The light at the end of the tunnel is a train, get off the track, NOW!
There is no legitimate need to distinguish the gender of the Chair of the Federal Reserve, except to imply that her power, strategies and motivations are somehow diminished by her gender. She is the Chairperson, like all other Chairpersons preceding her. This less than subtle gender naming game in this article and others is juvenile and distracts from any argument made by those who repeatedly do so. And quite honestly I and so many others have reached the tipping point on our weariness of juvenile games played by persons who do not recognize their implicit biases and the demeaning distortions they create.
2
The Fed’s decision was perfectly justified. As it interprets its legal mandate, its job is to maximize employment growth in a manner consistent with an inflation target of 2%. Despite the fact that job growth has been steady and the unemployment rate has fallen to 5.1%, which is close to the level at which the Fed believes inflation starts to accelerate, there is absolutely no sign yet of inflation picking up. To the contrary, headline inflation is running at an annual rate of just 0.2%, and last month consumer prices actually fell a little. Core inflation, which excludes volatile food and energy prices, is running at 1.8%, which is also below the Fed’s target. Even if you’re an inflation hawk, it’s hard to argue that the Fed needs to act now.
The primary concern is insuring that the economic recovery continues, and that recent tentative signs of wage growth finally translate into real income gains for the majority of Americans.
Fed Chair Janet Yellen’s message was that the Fed needs more time, and more data, to figure things out.
The primary concern is insuring that the economic recovery continues, and that recent tentative signs of wage growth finally translate into real income gains for the majority of Americans.
Fed Chair Janet Yellen’s message was that the Fed needs more time, and more data, to figure things out.
1
After all of those many months pontificating and dithering on the news media, the Wizzardess of Oz and her cronies finally made a decision thanks to their ouija board.
1
Statements like "more basic point that it takes a lot to change the underlying pace of inflation" is just another example of the anti-logic that permeates economics today and promotes the ill-advised treatment and instability of our economic climate: discounting core factors in favor of desired ones that support select philosophies. Current professional attitudes toward inflation are a prime example. It only takes a lot to change the underlying pace of inflation when there is little pressure to raise prices. Like when demand is low. Like when people spend less. Like say the last ten years. And yet we will probably continue to inaccurately credit current policy as the reason for low inflation because many of us desperately want to believe that economic conditions can be controlled. They cannot, not outside of a clinically perfect totalitarian regime, and it seems irrational to think otherwise.
It's hard to imagine the magical accounting that went into determining there is no price inflation considering the S&P has nearly risen 200% since the last recession. I guess as long as the reporting ignores the issue, there really isn't one.
It appears there is pressure from Banks and Companies who have done well with low interest rates. However, that is just one side of the equation. stack and commodity markets have become areas of concerns for individual investors, but they can not keep up with the economy. It is time for Companies and Banks to sharpen their pencils and provide profits with higher interest rates. These institutions' have to prove to me that they deserve profits
Reality will be faced -- someday. By postponing the day of reckoning, Yellen has only made matters worse when that day comes. During her tenure and the disastrous tenure of her predecessor, we have continued to borrow from the future. Posterity will repay what we have borrowed with lower standards of living. Congress cannot do anything from a fiscal position because at borrowing already above 100% of GDP, there is no fiscal stimulus left that will work. The Fed has primed the economy with another $4-5 trillion of stimulus to let the big banks stay afloat, while preventing the small banks from making investments. The cronyism that the Times supports on its editorial page this morning will have a big cost.
It is past time to rein in the Fed. Since they started to drop interest rates in late-2007 and especially since they pushed them to zero in late-2008, the Fed has conducted a policy that is tantamount to war on savers. With little attention from most media outlets on the consequences of these rates, savers have seen negative real returns for over seven years now. All this with darned little proof that keeping rates at zero will do anything to boost the economy. Businesses are sitting on hoards of cash so it can not be that interest rates are holding back a thing. Shame is that with a dis-functional Congress, there is essentially no one supervising Bernanke/Yellen and their gang. Its a strange situation when I agree with Ron and Rand Paul -- it is time to rein in the Fed and severely limit their actions.
2
Just stop the Fed from creating money out of thin air.
1
Obama is the problem. He cannot grow the economy so the Fed is resorting to these extreme policies to prevent a complete breakdown of the system
How is this affecting the small saver and senior citizens? We need a small interest increase to keep our heads above the waterline. The stock market will not help us.
3
Freeze the rate till everyone who is not in the top 5 percent wages reach over $20 an hour. We can't afford another 35 years of stagnant wages.
1
Blame suffering Chinese economy! Federal reserve and it's bureaucrats should not blame others, but think what to do. Corporations wipe their feet on the American system of government. Today, the US government is hopelessly strayed from the ideals of the American Revolution and the covenants of the founders of the State of the United States. Since 1913 the American political system has actually become dependent on big private capital at the legislative level with the adoption of the Law "On the Federal Reserve." Cause Federal Reserve is in the hands of financial corporations. Exactly they dictate their will to our government.
The persistence of low interest rates forces seniors to accept greater risk in the equity markets. Ms. Yellen: Seniors are people, too!
5
the economic experts have been predicting raises in the fed's interest rate for several years now, and have been consistently wrong. nevertheless, the press faithfully repeats these wishful thoughts as though they were gospel.
eventually, one imagines, they will be right. but it's no more likely this time than any of the previous ones.
eventually, one imagines, they will be right. but it's no more likely this time than any of the previous ones.
There was no real need to raise rates. Inflation at 0.2% according to the number released a few days ago. Core is 1.8% (btw as a sidebar has anyone noticed how Republicans and cranks have stopped ranting about core being a phony number). So in fact we're on the edge of deflation.
3
J, have you bought groceries lately?
Inflation is ongoing and obvious to anyone who works for a living -- it just isnt being calculated accurately (cough) to show the whole story.
Inflation is ongoing and obvious to anyone who works for a living -- it just isnt being calculated accurately (cough) to show the whole story.
When interest rates are discussed, it is usually noted that raising them will hurt ordinary citizens by making mortgages, car loans etc. more expensive. However, average citizens have been suffering from low rates. For 8 long years there has been nowhere to go with savings other than the stock market. Even average citizens (that is, those who are not even affluent) who have some money in the stock market know that they are told by "experts" to diversify.
Where?
Most investments other than the stock market are little better than the mattress. For years now we have been warned away from the bond market and the Armageddon which is coming when interest rates are raised (sometimes the Chicken-little act sounds worse than a stock market crash). Poorer senior citizens, who cannot afford the stock market (or are too afraid or need to use their money in the short term) really have no where to go with their money. With banks charging fees if one falls below a minimum the bank can actually be less good than the mattress... explain to me again how keeping rates low is good for the average American.
Where?
Most investments other than the stock market are little better than the mattress. For years now we have been warned away from the bond market and the Armageddon which is coming when interest rates are raised (sometimes the Chicken-little act sounds worse than a stock market crash). Poorer senior citizens, who cannot afford the stock market (or are too afraid or need to use their money in the short term) really have no where to go with their money. With banks charging fees if one falls below a minimum the bank can actually be less good than the mattress... explain to me again how keeping rates low is good for the average American.
9
Its like "Waiting for Godot". So much waiting for such a decision which should be directed to do good to the Americans, as there is little on China in Ms Yellen's speech. China's situation is very bad so far the exports are concerned despite a hefty devaluation and other measures. It look like, the situation will not improve within a short term, say in next 6-8 months. Until then, the Fed should wait?
1
Good points. I would add that gambling in the stock market exposes hard earned savings to insider traders, high speed computer traders, and fees.
2
Half of the country has no savings. The greatest risk for them is an economy that slips back into recession. Fed Chair Yellen is doing what she should -- thinking about the most vulnerable half. Upper middle savers have few options, I understand. But most people need two things: a job and the hope of a better one. Until the economy is fully righted, the Chairwoman must focus on those who most need that help and hope.
They have to keep cheap money available for the wall street types to gamble with. Not that any of the rest of it will see any of it.
2
@JAF
The rest of us, as you put it, are seeing the benefit it every day in debt relief. Household debt (mortgages, student loans, car loans, credit card, revolving credit lines) is about $12.5 trillion so the vast majority of Americans are making lower monthly payments on their borrowings and many have take the opportunity to refinance mortgages thus reducing their exposure. Is this really that hard to understand?
The rest of us, as you put it, are seeing the benefit it every day in debt relief. Household debt (mortgages, student loans, car loans, credit card, revolving credit lines) is about $12.5 trillion so the vast majority of Americans are making lower monthly payments on their borrowings and many have take the opportunity to refinance mortgages thus reducing their exposure. Is this really that hard to understand?
1
"John" that is not the complete story and at best a distortion of facts.
1. Many working Americans cannot afford mortgages at all -- regardless of mortgage rate offered. This is not new information. Hence the continued well-documented housing slump and all of the talk about renting in the news media. And foreclosures are still widespread in many parts of the USA.
2. It is not cool for you to talk about "low student education loan rates" since those rates are far too high. Again not new news and a topic regularly referenced in the news media.
3. Credit card interest rates are STILL in the 20% range and USA consumer credit debt is still a wide problem.
Banks and corps are the ones most enjoying the benefits of near zero interest rates.
1. Many working Americans cannot afford mortgages at all -- regardless of mortgage rate offered. This is not new information. Hence the continued well-documented housing slump and all of the talk about renting in the news media. And foreclosures are still widespread in many parts of the USA.
2. It is not cool for you to talk about "low student education loan rates" since those rates are far too high. Again not new news and a topic regularly referenced in the news media.
3. Credit card interest rates are STILL in the 20% range and USA consumer credit debt is still a wide problem.
Banks and corps are the ones most enjoying the benefits of near zero interest rates.
1
"the rest of us" don't rack up credit card debt and large home mortgages. We drive modest cars for lengthy periods of time. Our kids get jobs, attend community colleges while working part-time and avoid student debt. This system is designed to benefit the wealthy. Not too hard to understand.
Feds will reap what they sow and printing more money may not even possible to save us from the next financial abyss.
1
For the first time the FED's decision making process takes into account the state of the global economy. To be more precise, China's economic rebalancing, a market driven exchange rate and its impact in the American economy.
The FED wants to preserve the exchange rate advantage acquired since the financial meltdown of 2009. External sector job creation sectors such as manufacturing and services, particularly tourism, are playing a major role in GDP growth. The so called currency war has gained a new and powerful player, China.
The FED wants to preserve the exchange rate advantage acquired since the financial meltdown of 2009. External sector job creation sectors such as manufacturing and services, particularly tourism, are playing a major role in GDP growth. The so called currency war has gained a new and powerful player, China.
2
From the website of the Federal reserve:
"the Reserve Banks issue shares of stock to member banks."
This is NOT a National bank in the sense that it genuinely represents the nation. It is owned by its 'member banks' like Goldman, Bank of America, Chase, Citigroup, etc,etc,etc.
