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21 sats \ 10 replies \ @kepford 21 Aug \ parent \ on: Donald Trump Does Not Know the "Correct" Interest Rate econ
I think those goals are real actually. If your think about it, it makes sense. They don't want unemployment to hi or the plebs get restless. If prices rise to high to fast you have the same problem.
From 1979 to 1983, unemployment, interest rate and inflation were in double digits. Ergo, high unemployment is caused by high interest rates.
Then in the 1990s, the Fed response to a 'smaller deficit' or a 'surplus' was lower interest rates (and a crazy stock market, irrational exuberance).
Another sign of fragility
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Setting interest rates is part of monetary policy but it shouldn't be the bedrock of economic activity
Something changed after 1995 and then another big change in response to the 2008 financial crisis
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The price of money should be determined on the market. Monetary policy is commie BS.
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Is Libor determined by market or political forces?
Treasury yields are set by daily or weekly treasury auctions. What interest rate will you lend to US govt?
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I forgot Libor disappeared and was replaced by:
SOFR is based on transactions in the Treasury repurchase market and is preferable to LIBOR since it is based on data from observable transactions rather than estimated future borrowing rates.
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Wasn't there some scandal surrounding Libor back during the Great Recession?
I suppose I could look it up, but I probably won't.
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2007 and 2008 and 2022 IIRC
Libor is 'scandalous' because sometimes their rates differ from the Federal Funds rate.
I think Libor is political, but I'd have to double check.
I would not lend to the US government, so I'm the wrong person to ask. My preference would be that nobody lend to them.
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