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Fed Ends Zero-Rate Era

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Re: Fed Ends Zero-Rate Era

#271

Post by gnaritas »

brc wrote: post #134
msellout wrote: post #113

Earlier quoted context omitted.

> more wisely than the original owners ... would have invested It depends. If the original owners were a handful of wealthy oligarchs, that's likely to be worse (ie. more centralized) than as spent by a large, distributed bureaucracy. If the original owners were a large population of mostly middle-income and poor, that's likely to be better (ie. more decentralized) than government spending/investment. > government sp…

How do you categorise a set of 'wealthy oligarchs' as having 'worse' spending than a monolithic government, which we all know has terrible spending patterns and priorities. Politicians spend money on vain projects to get themselves popular and re-elected- how is that not worse than a wealthy oligarch spending money on a gold plated fountain? At least the gold plated fountain would not be built on promises that the fu…

You're missing his point; he's saying whomever happens to be the larger group in a given scenario will be the better spender of the money. Which is a point, given your stances, that you should be agreeing with unless you're just purely anti-government. He's saying the government is a better spender than the 'wealthy oligarchs' precisely because that's such a small group and the government is the bigger group but that the poor and middle class are better spenders than the government because they're the bigger group..

Re: Fed Ends Zero-Rate Era

#272

Post by gnaritas »

mindcrime wrote: post #180
jellicle wrote: post #149

Earlier quoted context omitted.

There are a vast number of situations where the individual decisions about how to spend money/take action may be the best for the individual, but bad for the society overall. For each and every one of those, it's better for society to act as a unit to make the optimal decision. https://en.wikipedia.org/wiki/Tragedy_of_the_commons

> For each and every one of those, it's better for society to act as a unit to make the optimal decision. Depends on how you define "better". Who is to say that "better for society" trumps "better for the individual". There's no particular objective reason to take that position over the one favoring individual choice. https://en.wikipedia.org/wiki/Tragedy_of_the_commons* If everybody owns something, then nobody owns…

> Depends on how you define "better". Who is to say that "better for society" trumps "better for the individual"

Society of course, thus democracy.

> There's no particular objective reason to take that position over the one favoring individual choice.

Yes there is, the will of the majority.

Re: Fed Ends Zero-Rate Era

#273

Post by harryh »

jfoutz wrote: post #247
harryh wrote: post #164

Earlier quoted context omitted.

> there's going to be .25% more people who can't get the loan they want. No. This is wrong. There isn't a 1-1 correlation between interest rates and the % of people who get the loan they want. That's nuts.

It's a mental model to highlight a point. if there were infinite mortgage applicants, and the fed change was the only change in the whole universe, there would be a 1-1 correlation. Lots of other stuff is going on, which pushes back.

No, that's wrong too. I have no idea why you think there would be a relationship like that. The two things you're trying to relate aren't even on the same scale.

Re: Fed Ends Zero-Rate Era

#274

Post by gnaritas »

gotchange wrote: post #167
mywittyname wrote: post #157

Earlier quoted context omitted.

The USD is about as free market as a currency can be reasonably obtain. The Fed allows the market to drive the money supply through lending. Institutional banks can effectively create an unlimited supply of money on demand through lending; they just ask the Fed for money and pay the discount rate. So it's largely the market that drives short and medium term inflation through borrowing. The Fed uses treasury bonds to…

> The USD is about as free market as a currency can be reasonably obtain. Nothing about the USD is free market. The USD is shored up by the petro dollar standard and its status as a reserve currency esp. in the commodities market and its supply and management is governed by a quasi-private institution that is in bed with Wall St.

You ignored everything he said, because it disproves your point.

Re: Fed Ends Zero-Rate Era

#275

Post by [deleted] »

toomuchtodo wrote: post #219
gohrt wrote: post #213

Earlier quoted context omitted.

Does it matter though? 21st Century, everyone with savings can open a Vanguard mutual fund account with the risk/reward profile of their choosing, that's almost as convenient wrt withdrawals.

I have yet to be convinced there's no downside to everyone piling into ETFs in Vanguard. Also, funds are traditionally not FDIC insured as checking and savings accounts. Money market funds have broken the buck before. Its rare, but can happen.