Is it a surprise that interest rates stay low?
Banks borrow at .25% (one quarter of one percent) then use that loaned money to buy government bonds and t-bills yeilding 2-3 % for a 175% to 275% NET profit, after repaying 'loan'.
America we are getting screwed.
"the Reserve Banks issue shares of stock to member banks."
This is NOT a National bank in the sense that it genuinely represents the nation. It is owned by its 'member banks' like Goldman, Bank of America, Chase, Citigroup, etc,etc,etc.
Is it a surprise that interest rates stay low?
Banks borrow at .25% (one quarter of one percent) then use that loaned money to buy government bonds and t-bills yeilding 2-3 % for a 175% to 275% NET profit, after repaying 'loan'.
America we are getting screwed.
7
thanks for this great comment - many commenters here dont understand that low interest rates = essentially free money to large banks and large businesses.
1
And on the dollar bill it says "in god we trust", only God can help us now.
I know there are people with legitimate reasons to be distressed by this development, but I think this is good news. What comforts me the most is knowing that the Fed is not run by macho ideologues who would be willing to risk very real damage for the sake of some kind of show of fiscal robustness for its own sake. And it's very good to know, especially as we witness this presidential race in which it seems like "facts" are whatever is shouted the loudest, that there are still people in government who are willing to take an honest look at a situation squarely in the present moment and make a call that errs on the side of caution because they understand that's one is supposed to do with the public trust.
4
This s the right decision for our economy.The low inflation rate is an aberration attributable mainly to oil prices being lower.
The unemployment rate is at first glance good but the quality of jobs s very weak due to the fact we exported our best jobs overseas .Thanks Ms Fiorina.
To most people in this country ( not me) interest is a cost of living and this respite will help their disposable income by keeping their mortgage and auto loans low and help grow the economy .
Last but not least an increase in interest rates would mean a stronger dollar which will hurt exports and open the door to more imports
The unemployment rate is at first glance good but the quality of jobs s very weak due to the fact we exported our best jobs overseas .Thanks Ms Fiorina.
To most people in this country ( not me) interest is a cost of living and this respite will help their disposable income by keeping their mortgage and auto loans low and help grow the economy .
Last but not least an increase in interest rates would mean a stronger dollar which will hurt exports and open the door to more imports
3
The Fed's move will insure the continued profits at the expense of the middle class, low income people and the poor. Once again, corporate America wins and rules while the rest of us languish in the steady erosion of what little we have left. What the wealthy, and I include the politicians (I don't refer to them as 'our' politicians as they are bought and paid for by the rich), is that the rest of us are decreasing spending as our meager wealth declines. Companies are already suffering due to meager sales and it will only get worse.
Personally, except for food, we don't buy anything anymore. Thanks for nothing.
Personally, except for food, we don't buy anything anymore. Thanks for nothing.
8
It is deeply disturbing that so few have commented on this vital non-decision by the Fed. For eight years the Fed has pursued emergency monetary measures whose purported aims have been to spur the economy, create jobs and enhance upward pressure on wages to reach a 2% inflation target. Despite trillions of dollars committed, these efforts have largely failed. They have, however, helped triple stock market prices from the low point in spring 2009, have contributed mightily to income/wealth inequality and have thrown a wrench into the retirement plans of many prudent savers nearing or in retirement. It defies belief that an unelected and unaccountable group of public functionaries can have such a profound impact on the lives and livelihoods of all Americans. Of deeper concern, our elected officials stand idly by with little effort to hold these functionaries to account for their actions. In a representative democracy, this is unacceptable. In the current electoral cycle, citizens should demand action from their elected representatives-- hold the Fed to account for their actions and demand a full accounting of their balance sheet.
7
The Federal Reserve has its reasons for not raising interest rates. However, are we not approaching a decade of interest flatlining for individual savings, which means assets depleting steadily over a decade for failure to grow at a pace with inflation?
How have these corrective measures been of benefit to individuals? By directly wasting their assets? By pushing them into markets where they ought not be taking risks?
I see no reason at all why there cannot be savings banks paying interest at a pace or in excess of inflation. Just ridiculous that people's lives are being diminished in this way. We need more than Bank of Mattress, which is what all the banks are acting as now. This is a disgrace.
How have these corrective measures been of benefit to individuals? By directly wasting their assets? By pushing them into markets where they ought not be taking risks?
I see no reason at all why there cannot be savings banks paying interest at a pace or in excess of inflation. Just ridiculous that people's lives are being diminished in this way. We need more than Bank of Mattress, which is what all the banks are acting as now. This is a disgrace.
10
Please see above reply.
Why don't we read about the other side of the coin -- low, nearly-non-existent interest paid on savings accounts? Why is the Fed so uninterested in this topic? My bank and lots of others have been paying virtually nothing on savings accounts since 2008. (0.25%, when I checked a couple of weeks ago. Another bank was paying a whopping 0.75%.) That's over SEVEN YEARS of putting money in an electronic mattress and actually losing money, when inflation is factored in. This is the largest transfer of wealth from ordinary citizens to the rich our country has ever seen. And still it goes on, with hardly a peep said about it. That money is GONE; we will never get a chance to recover it. How much longer will this continue?
22
"Why is the Fed so uninterested in this topic?"
The USA Fed Bank if you notice never ever ever mentions this topic in their press releases. They know the impact and prefer not to talk about it because there is no positive spin they can put on it.
The USA Fed Bank if you notice never ever ever mentions this topic in their press releases. They know the impact and prefer not to talk about it because there is no positive spin they can put on it.
I guess you didn't get the email, buy GLD.
1
“The recovery from the Great Recession has advanced sufficiently far..."
Yep. The top quintile has recovered and the .1% are doing fabulously and that's all Janet and her ilk are concerned about. The rest of us can thank God for the troubles overseas, or the Fed would have thrown us under the bus.
Yep. The top quintile has recovered and the .1% are doing fabulously and that's all Janet and her ilk are concerned about. The rest of us can thank God for the troubles overseas, or the Fed would have thrown us under the bus.
7
I am firmly convinced that economists in general, and the Fed in particular, are totally clueless. Zero interest rates didn't revive the economy, nor did quantitative easing. Keynesian stimulus didn't work either. We've had budget deficits between $500 billion to $1.5 trillion every year since 2008 without reviving the economy.
We're in a new world, where what worked in the past doesn't anymore. The economist who figures out a solution to the current world problem (if there is one) will get a Nobel.
We're in a new world, where what worked in the past doesn't anymore. The economist who figures out a solution to the current world problem (if there is one) will get a Nobel.
11
Not clueless. Not trying to revive anything. Just kick the can down the road. Once you look at it through this lens, it makes sense.
1
I agree - it really does seem as if nobody knows anything. While there are individual economists who are brilliant social philosophers, if you will, and I enjoy reading them even when they are (usually) on the losing side of a battle for public policy, I keep coming back to the idea that economics is itself a false science. It's not mathematics, it's not physics, it's not really statistics though it thinks it is, and it's not some kind of behavioral psychology even though it thinks it's that too. It's just a few competing systems people made up for mass commerce that kind of work until they don't and inevitably lead to tyranny without sufficient regulation imposed by a government actually interested in correcting trends toward massive inequality, which they usually aren't. And because of a misleading affiliation with geopolitical currents we now have to deal with a false dichotomy in public discourse, in which one is a commie if you criticize capitalism and an oligarch if you criticize communism or socialism when in fact none of them work. Economics should really be about creating a system that does work instead of debating the merits of the existing systems, but that would require original thoughts and people in power with the courage and foresight to implement them. Instead we're still arguing trickle-down vs. raising taxes.
We're going nowhere slowly.
We're going nowhere slowly.
4
The Fed lowers interest rates to spur borrowing which spurs economic activity (the GDP) which puts people to work. Quantitative easing does the same. For the same purpose the government passed a large stimulus bill.
Since 2008, the GDP has steadily increased and the work force has steadily grown. The stimulus and Fed policy accomplished exactly what was intended. Maybe you thought it was magic! And maybe you forget that, in 2008, economists were predicting a long lasting Depression, complete with food lines, 20% unemployment, and widespread bank failures.
Since 2008, the GDP has steadily increased and the work force has steadily grown. The stimulus and Fed policy accomplished exactly what was intended. Maybe you thought it was magic! And maybe you forget that, in 2008, economists were predicting a long lasting Depression, complete with food lines, 20% unemployment, and widespread bank failures.
2
As a kid I remember my parents taking me to the bank and opening a savings account and extolling the virtues of saving money and growing interest. "Save for a rainy day. Always pay yourself first. Watch that interest grow." Ha hahahaha. Now I take my grandkids and wish I could tell them the same thing. Instead I have to tell them about high bank fees. Where's the love?
13
Unfortunately for people like myself, who have quite a bit of savings and nowhere safe to put it to get any kind of decent return, low interest rates have become a burden. Yes, I have money in the stock market through my 401(k), but I'd still like to put my rainy day money in a Treasury or CD and get a little bit of interest for it. Instead, it just sit in a bank account getting next to nothing.
14
Yellen explained there's no current threat of inflation. The risk is deflation - falling demand from emerging economies driving down global commodity prices, compounded by a higher dollar exchange rate linked to a higher Fed funds target rate
Yellen also insisted that her 2% inflation 'target' was not a ceiling.
While most politicians' default macroeconomic rhetoric is that ALL inflation is bad, it seems that for a couple of years already, the Fed literally can't get enough of it.
Maybe we should now ask questions like:
What is the optimum level of inflation and interest rates (not zero in either case)?
What is the optimum level of sovereign debt (again, definitely NOT zero)?
What is true level of 'full employment' (not 100%, however the 'available labour' is defined)?
...Then we can discuss why the level of employment and government tax receipts weren't optimized after 2008 (and welfare payments to the unemployed and their dependents minimized) by more government-backed infrastructure and development investment at zero real rates of borrowing (though paradoxically the 'free-market' US was and still is way of austerity-crazed Europe)
The answer of course is simply the remarkable resilience since 2008 of self-serving myths derided by most academic economists, but directed at the key conservative goal of shrinking the state. If a public company followed such myths barring debt (investment) at any (or even no) cost, they'd be lucky to stay in business.
Yellen also insisted that her 2% inflation 'target' was not a ceiling.
While most politicians' default macroeconomic rhetoric is that ALL inflation is bad, it seems that for a couple of years already, the Fed literally can't get enough of it.
Maybe we should now ask questions like:
What is the optimum level of inflation and interest rates (not zero in either case)?
What is the optimum level of sovereign debt (again, definitely NOT zero)?
What is true level of 'full employment' (not 100%, however the 'available labour' is defined)?
...Then we can discuss why the level of employment and government tax receipts weren't optimized after 2008 (and welfare payments to the unemployed and their dependents minimized) by more government-backed infrastructure and development investment at zero real rates of borrowing (though paradoxically the 'free-market' US was and still is way of austerity-crazed Europe)
The answer of course is simply the remarkable resilience since 2008 of self-serving myths derided by most academic economists, but directed at the key conservative goal of shrinking the state. If a public company followed such myths barring debt (investment) at any (or even no) cost, they'd be lucky to stay in business.
