What do the interest rate hikes mean?

Discussion in 'Political Opinions & Beliefs' started by I justsayin, Dec 20, 2015.

  1. I justsayin

    I justsayin Well-Known Member

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  2. geofree

    geofree Active Member

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    When inflation feed stock prices the federal reserve lets it run. But, when inflation starts increasing wages, the federal reserve slams on the brakes. The rich must be protected from competition, at all costs.

    If millions of poor working people lose their jobs as a result, that is a sacrifice the rich are willing to make.
     
  3. Bluespade

    Bluespade Banned

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    ya, not really. Rasing interest rates means, Wall Street's free ride is over.
     
  4. I justsayin

    I justsayin Well-Known Member

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    Ok I'm confused.

    - - - Updated - - -

    Who gains, who loses? Is the recession coming?
     
  5. Bluespade

    Bluespade Banned

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    Most likely, it will be a market correction again. The fed, keeping rates so artificially low, has served as putting off the inevitable.
     
  6. I justsayin

    I justsayin Well-Known Member

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    Which is?
     
  7. Bluespade

    Bluespade Banned

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    Which is what?
    Our "recovery" was built on a false presence that the market was actually recovering. It wasn't, it was being pumped up by artificial interest rates, mark my words, we're starting another recession in the face. The market will ween itself off bogus interest rates, then the fed and Wall Street will find a new way to (*)(*)(*)(*) it up, because that's what their greed and cronyism demand.
     
  8. God & Country

    God & Country Well-Known Member

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    A market correction is putting it mildly. My retirement savings numbers are upside down for 2015 I'm old enough to grab what's left and probably will but then what,stuff the matress?
     
  9. I justsayin

    I justsayin Well-Known Member

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    Thank you. A lot fo people don't understand there is a recession coming or why.
     
  10. BrianBoo

    BrianBoo Active Member

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    I'd get with somebody else to help manage your retirement if you're that upside down this year. My retirement grew substantially this year.....granted that includes my contributions I'm maxing out plus my company matching. However, I just looked at it Friday because of the back to back bad days for the market. Backing out my contributions and company contributions and solely looking only at investment performance, I am down less than 1% on the year.

    Apple was the killer. I thought about getting out at $131/share but stayed in, and now it's at $106/share. Ugh. :cry:

     
  11. I justsayin

    I justsayin Well-Known Member

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    So the money was already effected before the hikes?
     
  12. Alucard

    Alucard New Member Past Donor

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    The country will just have to wait and see.
     
  13. bois darc chunk

    bois darc chunk Moderator Staff Member

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    This site has some good information. Rather than prepare for a recession, this rate hike is supposed to help keep inflation in check. For those with cash in banks, they will start seeing a higher return on the money they have saved. It also means those with flexible rate mortgages, car notes, or credit card debt may be seeing higher bills. For those looking to purchase a house or car, they'll likely pay a bit more after the rate increase. According to that site, rising interest rates usually indicate economic growth is firm. I'm skeptical of just how firm our economic growth is, but the interest rate hike was just 1/4 of a percent. At least that is the way I understand it. The FED has been looking to raise interest rates for a while, but the economic indicators just weren't good enough to do it before. I guess we're marginally better now… at least that's what they are banking on (pun intended.)
     
  14. katzgar

    katzgar Banned

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    the rest of the market went up nicely this year. you need to start over and not screw it up this time.
     
  15. I justsayin

    I justsayin Well-Known Member

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    So bad or good?
     
  16. cjm2003ca

    cjm2003ca Active Member

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    a .25 % is not going to do anything...a full point in over a year will do something..people will put money back in the banks so the banks can go back to making loans on housing...cd's will pay more on interest..and no one in their right mind has a ARM mortgage right now...
     
  17. bois darc chunk

    bois darc chunk Moderator Staff Member

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    Both or neither, depending on your own personal finances. It's such a small hike that it probably won't make a huge difference to any one person, but in aggregate like at the FED, the difference could be substantial especially when compared to a decade of 0% interest, at least substantial enough to keep a check on inflation.
     
  18. I justsayin

    I justsayin Well-Known Member

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    So everything about a recession is bs? How does this show an issue? Why is everybody up in arms then? Are there future hikes coming?
     
  19. I justsayin

    I justsayin Well-Known Member

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    So keeping inflation in check means what?
     
  20. cjm2003ca

    cjm2003ca Active Member

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    future hikes will be coming..inflation we have been having that for the last seven years..ever notice that you are spending more on food and rent?..and no raises?..thats what happens when they lie about it..your boss gives you a raise by using the inflation index,,so they say there in no inflation you dont get a raise and you start to fall behind...sound like this is what has been happening the last 7 years?...time to wake up
     
  21. bois darc chunk

    bois darc chunk Moderator Staff Member

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    Keeping the price of goods and services from growing faster than the rest of the economy and spiraling. When inflation kicks in, your dollar doesn't buy as much, so it's like getting a pay cut in purchasing power. Our economy runs on demand, which means people have to spend money. The amount of money most people have is finite, so when they can't buy the same groceries this month for the same amount as last month, they have to cut their budget somewhere else. Many have no place in the budget to cut, so they go without. Lots of Americans live paycheck to paycheck, so inflation is not desirable. The FED does an intricate, complicated, and manipulative dance with the money supply to keep the economy under control. The only reason this rate hike is newsworthy is because it is the first hike in a decade.
     
  22. Stevew

    Stevew Well-Known Member

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    The so-called inflation we've had in recent years are due to the falling dollar for several years. The dollar finally strengthened about 14 or 15 months ago, likely due to confidence from political changes and the Euro is questionable. The usual Fed rate hikes have historically been in 1% increments, so the Fed isn't confident they are doing the right thing. But they've got to get above zero.

    Steve
     
  23. Deckel

    Deckel Well-Known Member Past Donor

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    We have had effectively zero percent inflation most of the year. I would say that it is well in check.
     
  24. cjm2003ca

    cjm2003ca Active Member

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    they never raise interest rates 1% at a time..
     
  25. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I don't believe the rates have been "artificially" low. I know it is popular to blame the Fed, but Bernanke wrote this piece, and I think he has a point:

    http://www.brookings.edu/blogs/ben-bernanke/posts/2015/03/30-why-interest-rates-so-low

    The point is that the interest rate the Fed sets can only deviate from the "equilibrium" rate for a short period of time. That means that the Fed cannot manipulate the equilibrium rate for too long, definitely not for 8 years. Why has the equilibrium interest rate been so low? Low economic growth coupled with too much capital searching for a return on investment. Why is that capital not invested? Because low demand makes return on investment unlikely.

    I know the response will be "too many regulations and taxes". However, if demand was high, businesses would invest even in the presence of those. How can demand be high when jobs are continuously being offshored and real wages keep shrinking?
     

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