Posted on 04/18/2022 3:54:01 AM PDT by RomanSoldier19
Today, the Federal Reserve announced an increase in the target for the federal funds rate to between 0.25 and 0.50 percent after holding the rate close to zero since the onset of the pandemic to help the economy recover. The increase is meant to help tame rising inflation; however, any changes in interest rates will also have implications for the federal government’s borrowing costs and therefore the nation’s fiscal picture.
Setting the target for the federal funds rate — the interest rate at which commercial banks lend to each other overnight — is an important tool for the Federal Reserve. That rate is the benchmark for Treasury bills and other short-term securities. Expectations about those short-term rates, combined with other factors, may also affect longer-term rates.
As interest rates on U.S. Treasury securities rise, so too will the federal government’s borrowing costs. The United States has been able to borrow cheaply to respond to the pandemic because interest rates were historically low. However, as the Federal Reserve increases the federal funds rate, short-term rates on Treasury securities will rise as well — making some federal borrowing more expensive.
(Excerpt) Read more at pgpf.org ...
This time is different. That’s what they always say. Big and continuing deficits won’t lead to inflation (or repudiation) this time. They get away with saying this for a time, because it takes a while for the deficits to undermine the credit of the country, nowadays by touching off an inflationary spiral. Then, no, we find out this time it’s not different.
https://press.princeton.edu/books/paperback/9780691152646/this-time-is-different
But, higher inflation lowers the actual principal.
Thank you, Captain Obvious.
“transitory’...emanating from MSM / Leftists mouths in 3..2..1
Yes, and in other news, water is wet ..
“But, higher inflation lowers the actual principal.”
Unless that inflation teeters into hyperinflation then you may lose everything as you cannot afford anything.
yep, but the only way to stop run away inflation is to dramatically raise interest rates.
Two links, one wikipedia, the other the Grace Comm PDF:
https://digital.library.unt.edu/ark:/67531/metacrs9044/m1/1/high_res_d/IP0281G.pdf
Fido969 is working hard to explain what the progressive demolition crew believes, and you try to inject common sense! Trust me. Our rulers ain’t having none of that.
Seems to me it would be less painful to cut government spending and stop some of the more outrageous welfare giveaway programs designed to buy votes. But no, let’s place the burden on the middle class in the hopes we can tax them out of existence.
Well, I get the federal reserve banks injected a 4% per year average inflation to cover what they steal out of the economy, but they’ve done a lousy job of managing our money.
Gosh, I fondly remember when this place used to be where you could have an intellegent discussion, rather than just throw insults around.
I guess I'm just old-fashioned.
It was a joke.
“ But, higher inflation lowers the actual principal.”
As higher inflation starts to slow growth, tax collection goes down as businesses are shuttered and people put out of work. Consumption decreases and investment slows, which also decreases taxes.
You end up with higher interest rates, faster growing debt, and a reduced tax base to pay it off.
Sell your T-Bills now before they are repudiated
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