1
Disappointing, but not altogether surprising! They've only now confirmed that they are indeed scared of the market cry babies who send stocks tumbling when there's a hint the punch bowl will be taken away.
4
Free Money. Let's not quibble about what this 'zero interest' Federal Reserve windfall really is. Unlimited "Free Capital" is provided to a community of Aristocrats, who in turn loan the money to others at high interest rates - creating fabulous profits for a small group of people - who reap the windfall with virtually "no personal risk".
My God - they have institutionalized the grandest parasitic corruption in history; and it is "legitimate". The financial sector has sufficient power to punish anyone who threatens this 'pecuniary drug' pipeline - "The Spice Must Flow".
Allen Greenspan birthed this obscene and colossal Tape Worm. Remove it.
My God - they have institutionalized the grandest parasitic corruption in history; and it is "legitimate". The financial sector has sufficient power to punish anyone who threatens this 'pecuniary drug' pipeline - "The Spice Must Flow".
Allen Greenspan birthed this obscene and colossal Tape Worm. Remove it.
12
If they really wanted to help the middle and lower classes, they could pass some usury laws to make it illegal for banks to charge above 10% of the interest rates the banks get themselves. I didn't know it was even legal to have a 29.99% APR on a credit card, and yet, that's what my rate soared to for no good reason in 2008 just when I had most need of credit. (I had every intention of paying it off, and I did, but it took much longer and it cost me much, much more than I had planned for.)
So now that I can finally look to buy a home for the first time at age 40 (with debt paid off and 3 years of savings for closing costs and down payment) you'd better believe I'm glad that interest rates are staying low at least for a little while longer. They owe me that. My business got hit hard by the recession.
But I do wish they could find a way to insure that the banks are indeed passing along their savings to the consumers instead of happily pocketing the difference.
So now that I can finally look to buy a home for the first time at age 40 (with debt paid off and 3 years of savings for closing costs and down payment) you'd better believe I'm glad that interest rates are staying low at least for a little while longer. They owe me that. My business got hit hard by the recession.
But I do wish they could find a way to insure that the banks are indeed passing along their savings to the consumers instead of happily pocketing the difference.
8
Could it be that one big reason the Fed is reluctant to raise rates is that we have a number of influential Republicans itching for a goverment shutdown and longing to test their theory that defaulting on the national debt won't be noticed by the financial markets? If I were Fed governor, I'd be worried.
Hallelujah!
This means my adjustable mortgage will not go up -- wonderful news in my situation, 62 years old, widowed this month, with two children to launch into productive lives.
Life will be stressful enough on a single income, so to have this relatively large bonus play out in my favor -- for once -- comes as a pleasant surprise!
This means my adjustable mortgage will not go up -- wonderful news in my situation, 62 years old, widowed this month, with two children to launch into productive lives.
Life will be stressful enough on a single income, so to have this relatively large bonus play out in my favor -- for once -- comes as a pleasant surprise!
2
September 17, 2015
I thought I had seen it all! The banks and corporations have received bailouts and ordinary citizens have had their savings punished. A prudent retired person living on Social Security and savings cannot reinvest at a decent interest rate. The banking cartel is protected from expenses by the FOMC, part of that cartel.
Corporations are protected by Congress. Our Federal Representative Democracy has been replaced by a cabal of wealthy individuals and corporations which "contribute" to politicians who do the bidding of those Corporations and the 2000+ billionaires who "donate" obscene amounts to push their special agendas.
Now we are trying to save the world financially, by protecting the world from our economic recovery over the past 7 years.
How did this happen? How do we recover our democracy?
I am 74 years old. If this ever gets fixed I will not be alive to see it!
I thought I had seen it all! The banks and corporations have received bailouts and ordinary citizens have had their savings punished. A prudent retired person living on Social Security and savings cannot reinvest at a decent interest rate. The banking cartel is protected from expenses by the FOMC, part of that cartel.
Corporations are protected by Congress. Our Federal Representative Democracy has been replaced by a cabal of wealthy individuals and corporations which "contribute" to politicians who do the bidding of those Corporations and the 2000+ billionaires who "donate" obscene amounts to push their special agendas.
Now we are trying to save the world financially, by protecting the world from our economic recovery over the past 7 years.
How did this happen? How do we recover our democracy?
I am 74 years old. If this ever gets fixed I will not be alive to see it!
8
For those few remaining who don't think Wall Street owns both political parties, this self-serving stroke of genius of the zero-interest rate policy has wiped out middle class savings accounts and incentive to save.
Those needing income from life savings were forced into the stock market, the same market that was allegedly too volatile to trust with social security. Much of the current high market levels reflect the bubble-demand of transferred savings, not real increased value of stocks.
Those needing income from life savings were forced into the stock market, the same market that was allegedly too volatile to trust with social security. Much of the current high market levels reflect the bubble-demand of transferred savings, not real increased value of stocks.
5
Our entire "recovery" has been built on cheap money and the ability to print more of it. The only people who have benefited are the Wall Street types. Certainly not the poor and the middle class. Delaying an interest rate hike today will only mean a more aggressive hike when one inevitably comes. Someone eventually has to pay for all this. And let me guess, will it be the wealthy and well-connect? Or the poor and middle-class?
2
Some how Yellen and Obama think that keeping interest rates low is going to create jobs.
After 7 years its obvious that its not working.
Low rates have been causing the stock market to go up and make the rich richer ..that's it.
The result is more folks reliant on government.
Perhaps that is by design?
After 7 years its obvious that its not working.
Low rates have been causing the stock market to go up and make the rich richer ..that's it.
The result is more folks reliant on government.
Perhaps that is by design?
7
you think Janet and Barrack shipped your jobs overseas? or caused the collapse of the global economy? get a grip.
2
TPP. Yes, this will ship more jobs overseas.
1
This is no surprise. The Fed has propped up the financial industry (money lenders) and Wall Street for six years now at the expense of poor and middle-class citizens. They'll use any excuse to delay raising interest rates.
Why don't they print more money and establish another "troubled assets relief" fund? The "too big to fail" corporations would appreciate another handout at the expense of the average citizens.
Why don't they print more money and establish another "troubled assets relief" fund? The "too big to fail" corporations would appreciate another handout at the expense of the average citizens.
8
My recollection is that the collapse began under W and the bail-out was designed in 2007. For every old gomer whose meager retirement is tied up in some mutual fund, a collapse of the markets would have been a catastrophe. We need jobs.
1
Interest rates were raised because of slowing of the "world economy". But the world economy hasn't much slowed of late. What has slowed is the Chinese economy. Essentially, we've got low interest rates for at least another month because the Fed is worried that problems in China could have a major effect on the US. No other single economy out there is that important. The Fed is saying that China is an economic superpower and what happens there can shake the American economy. That's quite an admission. And it suggests that we need to look out for the Chinese economy as much as we look out for the Eurozone.
2
The Fed is stuck in a box it built for itself. Can't raise rates that easily, as everyone is now dependent on zero rates, forcing everybody to chase riskier assets. This will be fine until "risk" in riskier asserts itself. Until then, party on Wayne!
8
Not even a 1/4 point? That would have eased the next, eventual increase without causing too much commotion in the markets.
11
On what rationale? There's no inflation anywhere. There's no wage growth. The fundamentals are not pointing to a raise right now.
1
Because 0% interest is distorting the markets, making millions for those who are savvy enough to do the arbitrage, and hurting real people who cannot get any return for their deposits.
1
On the rationale to test the market. Lie. Everyone wants to believe the economy is doing well. They've been talking about bumping it up for so damn long, just do it.
1
I have long argued that the Fed will have to maintain a low (near zero) interest rate policy much longer based on what has happened in Japan in the past 15 years, and the fact that policy makers in the US and Western Europe lack the political will to adopt expansionary fiscal programs needed for a more rapid recovery.
Both the US and Western European economies still have not return to pre -2008 level of well being, and until legislators are willing to consider more expansionary programs to stimulate the economy, expansionary monetary policy remains the only game in town.
Both the US and Western European economies still have not return to pre -2008 level of well being, and until legislators are willing to consider more expansionary programs to stimulate the economy, expansionary monetary policy remains the only game in town.
1
Until the $1 trillion in regulatory excess costs are reigned in fiscal and monetary policy are not capable of stimulating the economy.
Then US, like Japan, will be stuck with zero interest rate for a long time,
This just goes to show you whose pocket the Fed is in... The Fed has been giving free money to all the banks that Borrow from the discount window. (ie GS, BofA and JPM) These banks borrow the money at .25 percent and buy US Treasuries and get between 2.75 and 3 percent return with no risk. It is a wonder that they do not need any branches, or people. One person could sit and buy and sell treasuries from a desk. This is a risk free transaction and for the select few, while all the other financial institutions are struggling. In fact who needs to lend money to the public, when you can lend it to the government instead? I believe the Fed should be abolished and the Federal Government should lend the money directly. Too much money in the hands of too few people is a very dangerous thing. Greenspan started this mess when he kept rates to low for to long, Bernanke and Geithner dropped rates to the floor to bail out their friends, and Yellen just continues the party.... Savers are getting decimated, and regular small businesses can not borrow money. I wonder how much collusion there is between the Fed and the banks. Remember they all come from the same school......
8
Buy Treasuries.
Oh good, I thought the FED would choose to tank the recovery. But then again, why should it, since the GOP clearly intends to shut down the US government next week, because it cannot legislate the way it wants to. This is because most Americans do NOT agree with them.
The last time those traitors shut down the government, it cost the economy $24 billion, according to some accounts. I suppose they'll try to exceed it this time, in desperate hopes that, although it will not work, it will appease their drooling, yapping base on the subject of Planned Parenthood.
I'm sorry, but I hope they choke.
The last time those traitors shut down the government, it cost the economy $24 billion, according to some accounts. I suppose they'll try to exceed it this time, in desperate hopes that, although it will not work, it will appease their drooling, yapping base on the subject of Planned Parenthood.
I'm sorry, but I hope they choke.
2
Most Americans think the Iran deal is bad too. We don't govern by popular opinion.
Obama shut down the government rather than delay the individual mandate, despite the fact that he had already illegally delayed the employer mandate. He was determined to give a break to big businesses, but not to middle class workers.
For those of us who campaign against usury in the sense that western civilization understood it for thousands of years — profit from loans of money — this is good news indeed.
Let there be loans at zero interest.
Let Christians wake up to their duty, unambiguously and unequivocally stated by Christ in Luke 6:30-36. But few there are among His alleged followers who are doers of his words concerning loans.
Let there be loans at zero interest.
Let Christians wake up to their duty, unambiguously and unequivocally stated by Christ in Luke 6:30-36. But few there are among His alleged followers who are doers of his words concerning loans.
