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Why would there have been a recession if the Fed hat tipped the breaks back in 1997/1998?
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“Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324) -
They did raise through the mid 90s. It weakened growth. They only lowered rates after they realized that the expansion was coming to an end.Originally posted by HershOstropoler
Why would there have been a recession if the Fed hat tipped the breaks back in 1997/1998?I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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They only raised from the very low levels of the bank reliquification. "They only lowered rates after they realized that the expansion was coming to an end." - nope, when they smelled systemic risk for the speculators.“Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)Comment
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It may appear that way. Of course they didn't want the bubble to pop, but remember the Fed targets the iflation rate. In the late 90s the rate of inflation fell below 3% and that's why they didn't raise rates further. And of course in 2000 there bacame a threat of deflation so they lowered rates. The Fed doesn't target investment bubbles. Greenspan was aware of the bubble throughout the 90s. He even made public comments about it in the hope that it would make investors think about it. That didn't work, but the Fed never had the will to pop the bubble. They simply targeted the inflation rate. The ECB also targets the inflation rateOriginally posted by HershOstropoler
They only raised from the very low levels of the bank reliquification. "They only lowered rates after they realized that the expansion was coming to an end." - nope, when they smelled systemic risk for the speculators.
I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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"And of course in 2000 there bacame a threat of deflation so they lowered rates."
In 2000? Ah, that explains the Fed's Y2K rampjob.
Seriously, deflation was not an issue in 2000, not even for this notoriously easy Fed - they raised rates 3 times in 2000 by a total 100 bps.
"The Fed doesn't target investment bubbles."
Oh it does, just in an asymetric way.
"The ECB also targets the inflation rate"
Not exclusively.“Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)Comment
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I was refering to the 4Q. Maybe I'm 1 Q off.Originally posted by HershOstropoler
In 2000? Ah, that explains the Fed's Y2K rampjob.
Seriously, deflation was not an issue in 2000, not even for this notoriously easy Fed - they raised rates 3 times in 2000 by a total 100 bps.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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I'm curious. Is your opinion popular in Europe? Here in the US its generally considered good for the Fed to fine tune the economy and target the inflation rate at 3%.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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Interesting enough Inflation in Germany aint the Inflation measured in Portugal.
Also Inflation is measured at a completly other measurement system in US-EU so if someone was kind enough to state in which system they talk?Curse your sudden but inevitable betrayal!Comment
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The Fed targets the US inflation rate and the ECB targets the EU inflation rate.Originally posted by Main_Brain
Interesting enough Inflation in Germany aint the Inflation measured in Portugal.
Also Inflation is measured at a completly other measurement system in US-EU so if someone was kind enough to state in which system they talk?
edit: and you can't target regional inflation rates. That's a problem here in the US too.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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The 50 years following WWII are made of two parts :
- until the end of the 70s, everywhere inflation up to 2 digits, resulted in a massive transfer from lenders to borrowers; actual rates of interests, that is nominal rate less inflation, was often negative;
- in the early 80s, suddenly, inflation was reduced sharply, and quickly to the level we see now; this improved considerably the income of the rentiers, and created incidentally considerable social adverse consequences : actual rates of interest significantly positive makes much more difficult the reimbursement of loans.
This revolution has never been explained satisfactorily; I do not consider satisfying the simple affirmation that inflation is bad when you remind the fantastic prosperity enjoyed in occident between 1950 and 1974. Although I can accept that it is sound from an abstract point of view, the practical end result is worrying only because of the public debt; all great nations have now in their budget a chapter of interest representing a considerable amount of the total (in France it is around 15% of the state expenses). And this good money is send every year (and growing) for a good part abroad to unidentified people who are actually taxing the taxpayer. This illustrates that in a system where inflation has been eliminated, the borrower cannot easily reimburse, whatever he is, a state or a citizen. And this explains the reason why Central Banks have such a high preference for the low interest rates, where they should prefer low actual rates.
Sooner or later, inflation will reappear, only to make possible for the states to bear the burden of the interests.
BTW does somebody has a link to a summary of the US budget?Statistical anomaly.
The only thing necessary for the triumph of evil is for good men to do nothing.Comment
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The first places to look for data on the US are these three sites;
1) Congressional Budget Office
2)The Economic Report of the President
3)The Fed
Also go to these sites for other info;
1)The Digital Economist
2)Dr. John Shaw's (my old prof) datalinksI drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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Kidicious, thanks.
Excellent links.
In the Digital Economist : in fiscal 2002, Interests 332 billions (19% of the Federal budget).Statistical anomaly.
The only thing necessary for the triumph of evil is for good men to do nothing.Comment
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Re: What is the ECB thinking?
The 2% max. inflation is the superior goal of the ECB, as defined by its status. ECB experts decide how to reach this goal, but they do not decide what the goal is. It would take a EU summit to stop this nonsense.Originally posted by Kidicious
I know, they want to ring the last bit of inflation out of the economy. Why are they so paranoid about inflation?"I have been reading up on the universe and have come to the conclusion that the universe is a good thing." -- Dissident
"I never had the need to have a boner." -- Dissident
"I have never cut off my penis when I was upset over a girl." -- DisComment
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"The 2% max. inflation is the superior goal of the ECB, as defined by its status."
Aha. Care to tell me in which article of the ECT or the ESCB statute the 2 % is enshrined?“Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)Comment
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SOrry, I haven't browsed the statutes of the ECB, but what I gather from the Treaty establishing the European community :
Article 8
A European system of central banks (hereinafter referred to as "ESCB") and a European Central Bank (hereinafter referred to as "ECB") shall be established in accordance with the procedures laid down in this Treaty; they shall act within the limits of the powers conferred upon them by this Treaty and by the Statute of the ESCB and of the ECB (hereinafter referred to as "Statute of the ESCB") annexed thereto.
Article 105
1. The primary objective of the ESCB shall be to maintain price stability.
From the ECB brochure :
The ECB has announced a precise definition of its primary goal. Price stability has been defined as a year-on-year increasein consumer prices in below 2%
My bad, the 2% limit isn't in the statute. Maybe the BCE will change its definition of price stability to allow a more lax monetary policy. I say a good definition for "price stability" would be 20% Now that would give leeway
"I have been reading up on the universe and have come to the conclusion that the universe is a good thing." -- Dissident
"I never had the need to have a boner." -- Dissident
"I have never cut off my penis when I was upset over a girl." -- DisComment
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