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The Fed

Wildly competent Fed Chairperson, Janet Yellen again declined to raise interest rates. Mostly due to lack of inflation. She claims she will raise by the end of the year. If you own a significant amount of bonds at this point you are a dummy.
 
Tightening now is dumb. The economy isn't growing fast enough that the breaks need to be put on.
Who does lower interest rates hurt? Savers- Good thing Americans are terrible at saving.
 

Lukey

Senator
Tightening now is dumb. The economy isn't growing fast enough that the breaks need to be put on.
Who does lower interest rates hurt? Savers- Good thing Americans are terrible at saving.
Yes, better to reward speculators and deadbeats than savers and small businesses. Oops - maybe that is why after seven years the economy isn't growing "fast enough."
 
What would a good Marxist say about this OP? Richard Wolff has spent decades studying and teaching Marxist economics, and he thinks those quibbling over interest rate hikes are missing the disease:

"Both sides of that debate celebrate capitalism.

"They differ only on how best to have government serve the reproduction of capitalism: by leaving it alone, by intervening intensely or somewhere in between.

"These days they hassle over raising, lowering or leaving interest rates unchanged.

"The possibility that capitalism - rather than the Fed or interest rates - might be the problem troubles none of these folks.

"It does not occur to them.

"Nor is that surprising given the monotonous mantra of academic economics departments and the journalists and politicians trained by them.

"The orthodox economics professoriate treats capitalism as so wonderful and 'optimal' (among their favorite words) that questioning it brings only the momentary scowl of a teacher/priest dismayed by a student's/acolyte's failure to grasp essential, universal, absolute truth."

That absolute truth involves the diminishing marginal productivity of capital's effect on mature economies like the current US example. Capital accumulation no longer serves the interest of raising per/capita GDP. Rather, it limits growth and enhances a wide variety of predatory business practices.
http://www.truth-out.org/news/item/33016-why-debates-over-the-fed-s-interest-rate-miss-the-point
 

Lukey

Senator
What would a good Marxist say about this OP? Richard Wolff has spent decades studying and teaching Marxist economics, and he thinks those quibbling over interest rate hikes are missing the disease:

"Both sides of that debate celebrate capitalism.

"They differ only on how best to have government serve the reproduction of capitalism: by leaving it alone, by intervening intensely or somewhere in between.

"These days they hassle over raising, lowering or leaving interest rates unchanged.

"The possibility that capitalism - rather than the Fed or interest rates - might be the problem troubles none of these folks.

"It does not occur to them.

"Nor is that surprising given the monotonous mantra of academic economics departments and the journalists and politicians trained by them.

"The orthodox economics professoriate treats capitalism as so wonderful and 'optimal' (among their favorite words) that questioning it brings only the momentary scowl of a teacher/priest dismayed by a student's/acolyte's failure to grasp essential, universal, absolute truth."

That absolute truth involves the diminishing marginal productivity of capital's effect on mature economies like the current US example. Capital accumulation no longer serves the interest of raising per/capita GDP. Rather, it limits growth and enhances a wide variety of predatory business practices.
http://www.truth-out.org/news/item/33016-why-debates-over-the-fed-s-interest-rate-miss-the-point
Interesting. Capitalism never has a problem when markets are kept open, transparent and free. The more government "serves" capitalism by doing anything that moves markets away from being open, transparent and free it doesn't actually "serve" capitalism at all. It serves insiders, cronies and bureaucrats, precisely how Marxist economies tend to work. I find that interesting, don't you?
 
Interesting. Capitalism never has a problem when markets are kept open, transparent and free. The more government "serves" capitalism by doing anything that moves markets away from being open, transparent and free it doesn't actually "serve" capitalism at all. It serves insiders, cronies and bureaucrats, precisely how Marxist economies tend to work. I find that interesting, don't you?
Free markets are abused just as much government controlled markets. Shall we replay the financial crisis of 2008. The banks were free and they created huge systemic risk. Then they refused to make short term loans to even the safest businesses even other banks. The financial system would have dissappeared in 2008, and you would have lost everything had Henry Paulson not walked back his free market principles.
 