1
As many commenters signal, we need a non-war WWII-style real stimulus to get the bulk of us out of the economic doldrums. It all seems to point to infrastructure repair and development both of which should focus on clean(er) or sustainable inputs now that we have managed to move from save the whales to save the water itself.
2
REALITY: the full statement does not state or imply weak global markets as a contributor to this decision
The Fed is now looking at global economy and its implications on domestic economy. If Fed raised the rate, money will flow out of Asian countries and makes global economy even worse. It hurts American exports and US housing market. If China devalues Yvan again, which is likely, the US economy may fall into recession. It takes time for inflation to go from around 1% to 2% and there will be plenty of warnings for Fed to raise the interest rates. The US economy is still weak on several measures such as total employment, wage pressures, inflation and loss of high paying production jobs. I predict Fed will not increase the rates until the end of 2016.
1
The Fed has interest rates near zero yet I'm paying nearly 17% on my credit card. That is because I live on planet Earth and Fed does not.
9
why are you spending money you don't have? retrench. pray for a job that covers living expenses. don't borrow.
3
No one is forcing you to pay 17%. No one should have credit card debt.
3
Meanwhile, the bank pays me 0.01% interest on my savings and charges 4-6% interest on loans they're able to make with my money. I suppose I benefit from the Fed's focus on macroeconomics, but it's hard to see that when I look at my bank statement. How is it okay that banks make that kind of profit?
29
I would love someone to explain this to me too. Economists out there - Why are banks allowed to borrow so cheaply yet still charge high rates to their customers ? Elizabeth Warren - are you reading this ?
Have you ever looked at a bank's financial statements. Most banks are lucky to make $1 or $2 after taxes on every $100 of loans. But if don't like banks, put your money in a money market fund and get rid of the middleman. (BTW, you'll still make way less than 1% on your money, which should tell you something.)
The banks need to make that kind of profit to support their repayments to the Fed and the overhead that has been created by Dodd-Frank and other regulations. Remember, investors in banks have seen very little of the return that should be generated by these numbers -- think of it as just another tax.
There is not a lot of inflation. The deficit is reducing. An election will be held in a little more than a year. Raising interest rates cripples investments. It makes the deficit harder to control. A raise in rates would be considered political rather than economic. That's why the fed didn't change the rate.
Excellent call by Yellen and the Fed. Definitely the correct thing to do. Rates should be raised when warranted by conditions, not on an artificial chronological timetable.
8
I am very apprehensive. I do not know whether to happy or not. I do not know the complicated relationships between the market or Wall Street. For me it's personal. My house is on the market up for sale. I should be happy interest rates are low, so people would want to buy locking in low interest rates. On the other hand, the house may not be sold soon because no one is in a hurry to buy.
Had the Fed dithered it might have been a total different scenario. Now, waiting for traffic!
Had the Fed dithered it might have been a total different scenario. Now, waiting for traffic!
1
The U.S. economy is not falling apart, and any drop in mortgage interest rates (if the Fed holding steady had yet not been priced in) will help your sale.
2
No, her decision makes people want to buy now because she made it clear in a few months the rate would go up. This will fire-sale your house because people want the mortgage to clear before the December meeting.
The Fed is now waiting too long. Raising rates now will improve economic conditions including increasing inflation as businesses will have to raise prices to cover increased borrowing costs.
6
This only works if employers are willing to raise salaries, instead of ploughing their gains into CEO and stockholder pockets. Right now salaries are not keeping pace with inflation. Imagine that happening with 5% inflation. and by the way, the CPI doe snot reflect true inflation. Been to a supermarket lately?
2
Of course they're not raising the rates. Our entire "recovery" has been built on a bubble. Between QE and ZIRP, we've been artificially pumping money into the financial market since it collapsed. It's effectively a money laundering scheme for the economic elite in this country, "cleaning" our debt into bonuses, stocks, and bonds for the richest among us. Between the volatility of the Chinese economy and Europe's continued struggles (made worse by Greece's own crisis and now the refugee crisis), the last thing the Fed wants to do is end the free money party. Mere *talk* about raising rates has hit the NYSE hard. Imagine what actually lowering rates will do?
So here we are.
So here we are.
24
And Yellen keeps Milton Friedmans legacy of voodoo economics alive, the only two questions remaining are when she will say "I never saw the bubble in the stock market or the housing market coming," just as her predecessor Greenspan did, and then of course there will be the decision of which hedge fund or investment bank she will work for, and how many half million dollar speeches she can recite to her paymasters: one more nail in the coffin for American middle class savers and a few more billion in the bank accounts of the shysters running the world. The fed would not even exist in a truly transparent, democratic free market economy; what we have is a plutocracy benefiting the Gods of Finance. Maybe Bernie Sanders will break up the big banks and throw the c.e.o.s out in the street for a real world experience, yeah I know, but we can dream.
20
If the fed didn't exist, the government couldn't borrow money. Do you have a better idea?
Can kicking, once again.
Nevertheless, at some point, the toe on Ms. Yellen's conservative low heels is going to get stuck inside the can, when she least expects it, and she (along with the rest of the FOMC), are all going to fall flat on their "respectable" and "credible" faces.
Nevertheless, at some point, the toe on Ms. Yellen's conservative low heels is going to get stuck inside the can, when she least expects it, and she (along with the rest of the FOMC), are all going to fall flat on their "respectable" and "credible" faces.
7
You can't get people to lend when interest rates are too low to cover default risk and you can't get people to borrow unless they expect their income to rise in the future.
18
If that is the concern, Steve, we should run up inflation to 4 or 5 % and solve these problems. The Fed should start saying now that there will be no pulling the punch bowl away until inflation is 4%.
The proposals by President Obama and many others in his party to spend more heavily on infrastructure is exactly what the country needs. But, the ideologues on the right in the House of Representatives and Senate won't stand for it. So, we are left with monetary policy keeping interest rates at about zero in order to provide the needed sparks for expansion. It is a very poor alternative, hence our relatively tepid recovery from the Great Recession.
Governmental spending on infrastructure is not only needed for its stimulative effects, it is also necessary to increase productivity of the nation as a whole and to fix terribly aged infrastructure in so many areas. I see the same bone-headed short sighted behavior in my state of Georgia, where politicians won't invest in roadway improvements in Atlanta, and won't invest in high speed rail transportation between Savannah, Augusta, Macon and Atlanta, and possibly connecting to other states, because they wish to brag that they kept taxes low. Such thought will let China and India eat our lunch in another 25 - 30 years.
Meanwhile, the Fed will do what it can to keep the economy from sinking. It can't do much.
Governmental spending on infrastructure is not only needed for its stimulative effects, it is also necessary to increase productivity of the nation as a whole and to fix terribly aged infrastructure in so many areas. I see the same bone-headed short sighted behavior in my state of Georgia, where politicians won't invest in roadway improvements in Atlanta, and won't invest in high speed rail transportation between Savannah, Augusta, Macon and Atlanta, and possibly connecting to other states, because they wish to brag that they kept taxes low. Such thought will let China and India eat our lunch in another 25 - 30 years.
Meanwhile, the Fed will do what it can to keep the economy from sinking. It can't do much.
12
They're killing people living in retirement on interest income. Further assault on the middle class. Also, why are student loans > 6.8% when responsible persons can get practically nothing back from safe investments? None of this is helping the public.
43
Putting retirement savings in a savings account paying practically nothing is not "responsible", it's foolish. No competent financial analyst would recommend doing that. My retirement savings - in a mix of bonds and equities - have done just fine over the last 6 years, the latest (overdue) correction in equities markets notwithstanding.
The public benefits enormously from low interest rates - my son-in-law was able to buy a business, my son his first house, and I bought a new car - all possible because of low interest rates.
The public benefits enormously from low interest rates - my son-in-law was able to buy a business, my son his first house, and I bought a new car - all possible because of low interest rates.
Since those people already invested in long-term bonds that won't come due for a long time -- perhaps within their lifetime -- why is it killing people in retirement homes?
As for people retiring, this is a good incentive to buy a nice house so they don't have to live in a retirement home.
As for people retiring, this is a good incentive to buy a nice house so they don't have to live in a retirement home.
Who said anything about the public? The Federal Reserve works for the Bankers, not for the Public.
1
It's a shame the the economy is so weak that it can not withstand raising interest rates 0.25%
This says a lot about where we are as a nation right now.
This says a lot about where we are as a nation right now.
29
It's not that weak...the Fed works for Wall Street...
1
Raise interest rates, crash the economy. Slash government spending, crash the economy (thank you for that lesson, Kansas and Wisconsin). All the people who get respectful treatment on the network talk shows seem to want to do things that crash the economy.
The only thing that'll grow it -- fiscal stimulus -- is off the table. Why is that?
The only thing that'll grow it -- fiscal stimulus -- is off the table. Why is that?
7
Cutting back on regulatory overreach would stimulate the economy. Why is that not on the table?
"Fed officials are convinced labor market conditions have nearly returned to normal." well, that just shows you they don't have a clue regarding working people, do they? from their lofty heights, they can't see what we see - the economy stinks, our wages are grossly deficient, but fat cats get it all ...
8
I think that a lot of commenters are being unfair here. The fed has been doing the only thing it can to counter the fact that the Republican congress refuses to stimulate the economy in Keynesian fashion. That said, couldn't something be done for savers and retirees? I'd settle for 2%. Seven years of shutting us out completely is also unfair.
6
Buy Apple stock instead?
You're quite right, Joe. Raising the Fed interest rate would be so stupid not even the Republicans would do it. I hope.
The Obama administration has done everything in its power to suppress an economic recovery. It is not the Republicans' fault that Obama doesn't want growth. Obama has no reasonable use for the money he would love to spend.
Quote of the day, by Alan Krueger, paraphrased, "The Fed is more afraid of deflation than it is of inflation, because it has had success in defeating inflation."
This view, more or less, echos Paul Krugman's.
My view, the limbo continues, monetary policy trying to do what ought to have been done on the fiscal side. We are paying a price, still, for the nincompoopism of Tea Party obstruction and crank economics.
This view, more or less, echos Paul Krugman's.
My view, the limbo continues, monetary policy trying to do what ought to have been done on the fiscal side. We are paying a price, still, for the nincompoopism of Tea Party obstruction and crank economics.
14
I would have preferred to see them raise the rate by at least .25. We've been ready for it for months. Get it over with.
16
I made a friendly wager with one of my neighbors in March that the Fed would not raise interest rates during 2015. He felt otherwise. I still feel I'll win this wager. We'll go through the same Wall Street hysteria we've seen this past month in the "will they or won't they" speculation. Yellen capitulated to Wall Street yet again, and the stock market's gyrations will continue throughout the next several weeks, once more forcing Yellen to abandon any thoughts of raising rates.
