as seen on tv
Senator
http://finance.yahoo.com/news/fed-greece-dollar-145800391.html
Oops . . . just when Janet Yellen was telling us it might be safe to go back into the water (allowing interest rates to rise from their near-zero position the past 6 years).
Nope. Not gonna happen. That Greek thing. Greeks can’t pay their debts. The USA didn’t lend Greece any money. But that’s beside the point. One excuse will do as well as another, for federal manipulation of the economy.
Remember how all this happened? How zero interest rates got came about, in the first place?
1. The first reason was ‘the housing crisis’. The one where congress decreed that Fannie Mae and Freddie Mac must grant millions of zero down liar loans to people with risky repayment histories. The mortgage defaults which followed were epic, and staggered the banking business. Zero interest rates were supposedly the cure.
2. The recession. Official government statistics say the Housing Crisis led to a 6-12 month recession, depending on which set of data you buy into. But zero interest rates, which were retained as an “anti-recession” measure, outlived the recession.
3. Unemployment was bad, so we kept interest rates low. Well, it WAS bad. Over 10%. Now, according to official statistics, the unemployment rate is below 6%. Zero interest rates persist.
4. Housing prices were too low during the recovery. But now real estate prices a back to “pre crisis” levels. Zero interest rates persist.
5. Zero interest is supposed to spur banks to lend money to entrepreneurs, who want to start small businesses. But that’s not actually the sort of lending banks like to do, because so many wild-eyed “entrepreneurs” have crappy business plans and go bust right away. Think about it – how many stores used to be in that vacant strip mall you drive by every day? The banks lost money on all of them, if they did that sort of lending.
So why do we still have zero interest rates today? “Greece”
Next month it will probably be “rising crude oil prices”.
This autumn the excuse might be “recovery from the hurricane that finally hit Florida, even though they went nearly a decade without having a hurrican, due to non-wild weather”.
And so on.
The real reason we have zero interest rates is this: The massive federal debt. Once US treasury debt starts carrying a real, market based interest rate, the cost of servicing that debt (in the federal budget) is going to skyrocket by billions a year. And increase the US budget deficit by that amount.
Obama doesn’t intend to allow that to happen on his watch. He wants the next president to get saddled with the interest rate hit when the Fed finally stops interfering in the markets.
JEB - you sure you still want to be president? Have your economic advisers explained to you that "it's the economy, stupid" . . . ?
