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The Coming Change in Monetary Policy

28 点作者 dirtyaura将近 10 年前

6 条评论

phkahler将近 10 年前
They will raise rates very slowly this time. Greenspan even admitted that jerking the rates up was partly to blame for the 2008 crisis. They put rates near zero, then jacked them up a few years later. Then had an oh-shit moment and dropped them to zero.<p><a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Federal_funds_rate#&#x2F;media&#x2F;File:Federal_Funds_Rate_1954_thru_2009_effective.svg" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Federal_funds_rate#&#x2F;media&#x2F;File...</a><p>Mortgage rates follow but don&#x27;t match the fed funds rate. Home prices vary inversely with interest rates. Falling rates generally mean rising home prices. So with rates near zero, there is only one thing for housing prices to do - fall when they raise rates. The only hope is that inflation will balance the fall in home prices caused by raising the rates. Otherwise, prepare for crisis part II.
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snowwrestler将近 10 年前
As Fred says, the Fed has been telegraphing their rate increases for a while, which means that the market has largely priced them in. For example the market basically did not react at all to Yellen&#x27;s press conference last week.<p>The whole point of the Fed deciding to raise interest rates is that it means that the Fed believes that the economy is strong enough to start removing fiscal support. If they are right, then there should actually be not a huge effect on valuations.
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tomcam将近 10 年前
Not addressed: that artificially low interest rates have a ruinous effect on savings, and therefore affect old people disproportionately.
stephengillie将近 10 年前
Does this mean that insane valuations (like Uber) will either get reduced, or start to make sense?
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MCRed将近 10 年前
If you really want to understand what&#x27;s happening in the economy, with advance notice, read <a href="http:&#x2F;&#x2F;mises.org" rel="nofollow">http:&#x2F;&#x2F;mises.org</a>. That site has hundreds of economics books for free (great reading!) but also regular news articles.<p>For instance, in 2001, before 9&#x2F;11 (IIRC) there was an article there about how as a response to the DotCom boom the low interest rates plus changes in the CRA would be causing a housing boom and bubble over the next decade.<p>In 2001 there was no boom, and after 9&#x2F;11 the economy was bad. But that advice proved true, and gave me 6 years to time to invest based on the housing bubble hypothesis (alas I never found a way to short houses and wasn&#x27;t the kind of person who could have bought CDOs against the foolishness) ... and I got out of the market very near its peak in 2007.<p>Unlike what politicians would want you to believe, Economics is a science and the consequences of actions in economics are pretty close to those in physics. They can pretend like one president or another is responsible. (the Housing Bubble was the result of the actions of Clinton and Bush, and actually Obama who was a lawyer in the lawsuit that claimed &quot;lending only to people who can afford to repay the loans is racist&quot;... and like economics predicted (That banks want money and will disregard race) in the end it turned out that they weren&#x27;t being racist but were lending based on likelihood of repayment... and the winners in Obama&#x27;s class action lawsuit got their loans... and defaulted.)<p>The consequences of the terrible actions in 2008- from the bailouts to the giving of one private bank (the federal reserve) the power to forcibly merge other banks (without regard to conflict of interest-- say one of the owners of the federal reserve wants to buy a smaller bank, he can just use the fed to force it to merge with him on terms he agrees to.... no way this will be abused, right?) .... these consequences are still playing out and have made the game much more dangerous than 2008.<p>One thing I&#x27;ve noticed is that the &quot;Black Swan&quot; events-- like 2008 which people said &quot;Tehre&#x27;s no way you could see this coming&quot; despite the popular sentiment in 2006 being &quot;there&#x27;s no way there&#x27;s a housing bubble!&quot; showing that people did, in fact, see it coming-- really are pretty predictable at least in terms of risk.<p>And the risk of a Black Swan has only been going up given the past 3 decades of irresponsible governance (under congresses and presidents from both parties.)<p>Don&#x27;t look to VCs for economic perspective. They don&#x27;t have it. All they know how to do is raise funds and collect a carry. Don&#x27;t look to political hacks like &quot;A housing bubble would be good for the economy&quot; Paul Krugman, or any politicians.... look to actual economists. (Even Keyenes disagrees with the monetary policy we&#x27;ve been following for these decades, even though the politicians claim its his idea. IT isn&#x27;t, it&#x27;s not what he said at all.)<p>The current bubble is the dollar, and they can&#x27;t raise interest rates without popping it. Whether they intend to pop it I don&#x27;t know.
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jkot将近 10 年前
Party is over.