Yes, better to reward speculators and deadbeats than savers and small businesses. Oops - maybe that is why after seven years the economy isn't growing "fast enough."
Let's face it, Americans are terrible at saving money. The economy as a whole will grow faster if we keep rates low.
 
Interesting. Capitalism never has a problem when markets are kept open, transparent and free. The more government "serves" capitalism by doing anything that moves markets away from being open, transparent and free it doesn't actually "serve" capitalism at all. It serves insiders, cronies and bureaucrats, precisely how Marxist economies tend to work. I find that interesting, don't you?
Not as interesting as the fable about "free markets." Markets are creations of government. They can be "free" of government regulation or "free" of insider control, but, somehow, we seem to have found the worst of both worlds for 90% of US earners. I think we need to recognize the fact that different economies and even the same economy at differing stages of development require different growth policies. Capital accumulation works well for emerging economies; however, for mature ones like the US, raising the labor/capital ratio no longer stimulates per capita GDP increases. We would be doing better today if we taxed capital to finance new infrastructure investment, imho. :)
 
Let's face it, Americans are terrible at saving money. The economy as a whole will grow faster if we keep rates low.
Unless we've arrived at the terminal stage of the production for profit economic system:
The central critique of the profits system by socialists is that the accumulation of capital ('making money') becomes increasingly detached from the process of producing economic value, leading to waste, inefficiency, and social issues. Essentially it is a distortion of proper accounting based on the assertion of the law of value instead of the "real" costs of the factors of production, objectively determined outside of social relations."
https://en.wikipedia.org/wiki/Production_for_use
 

Lukey

Senator
Not as interesting as the fable about "free markets." Markets are creations of government. They can be "free" of government regulation or "free" of insider control, but, somehow, we seem to have found the worst of both worlds for 90% of US earners. I think we need to recognize the fact that different economies and even the same economy at differing stages of development require different growth policies. Capital accumulation works well for emerging economies; however, for mature ones like the US, raising the labor/capital ratio no longer stimulates per capita GDP increases. We would be doing better today if we taxed capital to finance new infrastructure investment, imho. :)
I'm not opposed to taxing capital. I'm opposed to confiscating it in the name of "economic justice."
 

Lukey

Senator
Let's face it, Americans are terrible at saving money. The economy as a whole will grow faster if we keep rates low.
Let's face it, governments are terrible at directing economic activity. The economy as a whole will grow faster if we raise rates:

When the Fed broke ranks with Wall Street in 2014 to taper its bond purchases, it was warned of disaster but achieved a major success. Bank lending to small businesses surged until the Fed pulled back on normalization, and real GDP growth accelerated above 4% for two quarters.

The Fed’s theory that extremely low interest rates will someday cause solid growth has been disproved repeatedly. It failed in 2003-06, when the Fed held rates at 1% and then limited rate increases to only 0.25%, which channeled credit into the housing glut. Growth would have been faster and more balanced if rates had been higher. In the current recovery interest rates are even lower, but the results have been worse, with real growth averaging only 2.2%—the slowest recovery on record.


http://www.wsj.com/articles/pro-growth-tools-for-the-frozen-fed-1444169417

If we've learned anything from the dismal economic climate of the Obama years, it's that big government, interventionism, and central planning DO NOT produce economic growth. Just as we should have learned during the Great Depression. And the fall of the Soviet Union. And the ongoing slow motion fiscal train wreck that is the Eurozone...
 

