Posted on 04/29/2019 10:51:27 AM PDT by deplorableindc
Ryan gave Obama everything.
But the debt has been climbing since Johnson.
Congress sets the rules for spending, the President just signs the bills and follows their orders.
They HAVE to spend the money like that, or the country’s economy would have become Zimbabwe decades ago.
There is NO easy way out of this. And there is NO SINGLE person to blame.
The sooner we all stop looking to blame someone, and start looking to fix it—the better off we will be.
Paul Ryan was Speaker of the House. Are economy wouldn’t turn into Zimbabwe’s if we didn’t fund Planned Parenthood.
Your mention of the funds rate under Reagan in post #84 screams that you can’t be taken seriously. The interest rates on longer term government securities were a lot higher then, too. It was a different time and a different market.
I’ll trust my own judgment rather than your opinion.
The Reagan era Fed was free to set their Fed Funds Rate at any level that they wished. Invoking “a different time and a different market” isn’t an explanation, it’s just bloviating on your part.
When you figure out an answer to my question in post #97 be sure to post it. I don’t expect to see that any time soon.
Your post screams that you have no understanding of the yield curve and that your opinion on this matter can’t be taken seriously.
Hahaha..the servicing cost on national debt is increasing at compound rate, when defense budget shrinks more often than grows. Reason I am well off is I discovered the compounding effect early in life.
It’s funny how asking what you thought the point of that St Louis Fed research paper is got these two replies from you:
“Your post screams that you have no understanding of the yield curve”
“Your mention of the funds rate under Reagan in post #84 screams that you can’t be taken seriously.”
Apparently when you’re stuck for an explanation a little “screaming” ad hominem is your go-to pitch. Thanks for playing.
Planned Parenthood is the least of our economic issues. Honestly, if you think our debt problem is based on that type of spending, you are woefully under informed and a dangerous voter.
Your problem is you think you’re an expert on the subject. You’ll never get smarter that way.
“Your problem is you think you’re an expert on the subject. You’ll never get smarter that way.”
Funny. I’d have said that a guy who posts “you have no understanding of the yield curve” and “you can’t be taken seriously” is someone who’s claiming to be an expert. But that’s just me. I did once pass the Series 7 exam so I guess I had a rudimentary knowledge of the securities markets at one time. Maybe I forgot it all.
You believe it’s best for interest rates at the long end of the curve to be set by the market, so why do you believe it’s best for interest rates at the short end of the curve to be set by the Ivy Leaguers at the Fed?
“so why do you believe it’s best for interest rates at the short end of the curve to be set by the Ivy Leaguers at the Fed?”
Anyone who lends money can decide what interest rate they are willing to lend at. The Fed does that with their Fed Funds Rate. It’s what they will charge member banks who want to borrow from the Fed.
It’s a target rate as opposed to a set rate. Commercial banks are free to negotiate short rates among themselves. They don’t have to use the Fed Funds Rate. But if they are going to borrow directly from the Fed they are going to have to pay what the Fed asks.
It’s an important tool for the Fed especially during a credit collapse after a bubble. The Fed can supply liquidity to banks at low rates when no one else could. Keeps the banking system from collapsing. And Volcker used the opposite ability to choke off credit and kill inflation.
Anyone who lends money can decide what interest rate they are willing to lend at. The Fed does that with their Fed Funds Rate. It’s what they will charge member banks who want to borrow from the Fed.
...
What about all those with excellent credit who borrow at the Prime Rate?
Why does the funds rate have such an impact on the short end of the yield curve if it’s only a target rate?
https://stockcharts.com/freecharts/yieldcurve.php
Click the animate button or drag your cursor across the chart on the right side.
The Fed sets short term rates rather than the market. I don’t know why any Conservative would support that.
Funny how nobody here was mentioning that when Obama was in charge. That’s called hypocrisy.
“What about all those with excellent credit who borrow at the Prime Rate?”
They borrow from commercial banks. The Fed only lends to member banks, not businesses.
“Why does the funds rate have such an impact on the short end of the yield curve if it’s only a target rate?”
Because retail banks aren’t likely to lend at a cheaper rate than they can borrow from the Fed.
“The Fed sets short term rates rather than the market. I don’t know why any Conservative would support that.”
The Fed can only set a target range for short rates. It’s inherent in their power to create credit.
In order to get away from that you’d have to go back to the previous system where JP Morgan acted as America’s lender of last resort and unofficial central banker. And in 1907 Morgan told Congress that that was becoming an impossible task for even a bank as large as his to do.
Morgan was the driving force behind creating the Fed so that he wasn’t stuck with the responsibility for backstopping the American banking system.
This a worthwhile read concerning some of the intertwined complexity of banking and money. It’s Leland Yeager’s forward to Vera Smith’s ‘The Rationale of Central Banking and the Free Banking Alternative’. Smith was a doctoral student under Friedrich Hayek:
https://www.econlib.org/library/LFBooks/SmithV/smvRCB.html
I think Liberty Fund is offering the book as a free pdf here:
“What about all those with excellent credit who borrow at the Prime Rate?”
They borrow from commercial banks. The Fed only lends to member banks, not businesses.
...
The Prime Rate is directly tied to the Funds Rate. It’s the Funds Rate plus a margin and it’s the same at all banks.
“Why does the funds rate have such an impact on the short end of the yield curve if it’s only a target rate?”
Because retail banks aren’t likely to lend at a cheaper rate than they can borrow from the Fed.
...
The yield curve applies to federal government securities only.
Commercial banks are free to set their prime rate as they see fit. There is nothing requiring them to move in concert with the Fed Funds Rate.
https://www.federalreserve.gov/faqs/credit_12846.htm
“What is the prime rate, and does the Federal Reserve set the prime rate?
“The prime rate is an interest rate determined by individual banks. It is often used as a reference rate (also called the base rate) for many types of loans, including loans to small businesses and credit card loans. On its H.15 statistical release, “Selected Interest Rates,” the Board reports the prime rate posted by the majority of the largest twenty-five banks. Although the Federal Reserve has no direct role in setting the prime rate, many banks choose to set their prime rates based partly on the target level of the federal funds rate—the rate that banks charge each other for short-term loans—established by the Federal Open Market Committee
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