4 ms·

Here you go: https://en.wikipedia.org/wiki/IS%E2%80%93LM_model https://en.wikipedia.org/wiki/IS%E2%80%93LM_model From the article: I(r) represents business inv

Here you go: https://en.wikipedia.org/wiki/IS%E2%80%93LM_model https://en.wikipedia.org/wiki/IS%E2%80%93LM_model From the article: I(r) represents business investment decreasing as a function of the real interest rate Businesses invest less as the rate increases. That's equivalent to businesses save less as the rate decreases.

wpietri 4y ago
That's a theoretical model of a consequence. I never denied the consequence, I denied that this particular consequence is the goal for central banks. Which is why I asked for something different than what you provided.
- 1123581321 4y ago
  Central banks are famously cryptic. If you’re looking for a smoking gun, this 2020 statement by Powell might satisfy you. “If you look at P/Es they’re historically high, but in a world where the risk-free rate is going to be low for a sustained period, the equity premium, which is really the reward you get for taking equity risk, would be what you’d look at,” Powell said. As you may know, this statement was made after Powell famously reversed course on his 2018 unwind of Yellen’s put after asset prices started to fall. https://www.hindustantimes.com/world-news/powell-busts-out-fed-model-to-defend-high-equity-valuations/story-EaUaBbV06sYj8edEdT8FYO.html https://www.hindustantimes.com/world-news/powell-busts-out-f...
  - wpietri 4y ago
    Central banks are famously cryptic about some things, especially about things that may be taken as indication of future action. But they are pretty transparent about goals. E.g.: https://www.stlouisfed.org/in-plain-english/the-fed-and-the-dual-mandate https://www.stlouisfed.org/in-plain-english/the-fed-and-the-... What you have is at best an acknowledgement of a typical consequence of one kind of Fed intervention, but I don't think that's at all evidence of a goal.
    - 1123581321 4y ago
      I suppose I can only appeal to the broadly held view that investment and debt are considered to have effects on employment rates and economic growth.
      - wpietri 4y ago
        Sure. I agree that there are broad effects and never said otherwise. My objection in this subthread is to the much more specific claim "the goal of low interest rates was to force savers into riskier assets".
        1123581321 4y ago
        At no point has your question been misunderstood.

wpietri 4y ago

That's a theoretical model of a consequence. I never denied the consequence, I denied that this particular consequence is the goal for central banks. Which is why I asked for something different than what you provided.

1123581321 4y ago
Central banks are famously cryptic. If you’re looking for a smoking gun, this 2020 statement by Powell might satisfy you. “If you look at P/Es they’re historically high, but in a world where the risk-free rate is going to be low for a sustained period, the equity premium, which is really the reward you get for taking equity risk, would be what you’d look at,” Powell said. As you may know, this statement was made after Powell famously reversed course on his 2018 unwind of Yellen’s put after asset prices started to fall. https://www.hindustantimes.com/world-news/powell-busts-out-fed-model-to-defend-high-equity-valuations/story-EaUaBbV06sYj8edEdT8FYO.html https://www.hindustantimes.com/world-news/powell-busts-out-f...
- wpietri 4y ago
  Central banks are famously cryptic about some things, especially about things that may be taken as indication of future action. But they are pretty transparent about goals. E.g.: https://www.stlouisfed.org/in-plain-english/the-fed-and-the-dual-mandate https://www.stlouisfed.org/in-plain-english/the-fed-and-the-... What you have is at best an acknowledgement of a typical consequence of one kind of Fed intervention, but I don't think that's at all evidence of a goal.
  - 1123581321 4y ago
    I suppose I can only appeal to the broadly held view that investment and debt are considered to have effects on employment rates and economic growth.
    - wpietri 4y ago
      Sure. I agree that there are broad effects and never said otherwise. My objection in this subthread is to the much more specific claim "the goal of low interest rates was to force savers into riskier assets".
      - 1123581321 4y ago
        At no point has your question been misunderstood.