[deleted]

Re: Fed Ends Zero-Rate Era

#276

Post by superuser2 »

toomuchtodo wrote: post #219
gohrt wrote: post #213

Earlier quoted context omitted.

Does it matter though? 21st Century, everyone with savings can open a Vanguard mutual fund account with the risk/reward profile of their choosing, that's almost as convenient wrt withdrawals.

I have yet to be convinced there's no downside to everyone piling into ETFs in Vanguard. Also, funds are traditionally not FDIC insured as checking and savings accounts. Money market funds have broken the buck before. Its rare, but can happen.

>funds are traditionally not FDIC insured

Index funds (whether exchange-traded or not) have exactly the volatility of the bundle of stocks they track; of course they aren't FDIC-insured, because they're investments and not savings accounts. But for index funds diverse enough and time horizons long enough they have really nice risk/reward characteristics that suit most people. If you go to Fidelity or Vanguard's website you can use automated tools to calculate the distribution of index funds, bonds, and cash equivalents that best suit your risk appetite and time horizon for growing a nest egg.

Re: Fed Ends Zero-Rate Era

#277

Post by [deleted] »

bmm6o wrote: post #49
fludlight wrote: post #40

Earlier quoted context omitted.

> Harder for me to buy a house. Bummer. Yes and no. Yes because the monthly payment on a new mortgage for a given purchase price just went up. No because that payment went up for everyone by the same amount at the same time, so purchase prices will (theoretically) adjust downward. Keep in mind that today's news means a bak will lend you money at 4% instead of 3.75%, so the effect is minimal. Other factors that influe…

> No because that payment went up for everyone by the same amount at the same time The rate is more significant the more you borrow, and not everyone has to borrow the same amount to buy the same hypothetical home. Buyers who have to borrow more are less attractive to sellers, ceteris paribus, since there's a greater chance of the deal falling through. But if we're talking about a .25% difference, it won't have a rea…

[deleted]

Re: Fed Ends Zero-Rate Era

#278

Post by jabgrabdthrow »

hodwik wrote: post #259
ubernostrum wrote: post #139

Earlier quoted context omitted.

Statists love their euphemisms My irony detector has just exploded. Can you direct me to a completely-unregulated minarchist free-for-all market where I can buy one that merely poisons me and everyone in a hundred-mile radius? Because at least it would actually work.

You have to pay extra for the poison. This is libertarian land, dude. NOTHING is free, even poison.

Nothing is free in reality, not even poison. What are you trying to say?

Re: Fed Ends Zero-Rate Era

#279

Post by superuser2 »

nostrademons wrote: post #237
toomuchtodo wrote: post #219

Earlier quoted context omitted.

I have yet to be convinced there's no downside to everyone piling into ETFs in Vanguard. Also, funds are traditionally not FDIC insured as checking and savings accounts. Money market funds have broken the buck before. Its rare, but can happen.

The downside of everyone piling into index funds isn't something systemic that'll bring down the financial system the way the real estate bubble did. Rather, it's that the capital market as a whole becomes less efficient. All the money parked in index funds is money whose owners did no due-diligence about where they put it; it means that if reality changes and the value of the underlying businesses goes up or down, t…

The problem is that Wall Street fund managers who beat the market almost never do so consistently, i.e. there is insufficient evidence to reject the null hypothesis "all actively managed funds have a roughly equal (low) chance of beating the market" in favor of "this fund knows how to beat the market consistently and will probably do so next year."

So a rational personal investor, who does not have insider information, is best off not trying to beat the market. Even though the market as a whole may be best off with everyone trying to beat it.

Re: Fed Ends Zero-Rate Era

#280

Post by mcnees287 »

hackaflocka wrote: post #155
roymurdock wrote: post #28

Fed raising interest rates 0.25% and setting a goal of "normal" 2% by 2018 means little to nothing. Market already priced the miniscule rate hike in as the move was widely expected, and move did nothing to assure markets that the Fed is in control, or set credible, measurable goals for future hikes. Fed can continue to push on the supply side of money at the bank/institutional level all it wants. We need the Federal…

So... is this a good time to short bonds?

It's likely priced in already.
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