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Simply put, when the economy is in the shitter, the federal reserve lowers interest rates. When the economy is doing well, interest rates tend to go up.
by cj 1y ago
Simply put, when the economy is in the shitter, the federal reserve lowers interest rates. When the economy is doing well, interest rates tend to go up.
- lenerdenator 1y agoThat's the way it used to work. Then we went through a decade of stupidly-low interest rates in the 10s, while the economy was doing decently well. Maybe it was because of low interest rates. Though then you could argue capital just doesn't want to have to pay the price of operating in a borrowing environment where the average person can go down to the local bank, get a 90 day CD at 5-ish percent, and have a nice guaranteed source of steadily-growing rainy day cash, which, in turn, makes it less likely that they'll gamble it on stocks and bonds that capital holds most of its wealth in.