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There is a lot of popular sentiment that misses the mark of the Fed, largely due to most Americans not taking time to study and understand it, but just seeing t
by elamje 7y ago
There is a lot of popular sentiment that misses the mark of the Fed, largely due to most Americans not taking time to study and understand it, but just seeing this large entity that has first-order effects that seem to only benefit banks and investors.
The parent here ^ seems to understand the nuance, that a lot of Fed decisions are for the CREDIT markets, not the stock markets.
I highly recommend reading the Greenspan or Bernanke biographies to hear what, and why, they use the levers that they do. There is simply too much nuance in financial markets and the Fed to play arm-chair politics about whether it is effective or not.
I just wrote a thread [0] responding to a joke going around about our first response to everything being to lower interest rates.
[0] https://mobile.twitter.com/elamje/status/1242129602040008704 https://mobile.twitter.com/elamje/status/1242129602040008704
- mindslight 7y agoLowering rates wouldn't be seen as dishonest if the Fed ever actually raised them. We're at 0% because their algorithm seems to be if (problem) lower() else party(). The response to 2008 wasn't a problem in isolation, but continuing that policy into 2010-2019 was. Rates even started going up slightly a year ago, but then got nipped in the bud to keep the stock bubble rising. I'm willing to agree that at this current point, these bailouts seem quite prudent. The problem is that after the crisis is over, the hazardous financial and business practices that necessitated the bailouts will never be reigned in, but allowed to continue thus necessitating another bailout in the future.
- waterfowl 7y ago"the Greenspan or Bernanke biographies" Which ones would you recommend? The autobiographies?
- elamje 7y agoThe Age of Turbulence, and The Courage to Act