In layman’s terms why the gov gets to decide that people are spending too much money and interest rates need to be raised? Maybe that’s too much question for laymen’s terms but if possible the simpler the better or even a link would be great. Googling it is giving me a headache.
I know it’s like to get locked up before long but I don’t care about colors or sides. I’ve just never understood how or why they have the right to decide how or when I can spend my money.
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Print to much money/ freebees? Then rates go up.
Demand outstrips supply = prices go up. Jack up rates and people slow down buying thus slows down inflation and increases supply. At least thats the theory anyways :)
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It's to stop inflation?
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Well, if the inflation reduction act is an example the way to stop inflation is to spend more money than you got on shit that you do not need!Originally Posted by Ckfishin
The Fed does not determine when you spend your own money. If you pay cash (no loan) the Fed’s actions on interest rates have little effect. The Fed is given two responsibilities by Congress regarding the economy, control inflation and try to achieve “full employment”. Sometimes these are mutually exclusive. Interest rates are a blunt instrument but it’s all they have.
the fed reserve started in the early 1900's so it has nothing to do with the founding of the country or the constitution.
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obama phones
The lifeline phone program started in 1984/1985 under a different president. Cell phones made it cheaper than land lines. Probably doesn't go along with your talking points, but here's a link to the program and history.
https://www.fcc.gov/lifeline-consumers
My understanding (which some smarter than me can correct) is the government sets the interest rate at which they lend money to banks.
that is one factor used by the free market to set consumer interest rates.
Our market economy was established in our constitution . See TCSNI'S post.
We are all born ignorant but one must work really hard to remain stupid---Ben Franklin
Again, I say raise taxes too slow the economy down......Then it's not just on the poor slobs who have to get loans for everything. Whole lot of people could care less about loan rates. And maybe you just might balance a budget for a change.
Rich people don't pay taxes.... Thats what everyone keeps saying so how would that help?
2019 BassCat Lynx 2019 250 Pro XS 4 Stroke - 2B573410
"Reality Is Often Disappointing."
Even easier than that, just take out a ton of the loopholes so everyone is paying their fair share. This way you aren't raising anything just taking away the ability for the upper 20% to rape the system.
The rich really are paying more than their fair share. Check these stats out.
<https://taxfoundation.org/data/all/federal/summary-latest-federal-income-tax-data-2023-update/#:~:text=High%2DIncome%20Taxpayers%20Paid%20the%20 Majority%20of%20Federal%20Income%20Taxes,of%20all% 20federal%20income%20taxes.>
The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent
- The average income tax rate in 2020 was 13.6 percent. The top 1 percent of taxpayers paid a 25.99 percent average rate, more than eight times higher than the 3.1 percent average rate paid by the bottom half of taxpayers.
- he top 1 percent earned 22.2 percent of total AGI and paid 42.3 percent of all federal income taxes.
Loopholes? There are no loopholes only tax code.
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Yes, interest rates are raised by the Feds to slow inflation by slowing consumer and corporate borrowing and spending. Of course, the Feds caused the inflation to begin with by printing too much money…money that was not represented by a corresponding increase in goods and service. Thus, inflation (too many dollars chasing too few goods) was the result.
"The man of system is apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his own ideal plan of government that he cannot suffer the smallest deviation from any part of it…He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.” Adam Smith, The Theory of Moral Sentiments
This!
And inflation is bad because of what it does to your savings. If inflation is running at 10%, that means the $10 you saved today would have $1 in buying power in 10 years. Think about how much you need to save for retirement in that light. Or think of the dramatic loss for folks on fixed income. And wages would not keep up. It is unsustainable, and I'm glad the Fed is doing something about it.
John
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