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> recession You've got it backwards. Recessions cause rate-drops. > Try to sell an expensive car on a loan with eye watering APR of, say 10-12%. This did actu

> recession You've got it backwards. Recessions cause rate-drops. > Try to sell an expensive car on a loan with eye watering APR of, say 10-12%. This did actually happen in the past, and could very well happen again. Rate-hikes cause us to lose demand. Yes. But we can see that Toyota demand remains strong with less than 30-days-of-inventory on the average. So the rate-hikes from the current Fed plan are causing expensive cars (like EVs) to lose demand, while cheaper, more-reliable ICE / Hybrid cars from Toyota are selling like hotcakes. Yes, I'm watching interest rates and am trying to understand how our economy shifts because of them. But at this base level, EVs are doing worse (and the stats prove it), while cheaper cars (namely ICE/Hybrids) are doing far better right now than anyone expected.

ein0p 3y ago
Don’t look at recent recessions which happened under almost zero rate regime. Look at the Carter era recession. Consider as well the cost of “printing money” if the rate reaches double digits, and the cost of refinancing the existing debt load.
- dragontamer 3y ago
  You've got my wording reversed. I said: recessions cause rate-drops. Which has always been true. Rate-drops don't always cure recessions, but its one of the first moves a central bank will make to try to fix a recession. https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS That's 2020, 2007, 2000, 1990, 1981, 1979 where a recession immediately caused a rate-drop. We have to go all the way back to 1974 before we had inflation so high that the central bank kept rates high even during a recession. (Dropping rates causes inflation, so its a balancing act). Even then, interest rates dropped to bring us out of the recession of 1974. After that, we have 1969, 1959, and 1957 recessions, all three of which caused interest rates to drop. So 9/10 times, a recession caused an immediate drop in interest rates. And the last 1 time (1974), the recession _eventually_ caused the bankers to drop rates. > Consider as well the cost of “printing money” if the rate reaches double digits, and the cost of refinancing the existing debt load. You've got it backwards. Increases rates destroy money. Lower-rates print money. That's why the central bank lowers rates during recessions, its an indirect way to print money (or perhaps more accurately, expand M2). Raising rates, like what we're doing today, destroys money (or more accurately, contracts M2). We're destroying money today with 5%+ interest rates because we've seemingly made too much in the 2020 recession / COVID19.

ein0p 3y ago

Don’t look at recent recessions which happened under almost zero rate regime. Look at the Carter era recession. Consider as well the cost of “printing money” if the rate reaches double digits, and the cost of refinancing the existing debt load.

dragontamer 3y ago
You've got my wording reversed. I said: recessions cause rate-drops. Which has always been true. Rate-drops don't always cure recessions, but its one of the first moves a central bank will make to try to fix a recession. https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS That's 2020, 2007, 2000, 1990, 1981, 1979 where a recession immediately caused a rate-drop. We have to go all the way back to 1974 before we had inflation so high that the central bank kept rates high even during a recession. (Dropping rates causes inflation, so its a balancing act). Even then, interest rates dropped to bring us out of the recession of 1974. After that, we have 1969, 1959, and 1957 recessions, all three of which caused interest rates to drop. So 9/10 times, a recession caused an immediate drop in interest rates. And the last 1 time (1974), the recession _eventually_ caused the bankers to drop rates. > Consider as well the cost of “printing money” if the rate reaches double digits, and the cost of refinancing the existing debt load. You've got it backwards. Increases rates destroy money. Lower-rates print money. That's why the central bank lowers rates during recessions, its an indirect way to print money (or perhaps more accurately, expand M2). Raising rates, like what we're doing today, destroys money (or more accurately, contracts M2). We're destroying money today with 5%+ interest rates because we've seemingly made too much in the 2020 recession / COVID19.