3 ms·
On one hand, after decades of inflation being too low, it's nice to see that the spigot works still. But it's bizarre that interest rates are being held so low
by legitster 5y ago
On one hand, after decades of inflation being too low, it's nice to see that the spigot works still.
But it's bizarre that interest rates are being held so low. It's unclear who it's supposed to help. I get that we need to boost the Covid economy, but if feels like the economy is currently running at every possible constraint - except for lack of money.
- sokoloff 5y agoThe Treasury pays over $0.5Trillion in interest every year against a total tax base of around $3.75T. Doubling the interest rate would be directly harmful to the government’s financial position. (They could of course “print” more, but at some point that’s adding to the problem more than alleviating it.) https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm https://www.treasurydirect.gov/govt/reports/ir/ir_expense.ht...
- legitster 5y agoBut this is exactly why the Federal Reserve is detached from the rest of the government. While they might coordinate with the executive branch, ultimately the Federal Reserve is supposed to follow their mandate and leave fiscal policy to Congress.
- sokoloff 5y agoYes, but it answers "who does [keeping rates this low] help?" with an answer of "all taxpayers, both now and in the near-future".