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Economics Discuss Yellen says she expects Fed to raise rates by year's end at the Political Forums; Originally Posted by ShivaTD Nonsense. The cost of capital (i.e. interest rate) doesn't significantly influence the creation or expansion of ...

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Old 09-30-2015, 09:02 AM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by ShivaTD View Post
Nonsense. The cost of capital (i.e. interest rate) doesn't significantly influence the creation or expansion of enterprise as it's merely rolled into the business plan.

While under-capitalization is often cited as the reason behind the failure of new enterprises that doesn't refer to the "cost of money" (i.e. interest rate) but instead that the owner didn't secure enough capital (money) to fund the start-up to begin with. This is generally reflective of the owner not having or not creating a viable business plan that identifies the capital costs of the start-up.
Obviously all you know is cost plus government contracts.

To pay double digit interest on pass book savings banks have to charge more than that in loan interest. New capital investment return has to exceed the loan interest rate. If capital costs are 11% compared to say 5% that means the investment of capital must produce 6% or more in extra return creating a barrier to capital investment.
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Old 10-01-2015, 06:35 AM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Obviously all you know is cost plus government contracts.

To pay double digit interest on pass book savings banks have to charge more than that in loan interest. New capital investment return has to exceed the loan interest rate. If capital costs are 11% compared to say 5% that means the investment of capital must produce 6% or more in extra return creating a barrier to capital investment.
The historical value of money is between 4% and 6% which is what the "interest" on money historically paid for deposit accounts. It's not double digit interest. Today, because of the Fed cutting the interest rates, the interest rate on my bank account is still less than 1% with a 1-yr CD yield of only 0.62% (Bloomberg).

Historically prime loan rates were about 7%-8% based upon the 4%-6% value of money or about 140% of the cost of the money. The current prime consumer loan rate is 2.91% or 469% of the cost of the money (Bloomberg).

The consumer is getting screwed at both ends while the banks are raking in huge profits because of the Federal Reserve's monetary policy and the Federal Reserve is making the most money because it literally creates "legal tender" by a simple computer entry (most "legal tender" is digital today) and then charges interest on the loan to the bank.
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Based upon the corruption, brutality, inhumanity, immorality, dishonesty, and incompetence of the Trump administration the White House is the dirtiest house in America and there's no known cleanser that with remove the stains of the Trump Administration.

Last edited by ShivaTD; 10-01-2015 at 06:47 AM..
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Old 10-02-2015, 08:39 AM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by ShivaTD View Post
The historical value of money is between 4% and 6% which is what the "interest" on money historically paid for deposit accounts. It's not double digit interest. Today, because of the Fed cutting the interest rates, the interest rate on my bank account is still less than 1% with a 1-yr CD yield of only 0.62% (Bloomberg).

Historically prime loan rates were about 7%-8% based upon the 4%-6% value of money or about 140% of the cost of the money. The current prime consumer loan rate is 2.91% or 469% of the cost of the money (Bloomberg).

The consumer is getting screwed at both ends while the banks are raking in huge profits because of the Federal Reserve's monetary policy and the Federal Reserve is making the most money because it literally creates "legal tender" by a simple computer entry (most "legal tender" is digital today) and then charges interest on the loan to the bank.
The comment has zero relevance to the impact of raising interest rates to support double digit returns on pass book savings accounts. That is the subject at hand. Care to comment on it?

I agree that the Federal Reserve acts to benefit big banks. Dodd Frank extended the power of the Fed without effective Congressional but is supported by many on the Left who claim to oppose the Fed.
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Old 10-02-2015, 12:54 PM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by Gordon Shumway View Post
Yellen says she expects Fed to raise rates by year's end

----------------------

so for seven years they artificially prop up the economy with qe1, qe2, qe3 and holding the fed rate at zero. now after slowing and halting qe3 they want to start raising the fed rate. can't help but notice the timing and what the next administration will have to deal with as a result.
while it needs to be done it should have already been done.
the sooner you take your medicine the sooner you'll recover.
but the timing is predictable.
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Originally Posted by AZRWinger View Post
The comment has zero relevance to the impact of raising interest rates to support double digit returns on pass book savings accounts. That is the subject at hand. Care to comment on it?