Lukey

Senator
Free markets are abused just as much government controlled markets. Shall we replay the financial crisis of 2008. The banks were free and they created huge systemic risk. Then they refused to make short term loans to even the safest businesses even other banks. The financial system would have dissappeared in 2008, and you would have lost everything had Henry Paulson not walked back his free market principles.
The idea that the banks were "free" in 2008 is a fiction in the fevered minds of Marxists seeking to blame markets for government failures. The idea that Hank Paulson was pursuing "free market" principles is absurd. He worked for Goldman Sachs for crying out loud. Their current CEO is on record as saying if he had a chance to repeal Dodd Frank he would not do so as it creates barriers to entry into their book of business. Does that sound like someone endorsing "free markets" to you? You really have no clue what you are talking about here. If regulation was the answer, why are we on the verge of another "Lehman Moment:"

http://www.zerohedge.com/news/2015-10-07/shocking-100-billion-glencore-debt-emerges-next-lehman-has-arrived
 
I'm not opposed to taxing capital. I'm opposed to confiscating it in the name of "economic justice."
Are you relying on the "just distribution" of pre-tax income to serve as your moral basis for deciding levels of taxation? If so, I think you're ignoring the argument that individual citizens own nothing absent laws enacted and enforced by the state. Government distorts pre-tax incomes through rules on employment, its influence on interest rates, widely different qualities of education, and through countless other mechanisms. Hereditary elites have used government to amass their family fortunes across the centuries, and confiscating substantial portions of those generational fortunes with each passing generation in the name of economic justice can be seen as the price we pay for democracy.
 

Lukey

Senator
Are you relying on the "just distribution" of pre-tax income to serve as your moral basis for deciding levels of taxation? If so, I think you're ignoring the argument that individual citizens own nothing absent laws enacted and enforced by the state. Government distorts pre-tax incomes through rules on employment, its influence on interest rates, widely different qualities of education, and through countless other mechanisms. Hereditary elites have used government to amass their family fortunes across the centuries, and confiscating substantial portions of those generational fortunes with each passing generation in the name of economic justice can be seen as the price we pay for democracy.
I think you have it exactly backwards. The individuals control the state, not the other way around. The government owns nothing that isn't given to it by the citizens.
 
I think you have it exactly backwards. The individuals control the state, not the other way around. The government owns nothing that isn't given to it by the citizens.
When one individual steals from another, it is government that delivers justice.
 
The idea that the banks were "free" in 2008 is a fiction in the fevered minds of Marxists seeking to blame markets for government failures. The idea that Hank Paulson was pursuing "free market" principles is absurd. He worked for Goldman Sachs for crying out loud. Their current CEO is on record as saying if he had a chance to repeal Dodd Frank he would not do so as it creates barriers to entry into their book of business. Does that sound like someone endorsing "free markets" to you? You really have no clue what you are talking about here. If regulation was the answer, why are we on the verge of another "Lehman Moment:"

http://www.zerohedge.com/news/2015-10-07/shocking-100-billion-glencore-debt-emerges-next-lehman-has-arrived
How Free Markets caused 2008- Individuals were free take out a mortgage they couldn't afford, they were also free to default on them. Banks were free make loans to whoever they wanted regardless if they were qualified or not. Banks were free to offload those mortgages by bundling them into poorly constructed securities. The rating agencies were free to rate those securities and not do any homework on them. AIG was free to sell credit default swaps that weren't properly priced, and couldn't afford to pay. It seems that free markets just create risk.
 

Lukey

Senator
How Free Markets caused 2008- Individuals were free take out a mortgage they couldn't afford, they were also free to default on them. Banks were free make loans to whoever they wanted regardless if they were qualified or not. Banks were free to offload those mortgages by bundling them into poorly constructed securities. The rating agencies were free to rate those securities and not do any homework on them. AIG was free to sell credit default swaps that weren't properly priced, and couldn't afford to pay. It seems that free markets just create risk.
How is that a "free" market? Fannie Mae and Freddy Mac drove the mortgage market. They ain't a "free market" business model. So the banks were scrounging for the scraps those two agencies were leaving and yes, making more reckless loans - and were able to securitize and sell them into a market starved for yield due to the Fed's artificially low interest rates. AIG was in one of the most heavily regulated businesses on earth - insurance. None of that resembles ANYTHING even approaching the "free" market.
 
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