Why are interest rates so low?

[Snobdds]

Watch the birdie. While you were raking in the dough, the massive economic stimulus on top of an already expanding economy was burying you in guano. Interest rates are low because the Fed bought treasuries to keep them low, and all that money went right into the economy. In the olden days when there were actually adults in this country, this was known as "monetizing the deficit" and was considered a sign of the impending apocalypse. If nobody is willing to loan the government that much money, just print more.

Asset inflation has been roaring for several years now. People who think they understand economics were delighted by the gains in their stock portfolio, blithely ignoring the fact that the cash value of any investment depends on a functioning monetary system. The Fed is dancing on a tightrope without a net. There is no way they can sell their bond portfolio without bringing down the economy. There is no way the federal government can service its debt if interest rates rise enough to make bonds an attractive investment.

I expect a crash that will make 2008 look like a Sunday picnic. I expect everyone's taxes to double, because the US Government has frozen bond redemptions, and has retreated to cash only operation. If you don't like that scenario, close your eyes, click your heels together three times, and chant, "It can't happen here."

Focus...

and how does this relate to the tax cuts you railing against?

 

[ROUSTABOUT]

Because when interest is low it is easier for the government to service it's debt. Think of bonds foreign governments buy to support our economy. Less money has to be paid out. That's why they are over here buying hard assets.

 

[Larry Caldwell]

Focus...

and how does this relate to the tax cuts you railing against?

A trillion bucks.

 

[MossRoad]

I tried to start a thread on inflation here a year or so ago. It went nowhere, and I can't even find it in a search. IIRC, one phrase I posted was, "If current economic policy does not cause inflation, we know nothing about the cause of inflation."

I have a low opinion of economists. Their theories have little predictive value. I'm more of an historian. I am old enough to have seen this scenario before, and have studied enough history to know our current crunch is not unique. Substitute national debt for war reparations and we look just like the Weimar Republic.

https://www.tractorbynet.com/forums/threads/inflation.437158/

 

[Larry Caldwell]

https://www.tractorbynet.com/forums/threads/inflation.437158/

Yeah, I don't have permission to view my own thread.

 

[PuffyC]

Watch the birdie. While you were raking in the dough, the massive economic stimulus on top of an already expanding economy was burying you in guano. Interest rates are low because the Fed bought treasuries to keep them low, and all that money went right into the economy. In the olden days when there were actually adults in this country, this was known as "monetizing the deficit" and was considered a sign of the impending apocalypse. If nobody is willing to loan the government that much money, just print more.

Asset inflation has been roaring for several years now. People who think they understand economics were delighted by the gains in their stock portfolio, blithely ignoring the fact that the cash value of any investment depends on a functioning monetary system. The Fed is dancing on a tightrope without a net. There is no way they can sell their bond portfolio without bringing down the economy. There is no way the federal government can service its debt if interest rates rise enough to make bonds an attractive investment.

I expect a crash that will make 2008 look like a Sunday picnic. I expect everyone's taxes to double, because the US Government has frozen bond redemptions, and has retreated to cash only operation. If you don't like that scenario, close your eyes, click your heels together three times, and chant, "It can't happen here."

I don’t necessarily agree with all your theories but I always enjoy your insight. You seem to be one of the few who bases their opinions on more than just “because that’s what CNN/FOX news told me”. 10 thumbs up for you sir.

 

[MossRoad]

Yeah, I don't have permission to view my own thread.

Ahh, sorry about that. It was closed then removed from public view a year ago due to politics and general rudeness amongst members.

For your own information, the lead you quoted for that thread was:


"If inflation doesn't kick up this year, we really don't know what causes it. All the pieces are in place." - John Phipps

 

[jyoutz]

Larry, I see you don't understand how targeted tax cuts work....then you try to draw parallels to the 60's, which is crazy because nothing is even remotely close.

Educate your self...

IRS data proves Trump tax cuts benefited middle, working-class Americans most

Republicans’ 2017 tax reform law did exactly what was promised: It lowered taxes for all income groups.

thehill.com

I don’t know how it lowered taxes for all groups. I lost a lot of deductions In the 2018 tax bill. We always used to receive a modest tax return; now we have to pay every year. My relatives who own businesses are doing well under the new tax laws.

 

[FERLING]

The older I get the more I start to think it's all a load of BS and smoke and mirrors.

Look at the historical price of gas and diesel vs crude oil. We hit $140/barrel back in 2007-2008 and I wasn't paying $2.00/L for gas at the pumps - closer to $1.40/L. Our peak oil price set this year is under $120/barrel.

Funny how the news right now is getting spun up over monkey pox which is pretty much an STD and covid has disappeared.

Monkey Pox is the latest and greatest, Covid is old news kind of like the Flu. News likes to report on the news that attracts people to their web site.
As for gas / diesel price Big Oil has found out they can price their product at whatever price and the public continues to buy it. Remember when gas use to be higher than diesel fuel and propane & kerosene use to be dirt cheap?

 

[Hay Dude]

I don’t know how it lowered taxes for all groups. I lost a lot of deductions In the 2018 tax bill. We always used to receive a modest tax return; now we have to pay every year. My relatives who own businesses are doing well under the new tax laws.

You never take a break from pummeling people who own businesses, do you?
Maybe turn your disdain for small business loopholes towards the very government that created them?
Its not quite the utopia you make it out to be.