Posted on 04/29/2019 10:51:27 AM PDT by deplorableindc
From Fidelity:
https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-yield-curve
“A yield curve can refer to other types of bonds, though, such as the AAA Municipal yield curve, or reflect the narrower universe of a particular issuer, such as the GE or IBM yield curve.”
When discussing the Federal Reserve and the Funds Rate, the yield curve always refers to federal government securities.
In practice, the Prime Rate and a bunch of other rates are determined by the Funds Rate:
The federal funds rate is the primary tool that the Federal Open Market Committee uses to influence interest rates and the economy. Changes in the federal funds rate have far-reaching effects by influencing the borrowing cost of banks in the overnight lending market, and subsequently the returns offered on bank deposit products such as certificates of deposit, savings accounts and money market accounts. Changes in the federal funds rate and the discount rate also dictate changes in The Wall Street Journal prime rate, which is of interest to borrowers. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Many small business loans are also indexed to the Prime rate.
https://www.bankrate.com/rates/interest-rates/prime-rate.aspx
You’re a member of the Republican Establishment. You said that our economy would turn into Zimbabwe’s if we didn’t spend trillions, not me.
The Austrian School has often had a lot of conservative fans. The Austrian School complaint against the Fed is that they artificially lower short rates and that this creates booms and busts.
If the Fed had a money supply target or if it didn't exist then credit wouldn't expand as quickly as demand, and short rates would get bid up by borrowers.
Here's a couple of interesting articles by David Trainer who has been on both sides of the issue:
The Fed Is Irrelevant: Low Interest Rates Are The New Normal Feb 2019
How Artificially Low Interest Rates Harm Economies in the Long Term Nov 2010
How can POTUS Trump pay down the National Debt when the Congress controls the purse strings?
Neither Party will even get rid of Baseline Budgeting so the Federal Budget will never go down even one dollar year to year, much less reduced.
Meanwhile, the Voters (Legal and Illegal) have no interest in shrinking the Federal Government and they confuse Politicians with Santa Claus.
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