Thanks for breaking this down for us, Gabe. You've explained the Interest rate adjustment in simple language for folks like me to understand.(I had to cheat in General Math just to get a C ) LoL Thank You 💯😀💙🇺🇲🌊🌊
Maybe this is Econ 102. The dual mandates at the beginning of the article (price stability and high employment) imply the law mandates ~2% inflation. There is nothing in the law that says what the target should be - just to maximize the two competing objectives. The 2% objective is a recent (say last 10 year) target set by the Fed. The economy was just find under Clinton (okay, it boomed) with inflation between 2.5% and 3%.
Just interesting to note that inflation below ~1% is dangerous. If we get into deflation --- prices will be lower next month --- it can trigger rapid decline in the economy as everyone stops buying waiting for lower prices.
True - for simplicity’s sake, I was just noting the Fed’s mandate for keeping inflation down and their current target for doing so in the same place, but you’re right that the target isn’t statutory and is much newer than 1977
I think it bears mention that inflation tends to be negatively correlated with income, which is why many don't agree with the official economic viewpoint. It pays to have a Costco membership or lots of potential vendors to choose from and not to spend too much of one's income on rent or gas or groceries and clothes...
Many swing voters in the US have long used a shortcut of whether they see themselves as better off than they were 4 years ago to decide how to vote in POTUS (re)elections. This made more sense in the past, before Trump held the GOP hostage. Reaching these people was the spade work Harris et al supporters need to do and the rate cut may make that somewhat easier...
You may want to edit your post you wrote that democratic senators want the fed to raise rates by even more but the article you linked to said they wanted to lower rates by 3/4 of a percent. I checked the article because I couldn’t imagine which dems would want to raise rates.
Thank you so much for the education about this important subject. I certainly do appreciate it.
Thanks for breaking this down for us, Gabe. You've explained the Interest rate adjustment in simple language for folks like me to understand.(I had to cheat in General Math just to get a C ) LoL Thank You 💯😀💙🇺🇲🌊🌊
Glad I could help! Math was certainly not my strong suit either!
Maybe this is Econ 102. The dual mandates at the beginning of the article (price stability and high employment) imply the law mandates ~2% inflation. There is nothing in the law that says what the target should be - just to maximize the two competing objectives. The 2% objective is a recent (say last 10 year) target set by the Fed. The economy was just find under Clinton (okay, it boomed) with inflation between 2.5% and 3%.
Just interesting to note that inflation below ~1% is dangerous. If we get into deflation --- prices will be lower next month --- it can trigger rapid decline in the economy as everyone stops buying waiting for lower prices.
True - for simplicity’s sake, I was just noting the Fed’s mandate for keeping inflation down and their current target for doing so in the same place, but you’re right that the target isn’t statutory and is much newer than 1977
I think it bears mention that inflation tends to be negatively correlated with income, which is why many don't agree with the official economic viewpoint. It pays to have a Costco membership or lots of potential vendors to choose from and not to spend too much of one's income on rent or gas or groceries and clothes...
Many swing voters in the US have long used a shortcut of whether they see themselves as better off than they were 4 years ago to decide how to vote in POTUS (re)elections. This made more sense in the past, before Trump held the GOP hostage. Reaching these people was the spade work Harris et al supporters need to do and the rate cut may make that somewhat easier...
You may want to edit your post you wrote that democratic senators want the fed to raise rates by even more but the article you linked to said they wanted to lower rates by 3/4 of a percent. I checked the article because I couldn’t imagine which dems would want to raise rates.
Thanks for catching -- that should have been "lower," of course. I’ve edited accordingly.
Still reads “raise” rather than “lower “.
Whoops! Sorry Should have read your post in the app, not my email. But I love getting your emails every day. Makes me feel so much more informed!