Re:Inequality, Interest Rates, Aging, and the Role of Centra...
by whimsicalism on Wednesday September 01, 2021 @12:15PM
(#28381767)
Seems surprising to me that you can look at financial history and conclude in any way that the Fed is somehow impotent.
Re:Inequality, Interest Rates, Aging, and the Role of Centra...
by chii on Wednesday September 01, 2021 @08:22PM
(#28387232)
this video gives an opinion that i believe to be true: https://www.youtube.com/watch?v=92MA6CxhBXA
The feds have the ability to influence rates a bit, but not set them directly as they wish.
Re:Inequality, Interest Rates, Aging, and the Role of Centra...
by whimsicalism on Wednesday September 01, 2021 @08:50PM
(#28387439)
I guess I disagree with this guy's characterization - unless the point he is making is that the Fed has to operate within the constraints of what makes sense given the market or otherwise the market fails.
This blog post summarizes my opinion https://www.themoneyillusion.com/monetary-policy-and-interes...
Re:Inequality, Interest Rates, Aging, and the Role of Centra...
by chii on Wednesday September 01, 2021 @11:25PM
(#28388343)
> Fed has to operate within the constraints of what makes sense
that's an implicit assumption all rational economists would have. It's like saying the US could just be holding the entire world hostage by threatening to nuke the entire world.
The blogpost you linked is basically confirming that the feds don't have unlimited room for controlling interest rates. they can merely nudge it a bit here and there, and hope for the best.
I like the analogy of the bus driver through the Alps.
The Feds have some scope to nudge the interest rate, but they cannot massively change it against the market. The persistent low rates of the past 2 decades are mostly market driven, because there's been a lack of growth.
The feds try to nudge lower the rates past the "natural" rate (a rate as if they weren't there), but the trend of the rates being down isn't determined by the Feds.