Economy 53,076 Posted December 15, 2017 Share Posted December 15, 2017 https://www.google.ca/amp/s/amp.usatoday.com/amp/946193001 Janet Yellen head of the US Central Bank announced a 0.25% increase in the benchmark rate from a range of 1.25% to 1.5% This will likely increase mortgage rates in private banks, student and car loans and even the Governments debt interest on bonds Link to post Share on other sites More sharing options...
Gaga Monster 13,001 Posted December 15, 2017 Share Posted December 15, 2017 2 hours ago, Economy said: https://www.google.ca/amp/s/amp.usatoday.com/amp/946193001 Janet Yellen head of the US Central Bank announced a 0.25% increase in the benchmark rate from a range of 1.25% to 1.5% This will likely increase mortgage rates in private banks, student and car loans and even the Governments debt interest on bonds Why did they raise interest rates? The GDP is at 3% for Q2 + Q3, why would they want to discourage more growth? GGD Presidential Elections Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 15, 2017 Author Share Posted December 15, 2017 4 minutes ago, Gaga Monster said: Why did they raise interest rates? The GDP is at 3% for Q2 + Q3, why would they want to discourage more growth? The labor market the way it is and consistent growth will cause problems down the road if rates arent raised in fact they forecast that they may raise it 3 times more in 2018 Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted December 15, 2017 Share Posted December 15, 2017 1 hour ago, Gaga Monster said: Why did they raise interest rates? The GDP is at 3% for Q2 + Q3, why would they want to discourage more growth? Has to do with available credit and currency... inflation is caused by too much availability and prices start bubble, a spiral too high. Interest rate increase shows borrowing and reduces the chance of inflation. like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted December 15, 2017 Share Posted December 15, 2017 1 hour ago, Economy said: The labor market the way it is and consistent growth will cause problems down the road if rates arent raised in fact they forecast that they may raise it 3 times more in 2018 Good news for me .. like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 15, 2017 Author Share Posted December 15, 2017 27 minutes ago, Woolfsmck said: Good news for me .. Truck driving benefits from higher rates???? Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted December 15, 2017 Share Posted December 15, 2017 Retirement and savings earn more like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 15, 2017 Author Share Posted December 15, 2017 9 minutes ago, Woolfsmck said: Retirement and savings earn more Oh true true I got bervous with stock valuations so i reduced equity holdings on my portfolio to 30% and fixed income (bonds) to 70% in case of a crash But now im making petty 4% to 5% annual gains on fixed income On top of that my bank always tries to sell me bond funds they put together for you which only invest in their sector funds but charge 2% which would wipe out half my gains f*ck them Link to post Share on other sites More sharing options...
FABian 852 Posted December 18, 2017 Share Posted December 18, 2017 On 15/12/2017 at 1:21 PM, Woolfsmck said: Has to do with available credit and currency... inflation is caused by too much availability and prices start bubble, a spiral too high. Interest rate increase shows borrowing and reduces the chance of inflation. I don't think you can reduce the chance of inflation. Maybe you can reduce inflation rates, but there will always be inflation as long as fiat is being printed daily... If we really could reduce the 'chance' of inflation, prices wouldn't be going up every year... Idk obv I could be wrong, just my though... Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 18, 2017 Author Share Posted December 18, 2017 2 hours ago, FABian said: I don't think you can reduce the chance of inflation. Maybe you can reduce inflation rates, but there will always be inflation as long as fiat is being printed daily... If we really could reduce the 'chance' of inflation, prices wouldn't be going up every year... Idk obv I could be wrong, just my though... They target inflation around 2% Higher interest rates reduce credit creation and in turn more currency going into system also higher rates reduce borrowing and therefore demand which slows economic growth When economy gets stronger rates have to go up with it or else you gey imbalances and the economy overheats An over-heating economy means its not growing sustainably, or that the labor force and industrial and economic capacity cannot absorb the growth rate If demand ecceds capacity, you get higher prices without the economic benefit Basically, its not just the more growth the better. Growth has to be balanced and sustainable what happens when economy gets stronger is without higher rates people get too confident and borrow too much, get in debt, and you get too much inflation as well In 2002 to 2005 they took too long to raise rates when economy recovered from .com bubble and as a result those imbalances were partially to blame for the 2008 crash Many argue even right now they are taking too long Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted December 18, 2017 Share Posted December 18, 2017 @Fabian & @economy You probably already know , but growth and inflation are different aspects of the economy. Growth is more people involved in production and consumption Inflation just means that the same products cost more , not necessarily more demand or production. Hence, by increasing the cost of borrowing, as Economy pointed out, oversupply of available purchasing power is limited ... The cost of the national debt is balanced by the increased revenue from bond sales and loan revenue. Really, to me, gov. spending needs to be held in check to balance the books more than any other way... but politicians love to spend other peoples money (tax payers)... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 18, 2017 Author Share Posted December 18, 2017 23 minutes ago, Woolfsmck said: @Fabian & @economy You probably already know , but growth and inflation are different aspects of the economy. Growth is more people involved in production and consumption Inflation just means that the same products cost more , not necessarily more demand or production. Hence, by increasing the cost of borrowing, as Economy pointed out, oversupply of available purchasing power is limited ... The cost of the national debt is balanced by the increased revenue from bond sales and loan revenue. Really, to me, gov. spending needs to be held in check to balance the books more than any other way... but politicians love to spend other peoples money (tax payers)... Right. But the two tend to go hand in hand One symptom of an economy over-heating would be if demand for producs and services increased at a faster rate than companies can hire new workers, buy new machinery and expand their capacity to accomodate higher demand The result is higher prices, a draining of peoples finances without having enough time for the benefits of more jobs and increased capacity to be enabled and ripple thru economy Growth is good, but if the economy cannot absorb a rate above a certain rate without creatinf distortions, then the econoym is over-heating and growth needs to slow... higher rates do just that How much growth causes overheating also depends on point if business cycle. Right after a recession when theres a lot of slack in labor market and eccess productive capacity... Even 4% growth for a couple of years may not cause over-heating If economy is at full employment with no spare productive capacity... Even 2.5% to 3% growth can cause over-heating unless productivity also increases with it Link to post Share on other sites More sharing options...
Stan Is My Name 453 Posted December 18, 2017 Share Posted December 18, 2017 Great, increase student loans that's just what I needed. Haroon is coming to kill me D: Link to post Share on other sites More sharing options...
Economy 53,076 Posted December 23, 2017 Author Share Posted December 23, 2017 On 2017-12-18 at 12:54 PM, Stan Is My Name said: Great, increase student loans that's just what I needed. Is urs fixed tho or variable? Link to post Share on other sites More sharing options...
scallywally 626 Posted December 28, 2017 Share Posted December 28, 2017 The US just took out succh a huge 'credit card debt' to get something passed before the end of the year. Everybody knows debt comes back to bite you in the ass even though its fun to spend it at the start. Trump is doing wat he as always done, live on debt that he cant affford and hes often gone bust. Hes now gamblinig and medling with the lovely american publics livelyhoods. His past record shows he isnt very good at it. So scary!!! Nobody should be excited for the short term break. The interest rates will be an interesting thing to keep an eye on. So will the workers that usually get their bonus in tax free store cards which have been banned. Link to post Share on other sites More sharing options...
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