Interest Rate Pause

I like you have been generally skeptical of the “dual mandate” as it doesn’t make sense that simply creating or decreasing money creates or eliminates jobs. But realistically it isn’t that simple, there are timing issues, and monetary policies can affect employment for a period of transition. Also things have to be viewed on an international basis as we don’t have a closed system.

I am also not a huge fan of tariffs but given current geopolitics I do see the merit of industrial policy to protect vital domestic interests.

 

Would you prefer most of us work on farms as was the case 150 years ago? Surely eliminating all of those farming jobs was bad policy.

 

You know less about banks than you know about economic laws. They’ve been a terrible investment for years XLF. (up 30%) in 5 years. Big bank and regional bank performance (ex jpm) has been impacted by massive over hiring, increased capital requirements (about to get much wore 20% vs 12.5% under Basel 4) and more recently a dried up IPO market. Yet they’re still making a pile of money, down from prior year due to aforementioned reasons among others. They’re just not been good at growing earnings and in 2025 non bank financial companies are going to be a lot more attractive.

 

You know less about banks than you know about economic laws. They’ve been a terrible investment for years XLF. (up 30%) in 5 years. Big bank and regional bank performance (ex jpm) has been impacted by massive over hiring, increased capital requirements (about to get much wore 20% vs 12.5% under Basel 4) and more recently a dried up IPO market. Yet they’re still asking a pile of money, down from prior year due to aforementioned reason among others. They’re just not growing earnings

 

I’ve been setting up a TIPS ladder. At 2.5% real it’s a pretty good deal.

 

It’s hard to tell what you’re babbling about when you talk about stuff you don’t know. You seemed think banks are losing money in 2023 (impacting their investment attractiveness) and now you seem to think there’s a banking crisis (there isn’t). One thing for sure. The US has too way to many banks..

 

When all is said and done it will be 15-20% of total investment portfolio, but that plus social security would take care of most of our core spending needs.

At 2.5% real, in 25 years that doubles in real terms. That’s not sexy but it beats the hell out of 1.0% nominal interest rates and negative real rates a few years ago.

 

You’ve interjected yourself in a conversation you don’t even know what we are talking about, presumably for the sole purpose of trolling.

Nobody is predicting a bank collapse. We, mainly I, was speculating on what types of scenarios high interest rates could set off, and I said, in theory, upside down bonds on bank balance sheets could cause some stresses.

You are trying to interject a political fight where there isn’t one, but nice try though.

 

I never said monetary policy doesn’t affect employment

 

not a bad idea & high int rates are really a boon to you since you are going into retirement. No one is a profit maximizer; we are utility (happiness) maximizers. Peace of mind has a lot of value.

 

How Trumpian. Only understands the scoreboard, UE & S&P 500. Politics over people. yuck

You've been wrong for a long time. You've opposed hikes since MANY hikes ago claiming mass UE & recession & yet here we are (smashed inf & UE is ludicrously low). If you can't even learn to stop putting your hand on a hot stove there is little pt to debate.

trying to avoid covid effects as much as poss. Feb, 2022, fed funds rate = .08%, inf = 7.9%, UE = 3.8%; Now. fed funds rate = 5.25%, inf = 3.7% UE = 3.8%. I think we all know your position between those 2 dates. think of the misery what you advocated would have caused 100s of millions. update.

 

It' s political move... nothing more.

 

I never said you said that.

 

what was the pt of this then:

"I like you have been generally skeptical of the “dual mandate” as it doesn’t make sense that simply creating or decreasing money creates or eliminates jobs. But realistically it isn’t that simple, there are timing issues, and monetary policies can affect employment for a period of transition. Also things have to be viewed on an international basis as we don’t have a closed system."

 

I was trying to find a point of agreement with you. But it seems like everybody just wants to start an argument.

 

not trying to start an arg. you seem to indicate that I am skeptical of the dual mandate "as it doesn’t make sense that simply creating or decreasing money creates or eliminates jobs." Not arguing. Just sayin that that is NOT why I am against the dual mandate as I think the quoted is flat wrong. I think monetary policy does affect employment. I do not think it should be used to affect employment. Hopefully that is clear.