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Ah fun, a baseless ad hominem attack. The feds sets the prime rate which then works its way down into the corporate markets. Corporations right now are borrowi

Ah fun, a baseless ad hominem attack. The feds sets the prime rate which then works its way down into the corporate markets. Corporations right now are borrowing at 1 or 2% interest rates, but if the fed rate goes to 5% then those corporations will have to roll over their existing debt at 5 or 6%. BTW, I majored in finance in college and worked at Merrill Lynch. 12 years ago I started my own company and have 200 full-time employees. I think I know a little bit about how the economy works.

whimsicalism 5y ago
> BTW, I majored in finance in college and worked at Merrill Lynch As an intern, yes? I know enough people working sell-side to know that it doesn't give you an intimate understanding of the economy, and certainly not after an internship. > Corporations right now are borrowing at 1 or 2% interest rates, but if the fed rate goes to 5% then those corporations will have to roll over their existing debt at 5 or 6%. Fair enough. I don't think we will be seeing 5% anytime soon, nor do I think that will be necessary for a price level increase largely driven by disruption to real output due to the pandemic.
opo 5y ago
>The feds sets the prime rate... Just to clarify, the Fed doesn't directly set the prime rate, though it does have influence on it: >...Although the Federal Reserve has no direct role in setting the prime rate, many banks choose to set their prime rates based partly on the target level of the federal funds rate--the rate that banks charge each other for short-term loans--established by the Federal Open Market Committee. https://www.federalreserve.gov/faqs/credit_12846.htm https://www.federalreserve.gov/faqs/credit_12846.htm
dragonwriter 5y ago
> The feds sets the prime rate No. The Fed sets the target for the Federal Funds Rate (currently, as a range target, used to be a single rate target), which is an interbank lending rate, but don't actually set that actual rate (but it is usually very close to or within the target range.) Currently, the actual Fed Funds Rate is 0.25%, the target range is 0-0.25. The prime rate, a measure of available commercial rates, is set by banks lending decisions. It is pretty invariably higher than the Fed Funds Rate; currently, its 3.25%. > if the fed rate goes to 5% ...it would be an enormous jump from the lowest its ever been to the highest since before the 2009 crisis.
- silexia 5y ago
  You are correct on all points. I know the Fed sets the targets and can't always get what they want, but effectively in recent past they have set the general direction of these rates. I was trying to oversimplify.

whimsicalism 5y ago

> BTW, I majored in finance in college and worked at Merrill Lynch As an intern, yes? I know enough people working sell-side to know that it doesn't give you an intimate understanding of the economy, and certainly not after an internship. > Corporations right now are borrowing at 1 or 2% interest rates, but if the fed rate goes to 5% then those corporations will have to roll over their existing debt at 5 or 6%. Fair enough. I don't think we will be seeing 5% anytime soon, nor do I think that will be necessary for a price level increase largely driven by disruption to real output due to the pandemic.

opo 5y ago

>The feds sets the prime rate... Just to clarify, the Fed doesn't directly set the prime rate, though it does have influence on it: >...Although the Federal Reserve has no direct role in setting the prime rate, many banks choose to set their prime rates based partly on the target level of the federal funds rate--the rate that banks charge each other for short-term loans--established by the Federal Open Market Committee. https://www.federalreserve.gov/faqs/credit_12846.htm https://www.federalreserve.gov/faqs/credit_12846.htm

dragonwriter 5y ago

> The feds sets the prime rate No. The Fed sets the target for the Federal Funds Rate (currently, as a range target, used to be a single rate target), which is an interbank lending rate, but don't actually set that actual rate (but it is usually very close to or within the target range.) Currently, the actual Fed Funds Rate is 0.25%, the target range is 0-0.25. The prime rate, a measure of available commercial rates, is set by banks lending decisions. It is pretty invariably higher than the Fed Funds Rate; currently, its 3.25%. > if the fed rate goes to 5% ...it would be an enormous jump from the lowest its ever been to the highest since before the 2009 crisis.

silexia 5y ago
You are correct on all points. I know the Fed sets the targets and can't always get what they want, but effectively in recent past they have set the general direction of these rates. I was trying to oversimplify.