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So much to learn, you still have. A most basic study of the Federal Reserve would lead you to the exact opposite conclusion. They try to keep interest rates as

So much to learn, you still have. A most basic study of the Federal Reserve would lead you to the exact opposite conclusion. They try to keep interest rates as loan as possible until price inflation gets out of control. I spend a lot of time caring about this issue and all the hype about what the Federal Reserve cares about is just that-hype. They want to inflate the monetary supply all day every day and that's why they buy debt every month as part of QE-infinity. That it hasn't worked does not mean that they do not desire inflation but rather that they have no clue as to what they're doing.

tokenizer 13y ago
I'd recommend Peter Schiff or Max Kaiser for an interesting look into the Fed's QE policy minus Mainstream Media hype/ The problem with the FED, and every Keynesian economist is that they think the US will indefinitely be the world currency reserve, and that 5,000 years of gold based monetary policy is less stable than the post war economics that have given us rising inequality, lowering employment, indefinite QE, China calling for a de-Americanized world, and an interest rate ceiling of 1% (look it up, Bernanke said it!) that was the bottom rate of Greenspan. I just love when current economists tell me I'm naive, and that government debt isn't the same a debt debt... Or that there isn't a borrowing limit. The limit, is when other governments stop buying your currency. See China-Australia trading deal, China's ease on buying bonds, and look up an interesting theory on how Japan will soon stop buying US bonds, due to it's self-inflicted inflationary policy, which will force it do invest in it's own money supply soon.
- mistermann 13y ago
  Recent history would seem to indicate the US can somehow simply buy their own debt. It seems impossible to me but its been working so far.
  - tokenizer 13y ago
    You're right, however things can take a long time to run out of steam. Also, it's very interesting how much of economics relies on everyone believing in the system. I'd recommend checking this video out: http://www.youtube.com/watch?v=BH9YPtk5VB4 http://www.youtube.com/watch?v=BH9YPtk5VB4. This is what many people think. While some can definitely brush it off, many aren't.
  - jayfuerstenberg 13y ago
    Well the US is exporting its debt (counterintuitive as that sounds) overseas by buying goods made abroad. If I recall correctly 40% of US currency is actually outside the country.
- seoguru 13y ago
  Peter Schiff has been calling for hyper inflation and dollar collapse any day now for at least the last 5 years. Check out this article on mobilization and money: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... no other governments buying our bonds were needed. Nor are they needed now. As for replacing the US dollar with something else as world currency reserve, Mike Norman gives his views: http://www.youtube.com/watch?v=m5fTV4bGO0w http://www.youtube.com/watch?v=m5fTV4bGO0w
nhaehnle 13y ago
Low interest rates is exactly what you want in a normal, non-inflationary environment. It encourages lending for investment into projects that allows a rise in economic activity. The only time you don't want low interest rates is when an excessive amount of loans fuels demand-pull inflation. (Though, interestingly, high interest rates can also fuel inflation via wealth effects. Overall, I tend to think interest rates are the wrong lever, and fiscal policy should be used at all times, but that's a whole other can of issues.) So the behavior is describe is exactly what is reasonable. Now, the whole QE thing is obviously pushing on a string. The zero lower bound means it's not going to help economic activity. QE is like going to a witch doctor because all the people who could really help - in this case, the people in control of fiscal policy - can't get their heads out of their proverbial asses.

tokenizer 13y ago

I'd recommend Peter Schiff or Max Kaiser for an interesting look into the Fed's QE policy minus Mainstream Media hype/ The problem with the FED, and every Keynesian economist is that they think the US will indefinitely be the world currency reserve, and that 5,000 years of gold based monetary policy is less stable than the post war economics that have given us rising inequality, lowering employment, indefinite QE, China calling for a de-Americanized world, and an interest rate ceiling of 1% (look it up, Bernanke said it!) that was the bottom rate of Greenspan. I just love when current economists tell me I'm naive, and that government debt isn't the same a debt debt... Or that there isn't a borrowing limit. The limit, is when other governments stop buying your currency. See China-Australia trading deal, China's ease on buying bonds, and look up an interesting theory on how Japan will soon stop buying US bonds, due to it's self-inflicted inflationary policy, which will force it do invest in it's own money supply soon.

mistermann 13y ago
Recent history would seem to indicate the US can somehow simply buy their own debt. It seems impossible to me but its been working so far.
- tokenizer 13y ago
  You're right, however things can take a long time to run out of steam. Also, it's very interesting how much of economics relies on everyone believing in the system. I'd recommend checking this video out: http://www.youtube.com/watch?v=BH9YPtk5VB4 http://www.youtube.com/watch?v=BH9YPtk5VB4. This is what many people think. While some can definitely brush it off, many aren't.
- jayfuerstenberg 13y ago
  Well the US is exporting its debt (counterintuitive as that sounds) overseas by buying goods made abroad. If I recall correctly 40% of US currency is actually outside the country.
seoguru 13y ago
Peter Schiff has been calling for hyper inflation and dollar collapse any day now for at least the last 5 years. Check out this article on mobilization and money: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... no other governments buying our bonds were needed. Nor are they needed now. As for replacing the US dollar with something else as world currency reserve, Mike Norman gives his views: http://www.youtube.com/watch?v=m5fTV4bGO0w http://www.youtube.com/watch?v=m5fTV4bGO0w

nhaehnle 13y ago

Low interest rates is exactly what you want in a normal, non-inflationary environment. It encourages lending for investment into projects that allows a rise in economic activity. The only time you don't want low interest rates is when an excessive amount of loans fuels demand-pull inflation. (Though, interestingly, high interest rates can also fuel inflation via wealth effects. Overall, I tend to think interest rates are the wrong lever, and fiscal policy should be used at all times, but that's a whole other can of issues.) So the behavior is describe is exactly what is reasonable. Now, the whole QE thing is obviously pushing on a string. The zero lower bound means it's not going to help economic activity. QE is like going to a witch doctor because all the people who could really help - in this case, the people in control of fiscal policy - can't get their heads out of their proverbial asses.