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>Low rates were expected to help kickstart the economy and prices and wages to increase. You're confusing the sales pitch used to justify low interest rates wi

>Low rates were expected to help kickstart the economy and prices and wages to increase. You're confusing the sales pitch used to justify low interest rates with what they were expected to do. They were expected to bail out insolvent banks and save them from the consequences of their collective bad decisions. Not raise wages. Not kickstart the economy. Fiscal stimulus is how you do that and they knew that. Had politicians instead gone to unions and asked "what the fuck should we do now?" the answer likely would have been "let those fuckers go under, fire/lock up all management that had fraud going on underneath them, nationalise the systemically important institutions and counteract the economic contraction brought on by a wave of banrkuptices with fiscal stimulus." That's no good though because reliable political donors like Jamie Dimon would be in an orange jumpsuit and wages might actually go up (bad for profits). So we got the band aid that was zero interest rates that kept the current lot on Wall Street who blew up the economy and encouraged fraud in a position where they still get to direct it.

adventured 9y ago
> They were expected to bail out insolvent banks and save them from the consequences of their collective bad decisions. They were also expected to - and did - bail out homeowners, having taken the hit of losing ten plus trillion dollars in fake housing value. The Fed also took trillions of dollars worth of junk mortgages off the market, dramatically accelerating value recovery for home owners. US home owners received the largest bailout in world history by a factor of 10. The Fed successfully fully reinflated the housing bubble. The four giant US banks are making ~$90 billion a year in profit. US home owners gained $20 trillion in fake housing wealth from the bottom, courtesy of the Fed's zero rate asset reinflation party with record low mortgage rates. It's obvious who got the sweetest bailout there. The big banks love higher interest rates. Their profits go up substantially as rates go up. If they had their way, rates would be a lot higher. Rates have been kept so artificially low, for the benefit of the housing market and the stock market (ie ~100 million of the wealthiest people on earth that reside in the top 1/2 income bracket and own everything in the US).
- crdoconnor 9y ago
  Bailing out homeowners is done with loan modifications not 0% interest rates. HAMP was the closest thing we got to that but even that was done as a gift to the banks (Google for "HAMP foaming the runway" for deets). A lot of homeowners did well out of low interest rates, but that was incidental. A lot also lost their homes and were rendered homeless. Under HAMP some home owners had their homes stolen from them - they were directed to go in to arrears in order to qualify for HAMP and after the bait and switch they were foreclosed upon. In other countries fraud like that gets you sent to prison. Not America.
Economics4u 9y ago
Except that the people actually doing the research and work explained to us what they wanted to happen, and it did, and it flies in the face of your narrative. The fact that you call out Jamie Dimon as a criminal with no evidence exposes you. Thankfully most people can discern between reality and populist tripe.
AnimalMuppet 9y ago
You know, I'm not sure that I consider unions to be the gold standard for economic advice for the country. For what's good for the unions, sure. For the country as a whole? Not so much.
- crdoconnor 9y ago
  >You know, I'm not sure that I consider unions to be the gold standard for economic advice for the country. How about you tell me who you think is the gold standard for economic advice?
  - AnimalMuppet 9y ago
    How about economists? I know, they make mistakes. So do physicists. But if I need physics advice, I don't go to plumbers.
    - crdoconnor 9y ago
      Yes, I meant which economists specifically? Economists are rational economic agents similar to the people that they study. They make mistakes, but more importantly - like us - they also respond to incentives. There's an interesting set of incentives in economics departments that the physics department simply doesn't have. I might go to a physicist to fix my boiler if all the plumbers in my area were shysters.
      - dragonwriter 9y ago
        > Economists are rational economic agents similar to the people that they study. Neither economists nor the people they study are rational economic agents, as the economists that use empiricism rather than trying to bash the observations to fit neat preconceived theoretical frameworks would probably recognize.
        crdoconnor 9y ago
        A key plank of neoclassical economics - taught in every econ 101 class - is that "people respond to incentives". Do you disagree with that? Coz I think most of what they teach is bullshit and even I don't disagree with that. I don't see any reason why economists wouldn't respond to incentives too. They're people just like us, no? Perhaps not always 100% rational, but a close enough approximation.

adventured 9y ago

> They were expected to bail out insolvent banks and save them from the consequences of their collective bad decisions. They were also expected to - and did - bail out homeowners, having taken the hit of losing ten plus trillion dollars in fake housing value. The Fed also took trillions of dollars worth of junk mortgages off the market, dramatically accelerating value recovery for home owners. US home owners received the largest bailout in world history by a factor of 10. The Fed successfully fully reinflated the housing bubble. The four giant US banks are making ~$90 billion a year in profit. US home owners gained $20 trillion in fake housing wealth from the bottom, courtesy of the Fed's zero rate asset reinflation party with record low mortgage rates. It's obvious who got the sweetest bailout there. The big banks love higher interest rates. Their profits go up substantially as rates go up. If they had their way, rates would be a lot higher. Rates have been kept so artificially low, for the benefit of the housing market and the stock market (ie ~100 million of the wealthiest people on earth that reside in the top 1/2 income bracket and own everything in the US).

crdoconnor 9y ago
Bailing out homeowners is done with loan modifications not 0% interest rates. HAMP was the closest thing we got to that but even that was done as a gift to the banks (Google for "HAMP foaming the runway" for deets). A lot of homeowners did well out of low interest rates, but that was incidental. A lot also lost their homes and were rendered homeless. Under HAMP some home owners had their homes stolen from them - they were directed to go in to arrears in order to qualify for HAMP and after the bait and switch they were foreclosed upon. In other countries fraud like that gets you sent to prison. Not America.

Economics4u 9y ago

Except that the people actually doing the research and work explained to us what they wanted to happen, and it did, and it flies in the face of your narrative. The fact that you call out Jamie Dimon as a criminal with no evidence exposes you. Thankfully most people can discern between reality and populist tripe.

AnimalMuppet 9y ago

You know, I'm not sure that I consider unions to be the gold standard for economic advice for the country. For what's good for the unions, sure. For the country as a whole? Not so much.

crdoconnor 9y ago
>You know, I'm not sure that I consider unions to be the gold standard for economic advice for the country. How about you tell me who you think is the gold standard for economic advice?
- AnimalMuppet 9y ago
  How about economists? I know, they make mistakes. So do physicists. But if I need physics advice, I don't go to plumbers.
  - crdoconnor 9y ago
    Yes, I meant which economists specifically? Economists are rational economic agents similar to the people that they study. They make mistakes, but more importantly - like us - they also respond to incentives. There's an interesting set of incentives in economics departments that the physics department simply doesn't have. I might go to a physicist to fix my boiler if all the plumbers in my area were shysters.
    - dragonwriter 9y ago
      > Economists are rational economic agents similar to the people that they study. Neither economists nor the people they study are rational economic agents, as the economists that use empiricism rather than trying to bash the observations to fit neat preconceived theoretical frameworks would probably recognize.
      - crdoconnor 9y ago
        A key plank of neoclassical economics - taught in every econ 101 class - is that "people respond to incentives". Do you disagree with that? Coz I think most of what they teach is bullshit and even I don't disagree with that. I don't see any reason why economists wouldn't respond to incentives too. They're people just like us, no? Perhaps not always 100% rational, but a close enough approximation.