The 2007 Subprime Mortgage crisis

Why? There is a monthly meeting of all the Fed-heads What does it do?

Answer from the FRB here:
Duties

It can, but typically the Board reacts to inflation. It does not "create it".

You are barking up the wrong tree. It is a market-economy that creates inflation.

That is, consumers like you and me buy things without adequate restraint (forethought) and so companies - I.e., "Supply" - that meets Demand increases prices because "the selling is good". The opposite happens in the same manner.

My point (simply): It is Jack-'n-Jill America who are responsible for price inflation ... !

What you are getting act is actually the Supply of Money (from here):

That bit is red above is dependent upon CONSUMERS and not the Fed (which simply reacts).

 

You do realize that all your answers and quoted information have been very vague about how the Fed funds rates has anything to do with setting actual prevailing interest rates in the economy?

I contend that the Fed doesn't have the legal power to simply set interest rates in the economy by simply ordering it. (Not talking about the Fed funds rate)

If you disagree, prove otherwise.

 

Frankly, it is not worth the effort. Enough is enough (for most people) ...

 

You're simply being elusive again.

And intellectually dishonest.


All I'm saying is that the Fed can't "magically" control interest rates and inflation. It's not so simple.
Anyone who believes its a just a simple matter of the Fed deciding what they should be, and "setting" it, is completely deluded and ignorant about how the whole process works.

I'll repeat it one more time: The main way the Fed attempts to change interest rates is buy borrowing or lending massive amounts of money in the economy.
Inflation is created whenever the Fed issues more new money than the value of the purchases they add to their Reserve Assets. You can't do one without creating the other.

Yes, in some cases the Fed can get away with changing interest rates without causing much inflation, but in other cases they can't, especially when it's a big shift in interest rates or it's happening over a long period of time, or if there are shocks to the economy. Just because the Fed can seem to "control" things now does not mean that they always will have the ability to do so in any situation.

 

That's not an economic fact. It's a controversial political-economic ideology.

I don't believe a lot of economists properly understand the field they are supposedly experts in. There's a lot of hairbrained economic theories being taught as established economic fact.

If the increase in the money supply and lower interest rates come along with a correlated increase in inflation, then it won't really be spurring any investment.

In essence, the Fed is basically diverting government revenues [purchasing power] into private loans. The overall economic effect wouldn't be much different than if a portion of tax revenues were lent out at subsidized low interest rates.
You can't give money to investment by taxing people more and then giving that money to them.

As they say in economics, there is no free lunch. Where would you think that wealth comes from?
It's just moving it around in complex not so obvious ways.

 

then why so afraid to show the argument for the whole world to see???

 

then why so afraid to present the best example for the whole world to see???

 

I just did, it was in reference to the part of LafayetteBis 's post I was quoting. Once again your brain wasn't able to see the connection.

Seems impossible to have a debate with you about any but the most simple topics.

 

this is true. if the govt could spur investment it would all the time and to produce huge sustained economic growth. Not knowing this makes liberals try to spur investment but it only causes what the Austrians call bubble or mal investments that actually slows down growth when the bubbles burst and then the free market must step in to reallocate investment correctly.

 

4 third time: then why so afraid to present the best example for the whole world to see???

 

do you have any idea what your subject is? Fed's job is to keep inflation and deflation at 0%[which they obviously do] to enable maximum economic growth. What is it that you don't understand??

 

You don't explain what that means, it's a very vague statement, with multiple possible semantic meanings in the context we are discussing.

Obviously the Fed has certain economic tools they can use to try to affect things in the economy, but some of those tools result in things counterproductive to other economic policy objectives they might have.

Can we agree that it's not so simple as the Fed just ordering what interest rates and inflation should be?

 

anyone can look up a definition to see what inflation means??????????????

 

Do you have any idea what yours is?
You keep bringing up non-sequiturs to this discussion, and then I assume you are trying to imply something, because that's the only way it would relate to our discussion, but then you say that's not what you were saying, so I am left wondering what your point was.

Why spout inane information with no connection to what we were talking about?

 

I wasn't referring to inflation, I was referring to your statement.

It's impossible to have a conversation with you.

 

its actually pretty simple which is why the mandate is about 0% inflation and they generally are pretty close. 1+1=2

 

Unfortunately the Fed can't just decide "hey, we want 0% inflation" and order it to be so.

When they try to change interest rates, it leads to inflation, because they have to print lots of money to pay to change those interest rates.

 

why not try Econ 101 then you participate with some sense

 

You do realize this isn't taught in Econ 101, and probably wouldn't fall under the category of "basic" economics?

Econ 101 teaches things that can be misleading, until you get much more advanced into it.

 

oh really??? so you think the GIrls Scouts have insured the mandate of 0% inflation/
deflation??

 

James M, you do realize the Fed "setting" the inflation rate or interest rates doesn't mean they have complete power over it?

You do realize what they have to do to try to "set" those targets, don't you?

 

I'm just saying, I think it's dangerous to automatically assume the Fed will have complete control over these rates in the economy, no matter what type of economic situation happens. The Fed is there to deal with short term situations, not long term.

The Fed could be "forced" to stop manipulating interest rates, and let them return to market levels, if inflation gets out of control.

It's not just some impenetrable bulwark against any economic calamity.

 

No economist says that. They say, "There is or should be a fair lunch!"

You refuse to understand that government taxation and redistribution of income is the foundation of economic fairness.

I leave you to that lack of comprehension ...

 

What does that have to do with the topic we are discussing?

I think you took my quote out of context.

What I meant was the Fed can't "magically rescue the economy" without taking purchasing power away from some other place.
Bringing up government redistribution of wealth is a different topic.

(Fed is not "the government" in this statement obviously)

 

Yes, I understood that. And, I repeat, YOU ARE QUITE WRONG!

The Fed has oversight only of financial markets. It is not in the business of managing "purchasing power" (even if that may be a consequence of interest-rate changes.) The Fed action disfavors nobody nor favors anybody! It is perfectly neutral and was designed with that virtue primarily!

You seem to think that the Fed managing interest-rates is "taking money away from personal savings". That's your belief and YOUR BELIEF ALONE.

It is the Fed's sole duty to manage interest-rates with the view of making the financial system "economically stable" - and not at the whimsy of outsider "market-players" looking for a quick-buck to take home ...