And the belief that inflation is minimal is Kafkaesque. Ours is now a mostly service economy. Yes, the infrequent TV or computer purchase has gotten cheaper, but as has been said many a time, "We don't eat electronics." Has anyone of the Fed been in a supermarket lately? My family's health insur. premiums went up 10%, our deductibles and co-pays have increased, our dental bills have increased some 8% as have our home and auto insurance. Insurers greatly increase premiums because interest rates are so low and they "earn" nothing on their reserves (along with the rest of prudent savers).
No, the Fed is beholden to Wall Street where there is a record amount of margin debt, a record amount of stock buybacks, and who knows what other shenanigans that are hidden, only to be exposed like Madoff 7 years ago when interest rates rose. That is why Ms. Yellen won't raise rates...better to kick the can down the road.
And the belief that inflation is minimal is Kafkaesque. Ours is now a mostly service economy. Yes, the infrequent TV or computer purchase has gotten cheaper, but as has been said many a time, "We don't eat electronics." Has anyone of the Fed been in a supermarket lately? My family's health insur. premiums went up 10%, our deductibles and co-pays have increased, our dental bills have increased some 8% as have our home and auto insurance. Insurers greatly increase premiums because interest rates are so low and they "earn" nothing on their reserves (along with the rest of prudent savers).
No, the Fed is beholden to Wall Street where there is a record amount of margin debt, a record amount of stock buybacks, and who knows what other shenanigans that are hidden, only to be exposed like Madoff 7 years ago when interest rates rose. That is why Ms. Yellen won't raise rates...better to kick the can down the road.
20
I hear the price of foodlike substances has gone through the roof. But I'm a scratch cook, and my grocery bill has barely budged.
It helps, of course, that I buy my groceries at stores you wouldn't be caught dead in.
What's in your cart, and whose name is on the handle?
It helps, of course, that I buy my groceries at stores you wouldn't be caught dead in.
What's in your cart, and whose name is on the handle?
1
All the costs you are complaining about are included in the CPI. See http://www.bls.gov/dolfaq/bls_ques3.htm. For example health care gets about 4x more weight than all the video and audio services including TV sets.
The cost of food has gone up exactly1.6% since last year. That means that a $22 gallon of olive oil I bought last year costs $22.35 this year. In other words, negligible.
If a parent always bails out a gambling spendthrift adult child the adult child will never have an incentive to clean up his act.
7
This seems especially imprudent if they're planning on raising the rate later this year -- they could have raised it a small fraction. If 0.125% or even .0625% would have such "negative historic impacts" like others are saying, we obviously have much deeper economic problems than anyone is willing to talk about it.
11
Rates - if the fed is smart and keeps them linked to inflation - will not move until employment is so high as to put wage pressure on employers. I don't expect that to happen in my lifetime, but I'm willing to be proven wrong.
If you follow financial astrology, this was a Mercury retrograde decision. I think they will revisit this in a few weeks and change their minds.
2
So many commenting here dont get: the Fed Bank never intended to raise the interest rates. This "news" is 100% PR spin.
Global corporations want rates at near zero levels and they hold the most powerful cards.
21
On the other hand, banks would like to make something on overnight deposits. They won't raise saver rates, though, even when the fed does move.
2
They like low wages and stock buybacks, for sure.
ejzim, no sorry but you are thinking too small. Global banks also want lots of cheap low-interest loans for their own internal investments just as much as global corporations do. The line between large banks and large corporations is very blurred in the 21ct century.
Near zero interest rates means money can be loaned and moved around short-term and (now) long-term after 80 months == and literally not having to think about carrying interest. Think like a corporation and not like a person wanting a loan.
Near zero interest rates means money can be loaned and moved around short-term and (now) long-term after 80 months == and literally not having to think about carrying interest. Think like a corporation and not like a person wanting a loan.
The Fed's monetary policy, its models and methodologies and ability to project future trends with any reliability have utterly failed. To deal with that reality, the Fed must change the paradigm under which it operates. But no such paradigm exists, the models which the Fed relies on are broken, and the Fed dare not suggest that "new" economic models and methodologies will perform better without losing all credibility. For example, does Yellen truly think, as she said today, that the U.S. will not be at "full employment" and that inflation will not reach the magical 2% rate until sometime in 2018? She can't possibly know that. She might as well say 2020 or 2028. Fact is: employment and inflation are subject to forces that the Fed cannot control. Yellen's comment today that ultra-low interest rates has no effect on the huge and growing gap between the super-rich and everyone else is ridiculous. Bottom line: The Fed is trapped in a model and a mind-set that is fundamentally flawed, and from which it cannot escape. Conclusion: today's news is very very bad. Volatility will increase in the coming months and years. And the Fed will have no tools to respond when the next inevitable downturn occurs. My suggestion: let the marketplace determine interest rates. What a concept! As Warren Buffet famously observed: only after the tide goes out do we see who is OK and who has been swimming with no trunks.
15
Socialism for the banks, free market for the poor
44
This disgusts me. I am a saver. Why aren't banks competing for my money by giving me bank interest. Bank interest used to be 5% a bunch of years... not is 0%.
I thought capitalism meant banks had to compete. Why do they all get to offer us no interest ?
I voted for Obama twice. Obama helped Wall Street, the rich, and Big Healthcare and nobody else. Obama didnt help normal people.
Not happy with Obama.
I thought capitalism meant banks had to compete. Why do they all get to offer us no interest ?
I voted for Obama twice. Obama helped Wall Street, the rich, and Big Healthcare and nobody else. Obama didnt help normal people.
Not happy with Obama.
39
You live in a mixed economy, not a market economy(capitalism).
Not only that, but they never cut consumer interest rates. Now, they will raise them, with as little as a .25 Fed hike. Remember when oil prices were skyrocketing, ad the very day oil went up, so did your gasoline price? Even though THAT gas came from oil that has been refined months ago, at a lower price. Same thinking. Heads we win, tails you lose.
4
Betty G.
You are not supposed to save. You are supposed to carry debt rather than save and pay cash. You are supposed to invest in stocks that may crash. There is no FDIC for stocks, but what the heck, the stock market always comes back, right, even if it takes years to recoup your losses.
As Elizabeth Warren keeps saying, "The game is rigged."
For the majority of the population, Wall Street should be as foreign as Mongolia, and as accessible. Wall Street is a casino for those who can afford risk. Most of us cannot. Again, no FDIC for stocks. It's called financially living on the edge.
Your community banker should be the go-to guy for banking advice. Instead, we all now are dependent upon financial advisors, mostly unknown to us, and whose trustworthiness if we don't know them can be a matter of question.
You are not supposed to save. You are supposed to carry debt rather than save and pay cash. You are supposed to invest in stocks that may crash. There is no FDIC for stocks, but what the heck, the stock market always comes back, right, even if it takes years to recoup your losses.
As Elizabeth Warren keeps saying, "The game is rigged."
For the majority of the population, Wall Street should be as foreign as Mongolia, and as accessible. Wall Street is a casino for those who can afford risk. Most of us cannot. Again, no FDIC for stocks. It's called financially living on the edge.
Your community banker should be the go-to guy for banking advice. Instead, we all now are dependent upon financial advisors, mostly unknown to us, and whose trustworthiness if we don't know them can be a matter of question.
6
Well, this is certainly destroying my retirement. If I put my money in stocks I know that they will crash when the fed raises rates so that's not a good idea. Bond yields are virtually nothing so that's pointless and besides prices will tank on bonds as soon as they raise rates. We're in a commodity bear market so every day that asset class gets worse. We have negative real rates and slow growth and no inflation. What they think they will get other than impoverishing every retiree in the USA by keeping these at these levels is beyond any sensible economic analysis. There is never going to be 4 percent real growth in the developed world anytime soon.
35
If society produces stuff, society, including retirees, can consume that stuff.
Ross,
Of your options, I'd say conservative dividend paying stocks are where you should invest at least some of your money.
Of your options, I'd say conservative dividend paying stocks are where you should invest at least some of your money.
1
Have you looked into REITs?
Janet Yellen was ineffective when she ran the Fed in California - she oversaw Countrywide....great job Janet. I believe there is no correlation between employment and interest rates - low rates are counter productive. Ms. Yellen has no idea what she's doing - she should go back to teaching Economics - or retire.
15
Since nothing nothing has worked thus far, Janet Yellen should do the same as George Costanzo.
George : "It's not working, Jerry. It's just not working."
Jerry : "What is it that isn't working?"
George : "Why did it all turn out like this for me? I had so much promise. I was personable, I was bright. Oh, maybe not academically speaking, but ... I was perceptive. I always know when someone's uncomfortable at a party. It became very clear to me sitting out there today, that every decision I've ever made, in my entire life, has been wrong. My life is the opposite of everything I want it to be. Every instinct I have, in every of life, be it something to wear, something to eat ... It's all been wrong."
Waitress : "Tuna on toast, coleslaw, cup of coffee?"
George : Yeah. No, no, no, wait a minute, I always have tuna on toast [highly accommodative monetary policy]. Nothing's ever worked out for me (or the FMOC, the U.S., or the world at large] with tuna on toast. I want the complete opposite of tuna on toast. Chicken salad, on rye, untoasted ... and a cup of tea [a 0.25% Fed funds rate increase]."
Jerry : "If every instinct you have is wrong, then the opposite would have to be right."
George : "Yes, I will do the opposite. I used to sit here and do nothing, and regret it for the rest of the day, so now I will do the opposite, and I will do
something!"
Elaine : "Well, there's no telling what can happen from this."
George : "It's not working, Jerry. It's just not working."
Jerry : "What is it that isn't working?"
George : "Why did it all turn out like this for me? I had so much promise. I was personable, I was bright. Oh, maybe not academically speaking, but ... I was perceptive. I always know when someone's uncomfortable at a party. It became very clear to me sitting out there today, that every decision I've ever made, in my entire life, has been wrong. My life is the opposite of everything I want it to be. Every instinct I have, in every of life, be it something to wear, something to eat ... It's all been wrong."
Waitress : "Tuna on toast, coleslaw, cup of coffee?"
George : Yeah. No, no, no, wait a minute, I always have tuna on toast [highly accommodative monetary policy]. Nothing's ever worked out for me (or the FMOC, the U.S., or the world at large] with tuna on toast. I want the complete opposite of tuna on toast. Chicken salad, on rye, untoasted ... and a cup of tea [a 0.25% Fed funds rate increase]."
Jerry : "If every instinct you have is wrong, then the opposite would have to be right."
George : "Yes, I will do the opposite. I used to sit here and do nothing, and regret it for the rest of the day, so now I will do the opposite, and I will do
something!"
Elaine : "Well, there's no telling what can happen from this."
1
"Representative John Conyers, a Michigan Democrat, introduced legislation on Thursday directing the Fed to push the unemployment rate below 4 percent."
There is only one thing the Fed can do with certainty. Asset bubbles. That's it.
There is only one thing the Fed can do with certainty. Asset bubbles. That's it.
8
Representative John Conyers should look in the mirror. The problem is Congress is not spending on desperately needed things that would stimulate the economy, improve our competitiveness and create jobs. The Fed has done all the heavy lifting and not criticized those incompetents in both houses.
