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Sustainability. The M2 is growing because interest rates are dropping. But interest rates are at 0, so they can't drop anymore. So there is reason to believe t
by ItsMonkk 6y ago
Sustainability.
The M2 is growing because interest rates are dropping. But interest rates are at 0, so they can't drop anymore. So there is reason to believe that we can not sustain our current trajectory any longer.
- deleted 6y ago[deleted]
- dragonwriter 6y ago> But interest rates are at 0, so they can't drop anymore Interest rates are not at zero [0], and interest rates, and their targets, can go negative. [1] [0] target range is currently 0-0.25%, actual is 0.08%: https://apps.newyorkfed.org/markets/autorates/fed%20funds https://apps.newyorkfed.org/markets/autorates/fed%20funds [1] https://www.investopedia.com/terms/n/negative-interest-rate-policy-nirp.asp https://www.investopedia.com/terms/n/negative-interest-rate-...
- fny 6y agoThe fed funds rate are not interest rates writ large however. This is the interest rates banks pay to borrow reserves over a short term. The markets for longer dated securities (i.e. 10Y and 30Y) more accurately reflect interest. The 10 year is currently at 1% and the 30 year at 2%.
- icefrakker 6y agoSo they are not at 0 and there is room for rate cuts.
- dragonwriter 6y ago> The fed funds rate are not interest rates writ large however They are interest rates and since they are essentially risk free, they ought to be roughly the floor of interest rates that aren't being subsidized by some other consideration. > The 10 year is currently at 1% and the 30 year at 2%. I would argue that 1% and 2% are even more clearly greater than 0% than is 0.08% (the recent effective federal funds rate), so that just reinforces the point, to the extent one agrees that they are the relevant interest rates, that interest rates are not currently at 0.