Economics of fed rate decisions
sharkhunter
Janet Yellen is going to talk about when rates might rise or tapering might start today or tomorrow.
Here's one clue. The fed doesn't set the rate. They use what the market sets and then adjust accordingly trying to talk the market up or down before they adjust.
Look at the 3 month treasury rate. If the market rate hasn't adjusted yet before the meeting, it won't happen. Doing anything else would cause wild market gyrations and the fed isn't doing that. Janet could try to talk the market into a December rate increase but who knows? Will she raise in December? Only if she can talk the market 3 month treasury rates up another quarter point between now and then. Tv people spends day's like they don't know. A September rate hike is not priced in the market. If Janet wanted to make the market dive, she could do it I guess. Then probably hear Trump say, you're fired.
I've read studies showing central banks around the world adjust rates to match their countries 3 month treasury rates. Then act all technical in describing when they may adjust rates again. Markets used to work fine without central banks. Now we get everyone waiting to hear what they are going to do every month.
Here's one clue. The fed doesn't set the rate. They use what the market sets and then adjust accordingly trying to talk the market up or down before they adjust.
Look at the 3 month treasury rate. If the market rate hasn't adjusted yet before the meeting, it won't happen. Doing anything else would cause wild market gyrations and the fed isn't doing that. Janet could try to talk the market into a December rate increase but who knows? Will she raise in December? Only if she can talk the market 3 month treasury rates up another quarter point between now and then. Tv people spends day's like they don't know. A September rate hike is not priced in the market. If Janet wanted to make the market dive, she could do it I guess. Then probably hear Trump say, you're fired.
I've read studies showing central banks around the world adjust rates to match their countries 3 month treasury rates. Then act all technical in describing when they may adjust rates again. Markets used to work fine without central banks. Now we get everyone waiting to hear what they are going to do every month.
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Yellen might get replaced early next year, anyway. If the stock market keeps going up, Trump will take credit and Yellen stays on. If the market tanks, Trump will blame Yellen.
https://www.economist.com/news/finance-a…
On its face, Basic Income might sound reasonable but it would rip apart society. For most of the population, there would be no incentive to work or be productive. We'd become a nation of TV watchers and stoners. Those that did work would be condemned as the fortunate 1%. Talk about income inequality and division !
If we do reach a point where automation does most of the work, a better solution would be to offer government service, with jobs like the Civilian Conservation Corps under FDR.
Getting close. Some think machines will pass a Turing Test in 2029. Only 12 years off.
mark94: " For most of the population, there would be no incentive to work or be productive. We'd become a nation of TV watchers and stoners."
Overly cynical. I think less 10% of the population would fall into that bucket if basic income was enough to live off of. No way it would be 50%. Believe it or not, most people's motivation for work is not just to make money. There are other levels on Maslow's Pyramid they are trying to fulfill. And some also might not do "work" in the classical sense, but would still do stuff of benefit to society. An example might be people choosing to work on (free) open source software projects.
Finally, if we started it right now, might be able to pay that much, but the amount will increase as time goes on.
The next possible fed chief, Trump's economic guy has been pressured to leave but is hanging in there. I forgot his name but heard he was getting pressured to resign by his wife because he is a Jew and thought Trumps remarks last week defended the side that said something like Jews go home. Trump has said he condemns hate groups but then made that comment about defending both sides which many took to mean he defended the hate groups saying there were good people on both sides.
I just hope they raise the debt ceiling quickly and get some tax cuts quickly and get rid of health care penalties at a minimum. They should treat Heath care as a form of tax relief in my opinion and get something that works done quickly but raise the debt ceiling first so that markets and governments aren't shut down leaving investors wondering if this time, will ther be a default? Since low interest rates are causing many to invest in stocks, it might have created a bit of a bubble. I don't think it will end well if they raise rates and taper at the same time.