As Krugman has repeatedly stated, only the VSPs (very special people) have been crying for higher rates for 6 years. Thank goodness, Ms. Yellen is a data driven person. There is absolutely no justification for raising rates. And I am retired and desperately need higher rates to survive but I am also a realist. Raise rates and you crash the barely breathing economy.
Everyone who is honest knows the "employment rate" is very misleading as millions of older workers (I am one) were "layed off" during the financial crisis and have be unable to find work since.
As Krugman has repeatedly stated, only the VSPs (very special people) have been crying for higher rates for 6 years. Thank goodness, Ms. Yellen is a data driven person. There is absolutely no justification for raising rates. And I am retired and desperately need higher rates to survive but I am also a realist. Raise rates and you crash the barely breathing economy.
Everyone who is honest knows the "employment rate" is very misleading as millions of older workers (I am one) were "layed off" during the financial crisis and have be unable to find work since.
Hedge Fund managers are taxed at what 25% on millions of dollars they get and I get .37% on my CD's. I lost $40,000 in annuities in the stock market crash and never recovered. Why don't we just keep catering to Wall Street and the banks since everything is going just fine.
16
Another thought... credit card interest rates... (9% to 20+%) as an example.
In the good old days the Fed more or less controlled the Fed Funds rate by keeping reserves in the system tight. Each day it would enter the market
and add or drain a small amount of money to or from the system to herd the Fed Funds rate toward the target range. Usually that worked. Today they can’t do that. They historically controlled rates by adjusting the supply of money each day. Today, there’s too much cash in the system for them to control.
and add or drain a small amount of money to or from the system to herd the Fed Funds rate toward the target range. Usually that worked. Today they can’t do that. They historically controlled rates by adjusting the supply of money each day. Today, there’s too much cash in the system for them to control.
1
If you need proof of the lie pushed by Obama's administration and some business leaders that the American economy is in fine shape once again, just look at the flatlined interest rates. If anyone was really confident rates would be rising. The fed's inaction belies the confidence game.
8
Winner: Wall Street and Hedge Funds. Losers: middle class savings and small business investment. Go for it. Americans are so dumb they love it.
4
Joe Shmoe.. I can't agree that this is just Obama, considering the roots of low interest rates pre-dates his administration by many years. I
At least show some Internet courage, and name these "some business leaders."
1
In its present political configuration, the Fed will never again raise rates. It will take a new financial and economic crisis, which ZIRP is rapidly helping along to fruition, to reveal the bankruptcy of its ideas. At which point, some populist political demagogue will arise that will wrest control of interest rates and the money supply from the Fed's Board of Governors, never to be returned.
The populist demagogue won't do any better than the Fed at managing economic outcomes through money supply tinkerings, but at least he/she won't be beholden to Wall Street bankers or the pointy-headed diviners and magicians commonly known as economists.
The populist demagogue won't do any better than the Fed at managing economic outcomes through money supply tinkerings, but at least he/she won't be beholden to Wall Street bankers or the pointy-headed diviners and magicians commonly known as economists.
5
Chalk another one up for Wall Street lobbyists and people like Larry Summers. The American economy/stock market is still overheated (yes) and banks and hedge funds want to continue taking free money from the Fed to lend and invest at their own marked up market rates. This has nothing to do with the real economy and small business who still can't get financing. Republicans are sold and Dems like Clinton and Schumer are bought and paid for. Time for voters to react but it won't happen because they are too uneducated and glued to their iPhones to care.
6
Every time an increase in interest rates looms, the stock market acts up and intimidates the Feds. The tail is wagging the dog.
13
The fleas are biting the tail, which in turn wags the dog. The fleas, being corporations, never die. The dog might (along with that tail). The fleas will live forever.
Looks like a classic case of getting cold feet to me. The Fed says the economy is recovered and the labor market has returned to normal. They've signaled the increase for months, so there's no surprise. They can always find reasons to hesitate from last week's news. But at some point, they simply have to take the first step and get monetary policy back to neutral so that they have the tools to react to the next crisis. Given that they're projection 2+ years to normalize rates, now is as good a time as ever to start.
7
What would you like the Fed or any other government official to say publicly? Would you like them to say things are horrible and they are scared to death we will follow the same path as the 29 Depression? If they were to say anything like that, people will panic and make things worse. They have got to give a positive public outlook in order to prevent that.
The unemployment rate is a false figure that the Fed should not use to raise rates. There are millions of professionals working part time jobs, with some people holding two or three part time jobs. In New Jersey when you go to the Shop Rite or Wegmans supermarkets or a Target, Costco, or Bed Bath & Beyond you see people in their 50's, 60's, and older thatare working, struggling to survive.
I'm a lifelong Democrat but when I hear the administration brag about how much lower the unemployment rate is I wonder if they are living in a fantasy world. It may be for illegal immigrants working out in the fields or in landscaping who are being paid the minimum wage and less, and for older Americans working two or three part time jobs (also at minimum wage or a tad bit more) but we should not be patting ourselves on the back for this "great" achievement.
I'm a lifelong Democrat but when I hear the administration brag about how much lower the unemployment rate is I wonder if they are living in a fantasy world. It may be for illegal immigrants working out in the fields or in landscaping who are being paid the minimum wage and less, and for older Americans working two or three part time jobs (also at minimum wage or a tad bit more) but we should not be patting ourselves on the back for this "great" achievement.
18
They are not living in a Fantasy World - they are living in a World of Total & Complete Denial of Reality. They now do it Openly and get away with it completely. They figure why shouldn't they? Because they can.
The global economy is one big house of cards made up of debt, and the Fed is afraid to even exhale- never mind actually do something- for fear of knocking it down. Once you understand that all this debt can never ever be repaid with actual growth in economic value, all that can be done is kick the can a little further.
4
Holding rates at historic lows, and leaving them there for 6 years, is a kowtow to the stock market (0% interest eliminates any competition for the stock market for your money), as well as an attempt to manipulate the dollar (keeps the dollar lower than it would be otherwise, if rates rose). The US cannot scream about Chinese currency manipulation if it does so itself.
Yellen's Fed has now taken the additional step of trying to be the world's central bank ("we are worried about global uncertainty).
0% appears now to be semi-permanent. It's difficult to see an economic environment that meets Fed criteria to raise.
Yellen's Fed has now taken the additional step of trying to be the world's central bank ("we are worried about global uncertainty).
0% appears now to be semi-permanent. It's difficult to see an economic environment that meets Fed criteria to raise.
7
Who am I to disagree with 9 out of 10 Fed governors, but I do believe they're going to wish they had acted differently today. Leading indicators are saying it's time to raise rates but the Fed is telling us their gut says otherwise. This is supposed to instill confidence?
Moreover, although the chose not to act, they are still saying they expect to raise rates by the end of the year. Hello? It's September. Now they're forced into a corner. The real effect of such a raise would have been negligible or effectively nonexistent, and yet, now, if economic conditions stall or even worsen by the next meeting, they are still forced to either raise rates against their better judgment or directly contradict themselves. It would have been better to raise rates now and then "wait and see" than to "wait and see" and be forced to raise rates anyway.
Moreover, although the chose not to act, they are still saying they expect to raise rates by the end of the year. Hello? It's September. Now they're forced into a corner. The real effect of such a raise would have been negligible or effectively nonexistent, and yet, now, if economic conditions stall or even worsen by the next meeting, they are still forced to either raise rates against their better judgment or directly contradict themselves. It would have been better to raise rates now and then "wait and see" than to "wait and see" and be forced to raise rates anyway.
16
Yeah after all our bought off by the 1% political class need to keep giving the gift of billions to our rich and powerful so with 0% loans they can by 2% government bonds, play casino capitalism on the stock market and above all use this "complex" wealth transfer to get US citizens in debt for generations by moving trillions to China to build factories and empty ghost apartments, and probably warships and bombs and bullets to kill 10's of millions of Americans with in the coming 3rd WW. Nice going 1%, your still as greedy and incompetent as cowardly as ever. For when you crash our society and economy it will not be you pampered kids fighting in the war. You'll get on a private jet and do the "refugee" Exodus bail out to somewhere else that you will in turn suck dry and destroy.
5
Pray tell why we aren't borrowing virtually-zero interest money and investing in federal infrastructure projects, putting people to work and having spillover benefits of secondary and tertiary spending and increased tax revenues and . . .
Oh, right. Republicans.
Oh, right. Republicans.
137
Whatever happened to that $700 billion economic stimulus package that was supposed to go to infrastructure and other shovel ready projects?
It mostly did, but was far too small.
Well, hot diggity dog! Now I'll able to renew that one year bank CD in my IRA for .15 of 1%!
Honey, let's go out tonight and have a big steak dinner with champagne to celebrate. So we'll run out of money in retirement by the time we turn 68. Big deal! Our kids will let us move in with them.
Thank you Janet Yellen!
Honey, let's go out tonight and have a big steak dinner with champagne to celebrate. So we'll run out of money in retirement by the time we turn 68. Big deal! Our kids will let us move in with them.
Thank you Janet Yellen!
43
I remember when I once had a 6 month CD at 15%. Unfortunately the rate of inflation was 16%. Be careful what you wish for.
14
You actually have some control of how inflation affects you personally. You have no control over CD returns.
Run out of retirement money by the time you're 68? So presumably you retired at a younger age?
I don't feel bad for you. I'm hopeful to retire by age 68, not before.
Anyway CD's always pay just a bit above inflation. They are not a common investment for retirement accounts, even when in retirement. A mix of stocks and bonds is best, especially if you plan to live another 20 years or more in retirement. Also consider annuities.
I don't feel bad for you. I'm hopeful to retire by age 68, not before.
Anyway CD's always pay just a bit above inflation. They are not a common investment for retirement accounts, even when in retirement. A mix of stocks and bonds is best, especially if you plan to live another 20 years or more in retirement. Also consider annuities.
1
Eight years during which the U.S. government could have borrowed hundreds of billions of dollars at zero percent interest -- ZERO PERCENT! -- to have invested in repairing crumbling infrastructure, retrofitting building for thermal efficiency, building mass transit, developing renewable energy, funding public education, and putting millions of unemployed people back to work.
But no. Simple-minded Republican beliefs -- not even worthy of the word "theory" -- devoid of the most elementary understanding of how debt, deficit, and inflation work relative to GDP let this golden opportunity to repair the USA, secure the future, and create the jobs they prattle on about endlessly to no effect slip away.
It is OK for a person to be ignorant, even stupid. But for ignorant, stupid people to control the instruments of power in the largest economy in the history of the world is a crying shame.
But no. Simple-minded Republican beliefs -- not even worthy of the word "theory" -- devoid of the most elementary understanding of how debt, deficit, and inflation work relative to GDP let this golden opportunity to repair the USA, secure the future, and create the jobs they prattle on about endlessly to no effect slip away.
