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What if your entire worldview was just because of near-zero interest rates?

novum.substack.com

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Re: What if your entire worldview was just because of near-zero interest rates?

#31

Post by viscanti »

Proven wrote: post #25
lokar wrote: post #13

People who complain about extreme fed policy should look to congress. The inability of congress to address core economic and financial issues forces the feds hand.

Complete nonsense. The Fed isn't supposed to address any "issues", but simply be neutral. Instead they've spent a century saving entities that socialized private losses.

They're meant to use monetary policy to maintain price stability and keep the unemployment rate low. Lots of issues come up where monetary policy would need to react. There are many places where fiscal policy might be better (it can be more finely targeted) and we generally don't see it materialize. So we're left with central bank technocrats using monetary policy.

Re: What if your entire worldview was just because of near-zero interest rates?

#34

Post by AnthonyMouse »

smitty1e wrote: post #27

> The point of this silly question is to consider just how much of an outsized role the Fed now holds. Among the overarching points of the U.S. Constitution is that people who wield vast power stand for election. The Federal Reserve urinates all over this point. Reforming the Federal Reserve is sine qua non IMO if there is to be any improvement.

The issue is it's not just the Fed, it's the administrative state as a whole. The President appoints the Fed board and the FCC commissioners and the DoJ and the FDA, and then they make policy though nobody elected them.

The rulemaking role of these agencies should be a subset of the legislature and the Congress should have to vote on their proposals before they become law.

Re: What if your entire worldview was just because of near-zero interest rates?

#36

Post by realityking »

627467 wrote: post #20
realityking wrote: post #16

Earlier quoted context omitted.

Dividends create an immediately taxable event, the value gained in a stock buyback is only taxed when the stock is sold. It’s one contributor to the low amount of taxes paid by the so-called 1%.

Isn't stock sold in the event of a buyback? And isn't that event taxable? Are dividend taxes higher than capital gains from stock sale taxes?

Depends. Only if the sellers make a profit with the sale. Then that profit is taxed.

The value gained by the other shareholders is not taxed until they sell themselves.

Re: What if your entire worldview was just because of near-zero interest rates?

#37

Post by KKKKkkkk1 »

antonomon wrote: post #15
dangus wrote: post #3

I think the article brings up too many separate concepts without sufficiently tying them together. One of the most basic concepts you have to accept to agree with the premise of the article is that the Fed kept interest rates low to transfer wealth to the wealthy. > After the Great Recession, the Federal Reserve instituted a zero or near-zero interest rate regime. The philosophy behind it was simple: > > The Fed’s “s…

Regardless of Wolf Richter, the Wealth Effect is an actual philosophy tapped into by Ben Bernanke and others post-2009 > In defending the Fed’s bond-purchasing plan late last year, Bernanke said that “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support econ…

The Fed was buying up government bonds in order to reduce long-term interest rates. The focus of Fed policy has always been on the long-term interest rates as a tool to control inflation/unemployment, and raising the demand for government bonds is the most direct way to lower the long-term interest rates. The quote from fortune.com is taking Bernanke's words out of context. Here is the original quote:

This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.

Re: What if your entire worldview was just because of near-zero interest rates?

#38

Post by thatguy0900 »

mensetmanusman wrote: post #35

Just wait until we enter the ‘decades long workforce population decline’ period. Once GDP growth decreases by population shrinkage, investing will be fun again!

Well just keep desperately importing people from other countries, unlike Japan and Co. Or, for the other side of the political spectrum, ban abortions/birth control.

Re: What if your entire worldview was just because of near-zero interest rates?

#40

Post by bumbledraven »

lambic2 wrote: post #39
blockwriter wrote: post #32

My friend that has been a general contractor for around ten years acts like it's not even worth doing his job anymore now that interest rates are going up.

why is that? what kind of contractor?

> what kind of contractor?

https://en.wikipedia.org/wiki/General_contractor :

A general contractor…is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project.

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