Posted on 01/28/2017 4:36:41 PM PST by Right-wing Librarian
Volcker began raising the Fed funds rate as soon as Carter appointed him Fed Chairman in August 1979. The Fed funds rate was about 11% then. By June 1981 with Reagan in office the Fed funds rate was up to 20%.
For comparison, the current Fed funds rate in January 2017 is 0.75%, less than 1%.
It is ridiculous to argue that raising rates that are below 1% constitutes "declaring war". If anything, this article is declaring war on your brain.
Rate increases are typically something like a quarter point. An increase at this point would bring the Fed funds rate to 1%.
I’ve heard worse.
Let’s say a family is saved from a fire by a barking dog. One of the family is on TV, saying: “If Fifi didn’t bark, we’d all be dead.”
Jackson vetoed the charter of the Second Bank of the United States in 1832. The bank took until 1836 to wind down operations. This was immediately followed by a depression that lasted for seven years.
Not much of a surprise because ending the SBUS caused a credit contraction.
Oh dear, that constitutes “ear abuse”! : )
“It is ridiculous to argue that raising rates that are below 1% constitutes “declaring war”. If anything, this article is declaring war on your brain.”
Totally agree.
And thanks for the link to the Fed rate chart. It looks like a big perfect Head and Shoulders.
I know the rates were really high under Carter - part of the malaise deal going on at the time.
If you needed a loan, it hurt, but my bank account was making close to 19% for a while....
When you pile up debt it’s going to crash. The longer you put off fixing the system the worse the crash is going to be. If we retain the Fed we will put off the correction yet farther and the collapse when it comes will be that much deeper. Reagan triggered a crash in the same sort of conditions. We had a recession that was actually pretty severe but the boom that necessarily followed lasted a quarter of a century. If he had done as Bush or Clinton or Ford or Hussein or Clinton II would have done, there wwould have been no boom and the doldrums of the last 9 years would have begun with Carter and we would be a much smaller economy now with a middle class that would have vanished and not returned.
Volker raised rates a full 1% at a time.
Congress is the sole party that can increase the national debt. The Fed has no say in that at all. The Fed buys and sells Treasury debt to adjust the monetary base in the banking system but that is something entirely different than having any role in authorizing the quantity of debt.
Reagan triggered a crash in the same sort of conditions.
I have no idea what you are thinking of by this. There was no crash in the economy during Reagan's term in office. Reagan inherited a stagnant and inflationary economy from Carter that experienced a double dip during his first year in office. Once the Reagan tax and regulatory policies began taking effect and Volcker loosened credit in August of 1982 the economy was off to the races.
The Fed increases debt every time it issues more money. Congress does not control the Fed’s issuing of money. It is not just the National Debt that is the problem. It is the soaring total private and public debt in the country. The Fed is responsible for that unsustainable vast increase in debt with it’s low to no interest rate policy which indirectly affects the National Debt because by keeping the rates unnaturally low it makes it easier for the debt limit to be continually raised, for more debt to be acquired by the taxpayers. The Fed has a lot to do with all the debt in America.
I disagree. Can you explain the mechanism?
fiat money and the financing of government
Debt = Money, Money = Debt
or if you have a whole lot of time
The Fed borrows money from itself?
How? More importantly, why?
and it becomes an obligation of the taxpayers.
As a Central Bank, the Fed doesn't need to borrow.
Still gives me the creeps.
First, let’s examine what happens when the U.S. government gets more money from the Federal Reserve.
Under our current system (which is fundamentally flawed), the U.S. government cannot just fire up the printing presses and print a bunch of dollars if it decides that more money needs to be produced.
Rather, if the U.S. government needs more money it asks the Federal Reserve for it.
The Treasury doesn't ask the Fed for money, the Treasury sells T-Bills, T-Notes and T-Bonds.
If the U.S. government really wanted to get out of debt it would take back control of our currency from the bankers and would start issuing debt-free money. But don’t expect that to happen any time soon.
My FRNs aren't debt, why would US Notes be any better?
You don’t know enough to discuss it.
I know enough to point out Snyder’s errors when I see them.
Well, you know what you don’t like, anyway.
It does have a wide audience though.....
What to you is “silly doom filled” is some of the most solid economists who have written, like Adam Smith and Ludwig von Mises, Bastiat and Ricardo. If you have not read Wealth of Nations then you have not had the beginning of an economics education.
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