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SW MN | This rate chart is the Fed Fund rate I believe, which is 5.5% right now. This chart shows that historically the rate has been between 4-6%. Yet if you were to put trends on the graph, it would be downward sloping from the 1800 to 1950, with an increasing rate from 1950-1990, and then a drop to zero. The steepness of the last 2 moves (since 1950) would show more volatility in my opinion, and probably overreacted (too high, too low). Trying to stabilize inflation/spending at current rates would be "good" for many except for the massive amounts of outstanding debt held that is either held as government debt or corporate debt. A lot of corporate debt was just rolled, all the time, paying only the interest, because of artificially low rates. Now those companies need to repay that debt at a much higher rate, and it is squeezing them because a lot of people didn't think we would ever get back to this level. The deficit spending of the government means they are having to borrow at higher rates and paying more interest. It will eat a larger and larger portion of tax funds, and the "solution" to deficits will be to either continue to borrow more and more or cut spending. The entire establishment (D & R) seems to have no appetite to do the latter. Sure there are a few, but the vast majority just provide lip service.
There isn't a good, simple solution out of this. There is some pain coming down the tracks, and some corrective action is going to hurt. But pain can be a good thing. Stupid should hurt once in a while, and we haven't been letting the stupid feel the pain lately. | |
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The main reason Interest rates will go unchanged through November