It is OK for a person to be ignorant, even stupid. But for ignorant, stupid people to control the instruments of power in the largest economy in the history of the world is a crying shame.
77
Thank heavens the Fed pulled back from the brink!
What a relief after so much anxiety. I am still shaking with fright. Thankfully they followed the wise advice of Larry Summers and held off from rising rates to usuries levels!
Economists, astrologers, palm readers, fortune tellers, and people who say they can make it rain have all warned that raising the rate to 0.25% would cause the worse disaster since that which caused the death of the dinosaurs.
Markets would crash with thunder and the land would be littered with the bodies of former billionaires who leapt to their deaths because they suddenly became only millionaires. Bill Gates would be forced onto the street where he would resort to setting up a table to sell paper, pencils and slide rules. There would be wailing and gnashing of teeth in every home as the very structure of the universe would be altered so that the earth would be bombarded by the return of electromagnetic waves from old tv broadcasts and the only thing to watch would be “Queen for a Day” and “Bonanza.”
However DOOM LOOMS! The end is nigh!
The disaster has not been averted but merely postponed. Forewarned is forearmed! You still have time to build an underground concrete bunker and stock it with fresh water, canned goods and of course plenty of guns and ammunition in the event the rate rise comes in December.
What a relief after so much anxiety. I am still shaking with fright. Thankfully they followed the wise advice of Larry Summers and held off from rising rates to usuries levels!
Economists, astrologers, palm readers, fortune tellers, and people who say they can make it rain have all warned that raising the rate to 0.25% would cause the worse disaster since that which caused the death of the dinosaurs.
Markets would crash with thunder and the land would be littered with the bodies of former billionaires who leapt to their deaths because they suddenly became only millionaires. Bill Gates would be forced onto the street where he would resort to setting up a table to sell paper, pencils and slide rules. There would be wailing and gnashing of teeth in every home as the very structure of the universe would be altered so that the earth would be bombarded by the return of electromagnetic waves from old tv broadcasts and the only thing to watch would be “Queen for a Day” and “Bonanza.”
However DOOM LOOMS! The end is nigh!
The disaster has not been averted but merely postponed. Forewarned is forearmed! You still have time to build an underground concrete bunker and stock it with fresh water, canned goods and of course plenty of guns and ammunition in the event the rate rise comes in December.
6
Another great day for the top 1% under the Obama Presidency. They will never raise rates while Obama is President. They want to protect him and lump the next President with these monetary problems.
4
"Another great day for the top 1%"....You might want to rethink your comment. Raising interest rates increases the value of the dollar, causing a decrease in exports, which often leads to unemployment.
"Raising interest rates increases the value of the dollar, causing a decrease in exports, which often leads to unemployment." ????
- Increase in value of dollar also decreases the cost of imports of raw material - which will be used by industries to churnout more cheaply produced US made products - of course ore jobs.
-- Never make an onesided assumption of downstream effects of having an strong dollar
- Increase in value of dollar also decreases the cost of imports of raw material - which will be used by industries to churnout more cheaply produced US made products - of course ore jobs.
-- Never make an onesided assumption of downstream effects of having an strong dollar
1
Zero rates inflates asset prices and makes the rich richer. That is my point and is one of the reasons why wealth inequality has drastically increased under the Obama presidency. This nightmare will hopefully end in 18 months
5
The whole interest rate/inflation issue is very puzzling. The Fed's target rate of inflation is 2%, yet the rate has been below that value for several years. It would seem reasonable to try to average the rate of inflation at 2% over a period of time, determined by the Fed.: when inflation is below 2%, the Fed should make policy that would increase inflation above that value so that over time the inflation rate should average 2%. The fact that inflation has been so low for a long period of time indicates that the economy may be sicker than it seems.
4
If Republicans had any ability to think, they would promote infrastructure spending where urgently needed while the interest rates are still so low and before failed systems force fast repairs that require far higher costs to implement.
85
That's a big "if."
Labor participation rates, much lower than pre-crisis should not be a side-note or afterthought. Claiming that the economy is strong because unemployment is at 5% does not reflect the true picture.
As an obviously absurd example, 300,000,000 people could all drop out of the hunt for a job and not participate. If there was only 100 people left working, and 5 were looking for a job, that technically is 5% unemployment.
More emphasis should be put on the reasons for lower labor participation, including "giving up", and having unemployment benefits running out.
As an obviously absurd example, 300,000,000 people could all drop out of the hunt for a job and not participate. If there was only 100 people left working, and 5 were looking for a job, that technically is 5% unemployment.
More emphasis should be put on the reasons for lower labor participation, including "giving up", and having unemployment benefits running out.
8
Labor force participation rates have been declining since the late 1990s, largely as a result of demographics, especially the boomer retirements. The decline accelerated some during the Lesser Depression of 2007-09, then returned to trend. CBO just predicted the LFP rate to be even lower in 2025, at about 60%.
LFPR is not a statistic that can be interpreted in a vacuum. One must also look at the U3 (official unemployment), U6 ("under"-employment, or people working part time who would like to be working full time), and the employed-to-population ratio, which has been recovering, albeit anemically, since 2010. Most importantly, LFPR must be interpreted against the backdrop of demographics, which are suppressing it and will continue to suppress it until the boomers are dead. Want to make a safe prediction? The LFPR will be lower next year and lower the year after that and the year after that. Here's another safe prediction: the sun will rise tomorrow in the east.
LFPR is not a statistic that can be interpreted in a vacuum. One must also look at the U3 (official unemployment), U6 ("under"-employment, or people working part time who would like to be working full time), and the employed-to-population ratio, which has been recovering, albeit anemically, since 2010. Most importantly, LFPR must be interpreted against the backdrop of demographics, which are suppressing it and will continue to suppress it until the boomers are dead. Want to make a safe prediction? The LFPR will be lower next year and lower the year after that and the year after that. Here's another safe prediction: the sun will rise tomorrow in the east.
2
The Bush debacle continues to be remedied at the cost to those who shun equities, invest in bonds, or, heavens forfend, hold cash instruments. And pity the retired folks who hope for cost-of-living adjustments. Meanwhile, our property and equity markets are going full boom ahead. Apparently the Fed has to show our Chinese bankers that our paper is still good and, yes, we are not China.
18
How is this the "Bush debacle"?
So wall street still gets a break while rents and food go up for those on S. Security. This year, again, the measurement of inflation is flawed!
43
Inflation? The cost of oil is half of what it was a few years ago, commodity prices are in the dumpster, and the price to the farmer for corn and soybeans has been in a precipitous decline. If you are paying more for what you buy, better check the pockets of the middleman.
1
I guess the people who have been playing the financial markets like they are gambling casinos will not have the benefit of higher interest rates to encourage some restraint, so the volatility of the markets will continue. However the people who are just getting by and paying off credit card debt have been given a reprieve from rising interest rates and the cuts in their other expenses they would make. Inflation is not a big threat, right now, but a decline in growth rates is far more likely from higher prime rates.
2
When credit card rates are 20 to 25%, is a small increase in rates going to mean even higher credit card interest? Where is the legislation to rein in these bloodsucking leaches?
Yellen discovered that there are still some people living on fixed incomes who have not yet had our savings completely wiped out. She is no doubt also afraid of the squeeze that a rate increase would have on the major credit granting institutions, who are barely able to eek out a profit given the 18 - 24 percentage point margin between their source of money and interest charged.
26
Ironically, Yellen looks like a retiree that could be on a fixed income herself. Conspicuous by it's absence, there was no talk on the effect of savers that rely on fixed interest rate investments with no penchant or tolerance to stock market risk.
Why would people use cards with rates that high? and if they are paying that high a rate, why on earth would they buy something knowing they couldn't pay the bill at the end of the month?
also these rates must be understood in terms of defaults. I don't know the number but many credit card holders go into bankruptcy and the company loses not only interest but principal. When you see high interest rates, think high default rates. And as far as I know the credit card companies do NOT make most money from the interest, they make it on the fees they charge merchants.
also these rates must be understood in terms of defaults. I don't know the number but many credit card holders go into bankruptcy and the company loses not only interest but principal. When you see high interest rates, think high default rates. And as far as I know the credit card companies do NOT make most money from the interest, they make it on the fees they charge merchants.
Thanks, Ms Yellin for keeping my savings interest near zero. I'll continue to respond by not spending the returns I don't have.
63
Thanks Ms Yellin for keeping interest rates low so that my adjustable rate mortgage is at an amazingly low 3% freeing up money for me to spend on renovating my home.
The best reason for raising interest rates today was that we wouldn't have to go through another episode of, Will the Fed at last raise interest rates? Well, now we have to go through this all again in one month's time.
8
More like until 2018.
The takeaway: 80 months of zero percent interest rates and $4 trillion new dollars haven't been enough to goose the economy to the point where it can sustain a quarter percent increase the Federal Funds Rate. Unemployment is at 5.1 % and the markets are bumpy but ok. What are they seeing that makes them so nervous? Perhaps the unemployment rate is actually higher than 5.1%, or maybe the stock market really is significantly overvalued, pumped up with free cash. I am more concerned about the implications of a delay in raising the rate more than the pros and cons of raising it now or next month. Something is seriously wrong with the global financial system.
77
You asked, "What are they seeing that makes them so nervous?" Let's see, the Chinese stock market and economy in free fall, which if you can recall, resulted in a 10 percent in U.S. stock prices in a little over a week. We have a global economy now, where all major business markets are dependent and react to each other. Raising the interest rate in the U.S. now, while the Asian markets are still fragile, would signal that we are tightening money supply, making it more difficult for other countries to purchase from us and refinance loans when they need to most. It would not be the right thing to do. If the Fed had raised interest rates, the stock market likely would have dropped. That wouldn't have been a good thing for investors, eh?
2
"What are they seeing that makes them so nervous?" ....Inflation, or rather lack there of. Oil is half of what it was two years ago, so to corn and soybeans. The price of commodities in general are in the dumpster. China has devalued it's currency make their exports even cheaper. The Euro keeps falling against the dollar and the Canadian currency is down to 75 cents.
1
Thank you for bringing this up.. yes.. to all your points, though I realize the questions were rhetorical.
Good call.
As Paul Krugman has repeatedly pointed out, we're not seeing inflation, and the job market is still nowhere near as tight as it should be - there are still a lot of people that want to get back to work. Until that happens, "pedal to the metal" remains the rule.
As Paul Krugman has repeatedly pointed out, we're not seeing inflation, and the job market is still nowhere near as tight as it should be - there are still a lot of people that want to get back to work. Until that happens, "pedal to the metal" remains the rule.
15
No inflation ? With the one exception of petrol, clearly you haven't gone grocery shopping recently, or tried to buy real estate, or a new car....
http://www.shadowstats.com/alternate_data/inflation-charts
The official inflation numbers are kept low so that COLA, etc are also kept low.
It is a shame none of this money trickled down, save to a few construction workers in the Hamptons.
http://www.shadowstats.com/alternate_data/inflation-charts
The official inflation numbers are kept low so that COLA, etc are also kept low.
