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U.S. interest rates have soared everywhere but savings accounts

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Re: U.S. interest rates have soared everywhere but savings accounts

#191

Post by incomingpain »

mupuff1234 wrote: post #42
incomingpain wrote: post #33

Earlier quoted context omitted.

>Or it's just a way to screw younger people who didn't lock in fixed rate mortgages when they could. Lets say we climb to 15% inflation and subsequently interest rates. Who can afford to pay 150,000$/year on a million $ home? Literally nobody. The boomer selling the home suddenly cant sell their home for a million. It will have to drop in order to spend that $. That retirement fund is suddenly looking weaker. Generat…

> We do know inheritance taxes are absolutely destructive to economies Is there any data to back that claim?

largely speaking as I said we don't know a significant amount about generational wealth. It's virtually impossible to account for all variables etc etc. You cant make conclusions.

I guess before we go forward, why is it bad? You are taxing families, family taxes are literally the worst thing you can do. Hence why there are so many tax benefits if not literally $ like in baby bonuses being given to families. If you actually were to make it such that families with children under age 18 got basic income and individuals between age 18 and 65 who don't have children of any age pay for it. Tax for being childless would probably be painful and unpopular obviously not everyone can have kids etc... but theoretically this would be ideal for society. Society is made for families and should be hostile toward individuals.

Kind of jumping to actual wealth tax, the important detail is that many countries have tried it. Denmark or more specifically Iceland is the one I researched/studied in depth. Iceland's weak economy and weak isk made it a great study point. Not only did they not actually generate much revenue, it came with waves of silver crime. It had significant wealth escape to britain. The actual wealth tax produced a negative tax revenue. Later, CCP hired an economist who measured the brain drain and what forced them to open up offices outside iceland.

Denmark followed and within a year of cancelling it they had significant measurable improvements they didnt even expect. In fact, because of denmark's success quite a few countries nuked their wealth taxes. Which is remarkable because how many countries ever reduce taxes? It's pretty rare, you only ever see taxes increasing.

Re: U.S. interest rates have soared everywhere but savings accounts

#192

Post by incomingpain »

bushbaba wrote: post #15
incomingpain wrote: post #5

Real yields matter. It's an inflation tax. If inflation is high and the interest rates are low. This tax is on you for holding currency or currency likes. Bonds for example are literally dumb to buy. Why are people buying them? They are legally required to buy them in some cases. What happens is that those 'savings accounts' are paying the inflation tax. Whereas someone with a mortgage at say 2% and inflation is 8%.…

Except boomers also own a large portion of housing and stocks. The boomer generation benefited the most from the Fed's money-printing.

Go check out the population pyramids. Boomers will inevitably have to sell assets to pay for increasingly costly goods and services. It will inevitably crash though yes, the boomers who are holding on these too-high-risk assets are inevitably going to hurt for it.

Re: U.S. interest rates have soared everywhere but savings accounts

#193

Post by rufus_foreman »

jjcon wrote: post #182
rufus_foreman wrote: post #102

Earlier quoted context omitted.

https://fred.stlouisfed.org/series/M1SL

The US Fed changed how M1 was defined in May 2020 - that's why the number jumped/changed (it spells it out right on that page

Before May 2020 M1 was defined as:

currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other checkable deposits (OCDs), consisting of negotiable order of withdrawal, or NOW, and automatic transfer service, or ATS, accounts at depository institutions, share draft accounts at credit unions, and demand deposits at thrift institution

After May 2020 M1 is defined as:

currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (3) other liquid deposits, consisting of OCDs and savings deposits (including money market deposit accounts)

Can you explain the spike from those definitions, because I'm not getting it.

Re: U.S. interest rates have soared everywhere but savings accounts

#194

Post by pmalynin »

clairity wrote: post #129
gdurham wrote: post #77

The issue is that there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash. Banks make money by lending money out, in times where banks are strapped for cash on hand, you will see interest rates increase. I don’t see this changing in the near future.

> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…

There is literally a trillion dollars too much in cash in banks right now. All of that money just sits in reverse-repo with the Fed.

So I don’t know how you’re claiming that banks aren’t sitting on too much cash?

Re: U.S. interest rates have soared everywhere but savings accounts

#195

Post by jimbob45 »

PheonixPharts wrote: post #60
azth wrote: post #40

Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?

> Fed's increasing of the interest rate is causing a stock market crash. Citation needed. Rate hikes were announced mid-march and I don't think you can even find that info on this chart https://finance.yahoo.com/quote/%5EDJI/ If we do see a crash soon I think it will likely be more related to major tech stocks failing to perform as expected. Of the original FAANG, F and N have both had days where there value dropped…

Even if that were true, you necessarily have to hike the interest rate intermittently to ensure you have room to lower it when the crash inevitably happens.

Re: U.S. interest rates have soared everywhere but savings accounts

#196

Post by mise_en_place »

BayAreaEscapee wrote: post #189
mise_en_place wrote: post #166

Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.

The obvious problem is that there is nowhere to hide. All markets are overvalued by virtually any historical metric. At least if you take the -6% real hit, at least you can know and predict what the hit is.

My portfolio with foreign value stocks and gold and silver mining stocks, plus oil companies is doing great. I am up by more than 10%. This is just the beginning for them.

My financial advisor who manages the vast majority of my wealth is down 2% in comparison. I'm close to pulling my money because he's extremely anti commodities and I had to yell at him to invest my money into mining companies because he thinks it's better to just hold cash. Meanwhile my networth disappears. Don't use a financial advisor would be my advice to you and do your own research.

Re: U.S. interest rates have soared everywhere but savings accounts

#197

Post by Spooky23 »

anm89 wrote: post #144
Rastonbury wrote: post #10

Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need margin and they can keep them low cuz people won't swap banks for half a percent (not that it'll get there anytime soon)

mortgage rates have doubled in the last two months, the 20 year has doubled in the last two months, rhe policy rate had doubled in the last two months (admittedly a small nomination amount) and is about to double again in a week. so although overall rates are still low, I think it's pretty fair to say they have exploded

“Doubled” from rock bottom. The government flooded the zone with cash to keep the economy alive. Hell, I’m paying a 2.25% interest rate on my home.

People are running around like chickens about inflation this and inflation that. The only meaningful metric is gas prices.

Re: U.S. interest rates have soared everywhere but savings accounts

#198

Post by Spooky23 »

Rastonbury wrote: post #22
gotaquestion wrote: post #17

Earlier quoted context omitted.

Doubling equals soaring in anything related to economics or finance.

Nah man 0.001% to 0.002% really? Would anyone describe the yield of t-bonds as astronomical at 1.44%? Nobody would even care if banks passed on fed rate to consumers, imagine getting the joy of getting 0.5% up from 0.25%

I wonder what happens when rates return to more historical territory?

Perhaps we’ll adopt shrimp marketing. “Mortgage rates are now jumbo collassal!”

Re: U.S. interest rates have soared everywhere but savings accounts

#199

Post by WalterBright »

clairity wrote: post #129
gdurham wrote: post #77

The issue is that there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash. Banks make money by lending money out, in times where banks are strapped for cash on hand, you will see interest rates increase. I don’t see this changing in the near future.

> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…

> purely out of greed

People want to collect interest on their bank deposits purely out of greed, too.

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