federal funds rate
Good news for consumers -- and possibly for Hillary Clinton.
Back in August, we explained the mechanics of how the Fed can tighten policy in today's world of abundant bank reserves. Now that the first policy tightening under the new framework is behind us, we can review how the Fed did it, if there were any surprises, and what trials still lie ahead.
Banks appear to be among the biggest beneficiaries of the Federal Reserve's decision to increase the cost to borrow.
It'll be an increase of one-quarter of 1 percent, which most Americans will barely notice.
In recent years, private-sector forecasters have been surprisingly accurate at forecasting changes in the unemployment rate, but they have been equally inaccurate when forecasting changes in the federal funds rate, the baseline interest rate controlled by the Fed.
All's I'm sayin' here is that we still have a lot of slack in the job market, highly elevated unemployment, and a strong rationale for aggressive monetary stimulus, not to mention fiscal stimulus, but that is blocked by government dysfunction. The message here is thus: good for the politically independent Fed for keeping the monetary pedal to the metal.
From AP: Information received since the Federal Open Market Committee met in June indicates that economic growth so far this
Wall Street banks have been saved from bankruptcy by governments that are now going bankrupt themselves; but the banks are not returning the favor. Wall Street needs to be made to pay its fair share, but how?
It now takes about 10 cents on every tax dollar collected just to pay the interest on the debt. As bad as that is, it's only because interest rates are at record lows that the debt is still manageable.