It is a shame none of this money trickled down, save to a few construction workers in the Hamptons.
3
The takeaway I get from the past 8 years is that low interest rates don't help the labor market. Sure, one could argue that things would be worse if rates were higher, but rates have been far higher through much of my working life and the employment picture was always way better back then.
The thing about Krugman's prescription is that he rightly insists on government infrastructure spending as the real cure for the employment problem, and he says now is the best time precisely because borrowing rates are so low for the government. However, the government has failed to take advantage of these low rates by not investing in infrastructure, so the low rates are pointless and only prolong the problem and casino effect on Wall St.
The thing about Krugman's prescription is that he rightly insists on government infrastructure spending as the real cure for the employment problem, and he says now is the best time precisely because borrowing rates are so low for the government. However, the government has failed to take advantage of these low rates by not investing in infrastructure, so the low rates are pointless and only prolong the problem and casino effect on Wall St.
4
It's a good decision to keep interstate rates at current levels. What's happening in China, refugee crisis, and issues around the globe have contributed to general sense of insecurity and stability in stock and capital markets. Fed Reserve made prudent decision to leave current interest rate unchanged, it shows their understanding of changing situations at home and abroad.
3
There has never been a better interest-rate environment to go out and buy a branch of the United States government.
This is a real chance to double and triple your oligarchic money.
This is a real chance to double and triple your oligarchic money.
93
What? Bond prices are relatively *high*, not low. As interest rates increase, bond prices will presumably fall.
Phew! Thank heavens for Janet Yellen
4
Good move. Increasing rates now would have been a mistake of historical proportions (very much like the Fed did in 1937 or Trichet did in Europe in 2011). Now the difficult thing is: what will change between now and the next year? Nothing. Even the Fed predicts, in its statement today, that inflation will be below target at least until 2018!
So the bad thing the Fed is doing is making people believe that it wasn't this meeting, but maybe next one (in Oct), or next one (in Dec), or little after that. What they should be doing is firmly changing people's expectations that it just won't happen until its two objetives of economic growth *and* inflation are firmly secured. Given the Fed's own thinking, current policy will remain appropiate for many more months (if not years) to come.
So the bad thing the Fed is doing is making people believe that it wasn't this meeting, but maybe next one (in Oct), or next one (in Dec), or little after that. What they should be doing is firmly changing people's expectations that it just won't happen until its two objetives of economic growth *and* inflation are firmly secured. Given the Fed's own thinking, current policy will remain appropiate for many more months (if not years) to come.
21
Raising rates isn't what killed the recovery in 1937. The mistake was the pullback in government spending. You could say that the two go hand in hand, but not necessarily so. The mistake now (2009-15+) is that we have low rates AND decreasing government spending. In short, the government has flubbed the opportunity to pour money into the real economy, opting instead to pour it into the coffers of the investor class, who use it to play the markets and do nothing.
"But officials have expressed concern that the recent stock market downturn may be a sign of weakness in the domestic economy."
We have a 6+ year bull market and reached record highs, but a month of volatility scares the Fed? Why is the Fed looking at the short-term instead of the long-term?
Wages have been stagnate since the '80s. Stop blaming interest rates. This is a problem with income inequality.
The Fed manipulates monetary policies. They do not control employment and wages--the free market does. The low interest rates have allowed companies to borrow and spend trillions on stock buybacks instead of investing and growing their company and hiring new employees.
"Liberal activists and economists" think the Fed has superpowers. They don't. All they do is manipulate policies and the free market responds by looking for profit.
We have a 6+ year bull market and reached record highs, but a month of volatility scares the Fed? Why is the Fed looking at the short-term instead of the long-term?
Wages have been stagnate since the '80s. Stop blaming interest rates. This is a problem with income inequality.
The Fed manipulates monetary policies. They do not control employment and wages--the free market does. The low interest rates have allowed companies to borrow and spend trillions on stock buybacks instead of investing and growing their company and hiring new employees.
"Liberal activists and economists" think the Fed has superpowers. They don't. All they do is manipulate policies and the free market responds by looking for profit.
12
The Fed, like the financial community and many academics, makes the error of believing that the stock market is the economy. Have a look at this:
https://www.gmo.com/docs/default-source/research-and-commentary/strategi...'o-the-wisp.pdf?sfvrsn=4
https://www.gmo.com/docs/default-source/research-and-commentary/strategi...'o-the-wisp.pdf?sfvrsn=4
4
The market is not the economy and most of us out here, 50+, new college grads and construction workers, are severely underemployed.
Once again, anyone who "saves" money is left out the mix; but anyone who takes risks gets to play a little longer!
48
The Fed. Every economic theory developed in the past four hundred years predicts that ruinous inflation will spring from all this easing. That's right, I'm fightin' the Fed.
1
With no growth in wages for the vast majority of Americans, raising rates now would only depress the economy. There are still too many other potential trouble spots in the global economy that could flare up.
Thank you Janet Yellen.
Now if we could only put Congress in the hands of sane people...
Thank you Janet Yellen.
Now if we could only put Congress in the hands of sane people...
25
The Fed works for and represents the 1%. Keeping rates abnormally low has not benefitted the poor and working class in the last 7 years. Flooding the banks with cheap money has done little for credit card rates.
32
You're half right. The federal government should have flooded the pockets of citizens with that money, since the banks will never loan it out.
4
There seems to be an under-appreciation for how worthless the current unemployment rate is now in relation to the health of our economy. This rate does not account for the numbers of previously high-skilled workers that decided to go to work for Home Depot after their unemployment ran out, nor does it account for the older workers who decided to leave the work force when their employers started sending their high-skilled jobs eastward. Wages for high-skill jobs will continue to fall due to overseas competition, and stagnation will reign for many years.
14
H1Bs, all those STEM and non STEM grads for whom there are no jobs. Automation replacing truckers, ambulance drivers, maintenance and food service, lawyers, doctors, caregivers, teachers. There is a huge paradigm shift coming. I expect this stagnation for the rest of my life. We can handle it well, by taxing the owners of capital and returning it to citizens via government programs, plus finding meaningful 'work' for everyone, or we can die in floods, famine, riots and disease, down to the point where we no longer have too many people and actually need people to make an economy again.
1
Without wage pressure, there will never be a rise in interest rates again! How ya like them apples, o masters of the universe?
11
Raise rates .25% and there will be enormous capital outflows from Europe to the U.S. You can figure out the rest.
4
At least the Fed has some form of common sense, especially after past six or so weeks. There are so many things wrong, than there are right with the Us economy; let alone the world economy.
China is quickly heading downhill, taking a lot of nations with it. Europe, its economy is being propped up by Germany. In the western hemisphere, it is the United States.
Meanwhile, in the US, the unemployment rate and jobs report, may reflect that we are in a normal economy, but the jobs are low paying, and many are not permanent. Raises are stagnant or non-existent; a booming economy they should be at or above 5%. Consumer prices are the only thing rising; and people have less to spend. Inflation, does not truly reflect, the truth especially when it comes to food prices.
The only thing booming in this economy is Wall Street. To most Americans, like myself, feel that the Great Recession is more on hiatus, than it ending. Technically, we are not in a recession, but it feels like one.
So, if the Fed starts raising interest rates, while it would be good for the banks (adding more to their record profits), for most Americans it will be another slap in the face. More money, which they don't have, to pay increased interest charges, on already double digit credit card interest, and loans tied to the Prime Rate. So, even more Americans will fall behind in this languishing economy.
In my opinion, the longer the Fed holds off on raising rates; the better.
China is quickly heading downhill, taking a lot of nations with it. Europe, its economy is being propped up by Germany. In the western hemisphere, it is the United States.
Meanwhile, in the US, the unemployment rate and jobs report, may reflect that we are in a normal economy, but the jobs are low paying, and many are not permanent. Raises are stagnant or non-existent; a booming economy they should be at or above 5%. Consumer prices are the only thing rising; and people have less to spend. Inflation, does not truly reflect, the truth especially when it comes to food prices.
The only thing booming in this economy is Wall Street. To most Americans, like myself, feel that the Great Recession is more on hiatus, than it ending. Technically, we are not in a recession, but it feels like one.
So, if the Fed starts raising interest rates, while it would be good for the banks (adding more to their record profits), for most Americans it will be another slap in the face. More money, which they don't have, to pay increased interest charges, on already double digit credit card interest, and loans tied to the Prime Rate. So, even more Americans will fall behind in this languishing economy.
In my opinion, the longer the Fed holds off on raising rates; the better.
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Unquestionably the right decision, based on the data.
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There was no basis for the Fed to raise interest rates before the slowdown in China. Wages are stagnant, the poverty rate is 14.8% and there is no inflation. There is a lot of slack in the economy to be picked up before the Fed even considers raising rates.
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As it is, the Fed will raise rates long before Congress decides to rebuild our nation's crumbling infrastructure. If Congress acted faster, the Fed wouldn't have to wait so long to raise rates. However, thanks to Congress, our nation has no fiscal policy and must depend on the Fed's low interest rate monetary policy to keep the nation from lapsing into an economic depression once again. Anyone in Congress who complains about the Fed has only him/her self (and Grover Norquist) to blame.
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The only reason the US is still economically standing is because they are the world reserve currency, and can print money ad nauseum. With a Canuck loonie losing ground everyday on the US greenback, all I can say is "must be nice".
I agree. Monetary policy can't substitute for fiscal policy. But I appreciate the Fed's action. Without the Fed, conditions would be worse.
The Republicans in congress, right?
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With Christmas coming, yes it is, many consumers will be happy.
After all, that is the time get out the cards for stuff not really otherwise "affordable" right? How convoluted is that?
After all, that is the time get out the cards for stuff not really otherwise "affordable" right? How convoluted is that?
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Does any American believe the Fed is holding off the interest rate because they want to "protect jobs"? The scenario is very clear: there are no conditions for the Fed to hike the interest rate right now, because, deep down, they know the music is very low now and will stop if they do it.
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Thank you. At least one part of our government is mindful of ordinary working people and those who cannot find work.
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The Fed works for the 1% and will keep rates where they are as long as it can get away with it. By transferring trillions of tax dollars and lost interest on savings from the middle classes and seniors to Wall Street during the past 7 years, the self-serving Fed has suppressed spending, labor participation, and wages for all but the wealthy, while simultaneously increasing income inequality. The Fed has a strong conflict of interest, and the country would be much better served by representative decision-making.
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And who might those "representative decision-maker[s] be? The boffos who starred in the CNN circus last night?
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Everyone in power works for the 1%. That's why there's no representative decision-making. But raising interest rates would hurt working people more than the 1%, whose income consists mostly of interest rather than wages.
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The market is not supposed to be the real economy. Can anyone tell us what the real economy is anymore? The market is a gamble and influenced by unsteady and unpredictable variables. Thus, our economy has become severely schizophrenic. Who has the courage to change this, I wonder.
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