Trump’s Proposed Tax Cuts
Higher inflation, higher interest rates coming soon. And don’t get me started on the debt. Economic disaster looming.P Continue Reading →
Tag Archives: interest rates
Hey, Janet, How’s That Interest Rate Increase Working Out?
But the real problem is that the Fed has not understood why banks are holding all those reserves. There are two reasons. First, there is incredible risk aversion caused by the random, frequent regulations and lawsuits emanating from the Obama administration. Second, there is the small matter of loan demand. Banks are holding reserves because they don’t see demand for loans whose return is worth the risk. The only way loan demand will increase is for the economy to ascend to a decent growth rate. Until that happens, the Fed should just give up. Continue Reading →
Let’s See If The Fed Can Make It Stick
The Fed has spoken. The new target rate for the Federal Funds rate will gradually rise to between 0.25 and 0.50 percent. I wrote extensively about this yesterday. It will be interesting to see whether the folks at the Board of Governors can make this rate increase stick. Continue Reading →
The Forever ZIRP
A two percentage point increase in the interest rate would double the U.S. government budget deficit. Continue Reading →
Watch for Interest Rates to Rise Soon
The Fed’s attempt to rescue the economy using monetary policy alone has been a fool’s errand. Now they face a Sophie’s choice: (1) Do nothing and watch inflation increase, or (2) drain the excess reserves from the system and watch interest rates rise. Actually, interest rates will rise either way. Continue Reading →
Yellen Decries Wealth Inequality, Fails to Mention Fed’s Role
It happens that the Fed critics are exactly right. While interest rates on debt held by those in the bottom 80% may be slightly cheaper, much of that debt is probably credit cards. Those interest rates are still way, way above 1%. Continue Reading →
This is How a Financial Meltdown Might Be Starting
Buyers suddenly decide U.S. Treasury securities may not be risk-free any more. They start to hedge against possible price decreases. An easy way to do that and limit risk is by purchasing put contracts on Treasuries. Continue Reading →