fed- interest rates and inflation...

[rSin]

At its May meeting, the Fed raised its target Fed Funds Rate to 1%. Here’s the scoop:

“The Federal Reserve recently announced that it’s raising interest rates by half a percentage point, bumping the federal funds rate to a target range of 0.75-1.00%.” (The Spokesman-Review)

Got that? So the Fed’s rate is still a measly 1%. That’s what the media is trying to hide from you, and that’s why you might have to read 9 or 10 articles before you find a journalist who provides you with the actual rate.

Why are they hiding the rate?

Because the rate is 7.6% below the rate of inflation, so it doesn’t do a damn thing. It’s another public relations travesty dolled-up to look like serious monetary policy. But it’s a joke, and you can see it’s a joke.

Think of it like this: If I loaned you $100 at 1% interest– but inflation was running at 8%– I would lose 7 bucks per year, right?

Right. And that’s what the Fed is doing. When interest rates are set below the rate of inflation, then the Fed loses money on every loan. In other words, the Fed is providing a subsidy to the banks for borrowing money. Have you ever heard of anything so ridiculous?

How would you like a deal like that? How would you like it if the Fed paid you interest on your credit card debt? You’d probably like that, right? But—if you were honest with yourself—you’d admit that it was a “gift”, because that’s what it is, a gift. The big banks are getting another handout from Uncle Sugar. That’s the whole deal in a nutshell.

https://www.globalresearch.ca/fed-isnt- ... it/5783353


So, how much would the Fed have to hike rates if it really wanted to do its job? Check out this clip from an article at the Chicago Booth Review:

“The usual wisdom says that to reduce inflation, the Fed must raise the nominal interest rate by more than the inflation rate. In that way, the real interest rate rises, cooling the economy.

At a minimum, then, according to the usual wisdom, the interest rate should be above 8.5 percent. Now. The Taylor rule says the interest rate should be 2 percent (the Fed’s inflation target), plus 1.5 times how much inflation exceeds 2 percent, plus the long-term real rate. That means an interest rate of around 12 percent. Yet the Fed sits, and contemplates at most a percent or two by the end of the year.” (“Why Hasn’t the Fed Done More to Fight Inflation” Chicago Booth Review)

So if the Fed was serious about fighting inflation, they would have raised rates to roughly 12%. Instead, they have decided to use their allies in the media to pull the wool over everyone’s eyes. That’s what’s going on. It’s another big snow-job. Here’s more from the Chicago Booth Review:

“… the inflationary shock we just experienced, whatever its source, together with today’s low interest rate, gives us a large negative real interest rate. That negative rate is itself additional “stimulus”: it raises output and lowers unemployment. Higher output and lower unemployment, however, raise inflation even more, relative to the large past inflation. Higher inflation means an even lower real interest rate, and more inflation still, in a never-ending spiral—until the Fed gives in, raises interest rates to much above inflation, and contains the mess with a large recession.” (“Why Hasn’t the Fed Done More to Fight Inflation” Chicago Booth Review)

[rSin]

the fed has now spent 9 trillion dollars on tanking wall street stock

curtesy of 'quantative easing'

[Butcher Bob]

When interest rates are set below the rate of inflation, then the Fed loses money on every loan. In other words, the Fed is providing a subsidy to the banks for borrowing money. Have you ever heard of anything so ridiculous?

“The usual wisdom says that to reduce inflation, the Fed must raise the nominal interest rate by more than the inflation rate. In that way, the real interest rate rises, cooling the economy.

“… the inflationary shock we just experienced, whatever its source, together with today’s low interest rate, gives us a large negative real interest rate. That negative rate is itself additional “stimulus”: it raises output and lowers unemployment. Higher output and lower unemployment, however, raise inflation even more, relative to the large past inflation. Higher inflation means an even lower real interest rate, and more inflation still, in a never-ending spiral—until the Fed gives in, raises interest rates to much above inflation, and contains the mess with a large recession.”

Been pointing this stuff out since Paulson was shitting himself on national TV.

The reason, is not addressed in your source....GNP. The Fed not only has a target rate for inflation, but also for GNP as well. They shoot for a 4% increase annually. Under their ideal scenario, an inflation rate of 2% covers aboot half of that. But even with our current inflation, we just had a 1.7% contraction in GNP in the last quarter reported.

That's one of the reasons we push war...because the MIC is our #1 industry.
That's why banks get the "gift"...because financial services is our #2 industry.

But...LOOK AT PUTIN!!...LOOK AT TRUMP!!....and while you are distracted, they will take everything from you.

[rSin]

Biden is relying on the Federal Reserve to choke inflation, rather than instituting any policies to protect workers’ pockets. According to Politico, ​“Biden declared his ​‘laser focus’ on inflation while meeting at the White House with Fed Chair Jerome Powell… and backed the central bank’s aggressive interest rate hikes, which are aimed at cooling the economy by any means necessary, including inducing a possible recession.”

The medicine the Fed has on offer is the same toxic elixir it’s had on its shelf for decades — hiking interest rates to ​“cool” the economy. This approach is a case of medicine that is worse than the disease. Cooling off the economy is a euphemism for scaling back investment in the economy, thereby driving up unemployment and decreasing workers’ bargaining power. Interest rate hikes have the power to ​“cool” the economy, because they make it more costly to borrow money, and therefore discourage investment in production. This, in turn, leads to reduced productive capacity, fewer available jobs, and an increase in unemployment.


https://www.commondreams.org/news/2022/ ... cutive-pay

[Butcher Bob]

Is the text your thoughts?....because it does not match the article you linked.
The linked article has a lot of accuracy to it....the text you posted, not so much.

[rSin]

first i though them labeling current rate hikes as aggressive was laughable but,
it revealed how close minded was the author

as for the second paragraph i guess it only makes sense if you think a sizable percentage of capital investment in production are chasing 5% and below profit returns.

profits for small timers expandingare huge in comparison and im suprised this understanding doesnt make it into the public discussion.

little doubt i could get a bank loan for a set of tools for a new trade given how fast it would pay for itself...

[Roots]

John Oliver did his show this week on interest rates and recession…..it was a good episode.

He really tries to dumb things down so people like Bob can follow.

[roller24]

The banks are just delaying what they expect/anticipate. Presently they are looting assets. Their even buying up the fucking trailer parks, residential real estate, etc. This has already made renting a home unreachable for many. The RE sales is so inflated, nobody can purchase and feel like they havent been ass fucked with no reach around.
They are dismantling the industrial world and making way for the technological world. Taking out the petro dollar and introducing the ESG unit.
Biden still has 2 more years to obtain his legacy as the POTUS that ushered in the Great Society. blah blah blah.

it's gonna get a lot worse.

Epic Dystopia

[Intrinsic]

Thanks Roots, I checked out the vid,

[Roots]

Why do I even pay for HBO when you peasants can get it free 24 hours later..?