I agree that the Federal Reserve acts to benefit big banks.
I don't see anywhere in the OP where it refers to the Fed increasing the interest rates so that pass book savings accounts will pay double-digit interest rates. Is this a new right-wing conspiracy theory I'm unaware of?
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"I always had a rule, if a restaurant is dirty on the outside, it's dirty on the inside." Donald Trump

"I always had a rule, if the White House is dirty on the inside, it's dirty on the outside." ShivaTD

Based upon the corruption, brutality, inhumanity, immorality, dishonesty, and incompetence of the Trump administration the White House is the dirtiest house in America and there's no known cleanser that with remove the stains of the Trump Administration.

Last edited by ShivaTD; 10-02-2015 at 01:09 PM..
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Old 10-02-2015, 01:15 PM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by AZRWinger View Post
Dodd Frank extended the power of the Fed without effective Congressional but is supported by many on the Left who claim to oppose the Fed.
I'm not opposed to the Federal Reserve per se but I am opposed to the fact that I can't go into a Federal Reserve bank and redeem Federal Reserve notes in "lawful money" (American Eagle coins) on demand in accordance with the law.

Quote:
U.S. Code › Title 12 › Chapter 3 › Subchapter XII › 411

Federal reserve notes..... shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.
https://www.law.cornell.edu/uscode/text/12/411

The law says we can do it but we can't and our government does nothing to enforce this law. If just this one law was enforced then virtually all of the other problems with the Federal Reserve disappear.
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"I always had a rule, if a restaurant is dirty on the outside, it's dirty on the inside." Donald Trump

"I always had a rule, if the White House is dirty on the inside, it's dirty on the outside." ShivaTD

Based upon the corruption, brutality, inhumanity, immorality, dishonesty, and incompetence of the Trump administration the White House is the dirtiest house in America and there's no known cleanser that with remove the stains of the Trump Administration.
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Old 10-02-2015, 10:02 PM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by saltwn View Post
Incrementally raising it will be great. I remember a savings account when I was 17 or so that gave 8 and a half % interest. That was the highest at the time. But boy howdy them was the days. No borrowing was still 3-6% depending on your credit. Yes we need higher rates because that would be more natural. then when things loosen up again and start flowing they will come down. but frickin 1% to 2.5% is crazy and dumb. nobody can save on that.
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Originally Posted by ShivaTD View Post
I don't see anywhere in the OP where it refers to the Fed increasing the interest rates so that pass book savings accounts will pay double-digit interest rates. Is this a new right-wing conspiracy theory I'm unaware of?
Here are a.couple of.comments on raising pass book interest to.double.digits. My comments were in.response to these comments. Review the thread.
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Old 10-02-2015, 10:17 PM
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Default Re: Yellen says she expects Fed to raise rates by year's end

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Originally Posted by ShivaTD View Post
I'm not opposed to the Federal Reserve per se but I am opposed to the fact that I can't go into a Federal Reserve bank and redeem Federal Reserve notes in "lawful money" (American Eagle coins) on demand in accordance with the law.



https://www.law.cornell.edu/uscode/text/12/411

The law says we can do it but we can't and our government does nothing to enforce this law. If just this one law was enforced then virtually all of the other problems with the Federal Reserve disappear.
You ranted in several comments about how the Fed is run by and for big banks. Dodd Frank extends the power of the big banks to use the Fed to gobble up smaller competitors using arbitrary stress tests while they offset their losses using a special bailout fund financed by mandatory consumer fees. On the consumer side a junta of political appointees has unrestrained power to dictate consumer credit and to poke into personal financial records. Both these agencies are funded directly by the FED making them effectively beyond the oversight of Congress.
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