go up. Treasury yields are artificially suppressed by their bond buying.
Beyond asset purchases, simply raising short term rates would immediately dampen inflation, though has economic consequences as well (slow business activity).
Unfortunately the Fed seems more interested in supporting markets than doing what's right for the longer term health of the economy. Wealth inequality has been primarily perpetuated through monetary policy... Though fiscal plays a role too, of course.