5 ms·

Hey look on the bright side, we have another 100bps left in rates and then QE4. After that, yeah then it gets tough, but then again, maybe we get some actual f

Hey look on the bright side, we have another 100bps left in rates and then QE4. After that, yeah then it gets tough, but then again, maybe we get some actual fiscal stimulus which maybe buys the US some China style infrastructure!

andreilys 7y ago
We will likely see negative interest rates before the Fed decides to raise
Symmetry 7y ago
We could always just end the practice of paying interest on excess reserves which the Fed started when they thought banks were collapsing but there wasn't any economic downturn back in 2008, so they needed to get the banks not to lend out the money they were pumping into them somehow. The Fed's inflation models have been predicting higher inflation than we've seen ever since. Currently the interest on required reserves (IORR) and interested on excess reserves (IOER) are both 1.6%, well above the Fed lending rate of 1.25%.
bluedevil2k 7y ago
A fiscal stimulus? Yes, let's go even more into debt than we already are.
- learc83 7y ago
  It doesn't matter how much debt we are in provided the rate of return for the investment is greater than the interest on the new debt. And that's without considering that inflation is very low, so we can print our way out of some of it.
  - bluedevil2k 7y ago
    I find it ironic that the people who say "the government should just spend tons of money because the debt doesn't matter" and don't care about punting the problem to the next generation are the same ones who say how irresponsible the Baby Boomers are for punting the environment problem to the next generation.
    - learc83 7y ago
      And you managed to both completely avoid my point and bring up generational politics.
      - bluedevil2k 7y ago
        You don't have a point, you have an opinion. You don't provide any facts or resources that prove the money spent in a fiscal stimulus returns a greater rate than the interest on it. You don't address the fact that the debt has gone up 300% over the last 20 years while the GDP is up only an average of 2.5% a year. Printing your way out of debt is not a solution, ask Argentina. Eventually your investors will lose faith in the value of the money they're getting back in return and the currency will collapse.
        learc83 7y ago
        > You don't provide any facts or resources that prove the money spent in a fiscal stimulus returns a greater rate than the interest on it. 1. I never said fiscal stimulus was guaranteed to return more than the interest to service the debt needed to pay for it. I said if it does that. My point is deficit spending == bad is not always true. 2. You didn't provide any facts or resources to prove that there exists no possible fiscal stimulus that could generate a greater return than the interest on the debt needed to pay for it. If you want resources, Google it. You'll find plenty of information backing up the claim that it is possible for deficit spending to pay for fiscal stimulus to be a net benefit. >You don't address the fact that the debt has gone up 300% over the last 20 years while the GDP is up only an average of 2.5% a year. Why are you quoting a 20 year value for the debt, but a yearly value for GDP? >Printing your way out of debt is not a solution, ask Argentina. Instead of looking at Argentina, why don't you look to the US? We've been effectively printing money since 2008 and inflation hasn't come close to going out of control. The US isn't Argentina, and saying look to Argentina is no better than people saying look to Somalia for an example of why small hands off government doesn't work.
        OCASM 7y ago

andreilys 7y ago

We will likely see negative interest rates before the Fed decides to raise

Symmetry 7y ago

We could always just end the practice of paying interest on excess reserves which the Fed started when they thought banks were collapsing but there wasn't any economic downturn back in 2008, so they needed to get the banks not to lend out the money they were pumping into them somehow. The Fed's inflation models have been predicting higher inflation than we've seen ever since. Currently the interest on required reserves (IORR) and interested on excess reserves (IOER) are both 1.6%, well above the Fed lending rate of 1.25%.

bluedevil2k 7y ago

A fiscal stimulus? Yes, let's go even more into debt than we already are.

learc83 7y ago
It doesn't matter how much debt we are in provided the rate of return for the investment is greater than the interest on the new debt. And that's without considering that inflation is very low, so we can print our way out of some of it.
- bluedevil2k 7y ago
  I find it ironic that the people who say "the government should just spend tons of money because the debt doesn't matter" and don't care about punting the problem to the next generation are the same ones who say how irresponsible the Baby Boomers are for punting the environment problem to the next generation.
  - learc83 7y ago
    And you managed to both completely avoid my point and bring up generational politics.
    - bluedevil2k 7y ago
      You don't have a point, you have an opinion. You don't provide any facts or resources that prove the money spent in a fiscal stimulus returns a greater rate than the interest on it. You don't address the fact that the debt has gone up 300% over the last 20 years while the GDP is up only an average of 2.5% a year. Printing your way out of debt is not a solution, ask Argentina. Eventually your investors will lose faith in the value of the money they're getting back in return and the currency will collapse.
      - learc83 7y ago
        > You don't provide any facts or resources that prove the money spent in a fiscal stimulus returns a greater rate than the interest on it. 1. I never said fiscal stimulus was guaranteed to return more than the interest to service the debt needed to pay for it. I said if it does that. My point is deficit spending == bad is not always true. 2. You didn't provide any facts or resources to prove that there exists no possible fiscal stimulus that could generate a greater return than the interest on the debt needed to pay for it. If you want resources, Google it. You'll find plenty of information backing up the claim that it is possible for deficit spending to pay for fiscal stimulus to be a net benefit. >You don't address the fact that the debt has gone up 300% over the last 20 years while the GDP is up only an average of 2.5% a year. Why are you quoting a 20 year value for the debt, but a yearly value for GDP? >Printing your way out of debt is not a solution, ask Argentina. Instead of looking at Argentina, why don't you look to the US? We've been effectively printing money since 2008 and inflation hasn't come close to going out of control. The US isn't Argentina, and saying look to Argentina is no better than people saying look to Somalia for an example of why small hands off government doesn't work.
        OCASM 7y ago