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.
2008 Skeeter 21I. Yamaha 250 Series II.
2011 Toyota Tundra Crewmax 4x4.
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 :)
I don't always find schooling fish but when I do I backlash on the first cast
It's to stop inflation?
2019 BassCat Lynx 2019 250 Pro XS 4 Stroke - 2B573410
"Reality Is Often Disappointing."
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.Originally Posted by 99R93S
obama phones
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."
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
I'm in
Far too many people need and love for the government to tell them what to do, when to do it abd how to do it. They want, crave and need that oversight. They trust the government 100%.
The folks raising the rates are not affected by it. So they raise it.
This bunch is raising interest rates to "slow" the economy....and slow inflation....at the same time printing and borrowing record amounts of money. This has never been done before. They just broke a record with 2 trillion dollars in deficit in a single year. Hard to "slow" the economy, while spending like this.
Thank you Southfork, Tcesni, and Fishinfamily. Those help me understand a few things I didn’t know.
Tcesni you are correct about they don’t control you spending money. I was thinking more the average joe who maybe needs a new truck or a family looking for a home. Most of those people are going to require a loan. I should have written it out better.
The rest of you go nuts and can get it locked now
2008 Skeeter 21I. Yamaha 250 Series II.
2011 Toyota Tundra Crewmax 4x4.
You beat me to it Lake. You nailed it...the Fed gov't is spending $2Trillion more than it's income (our taxes) which is making the economy way too hot. The Fed Reserve is raising interest rates to slow it back down (to their 2% inflation target). **A good visual would be driving with 1 foot all the way down on the accelerator and other foot all the way down on the brakes.
This!
Facts!
My goal has always been to get myself in the position of not having to borrow money so when interest rates take a hike, I gain on what I have saved.
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