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Did the fed get it wrong by raising interest rates?

ghostofposterspast 8,408 1,525 January 20, 2016 at 03:10 PM
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Back when the fed didn't raise interest rates in Sept, people came out of the woodwork saying how the fed blew it. Then when Dec came around "the street" said that a interest rate was baked in and that the fed would disappoint if it didn't. So it did. Now a month later the stock market has tanked and "the street" says the fed "blew it" by raising interest rates. Even Rick Santelli who is legendary for his red faced rants about how the fed is destroying America by having low interest rates seems to have backed off. So, should the fed have raised? Should they keep raising or should they lower it back to zero?

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#2
At some point, we must ween off the drug of artificially low interest rates.
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#3
Quote from Dr. J View Post :
At some point, we must ween off the drug of artificially low interest rates.
But is that point now? If you follow the Great Depression, they did roughly where we are now in that recovery and it was a disaster. It took a World War to shake out of the second down turn many many years later.

Regardless, in today's environment when the other central banks are lowering rates which is already pressuring the dollar up, it doesn't make sense to raise our rates to put even more pressure on it.
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#4
Let the market crash. I need some good sale prices on stocks.
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"This whole.. I have XX company so my pee pee is 2" longer talk is hilarious. Who cares what company is cheapest, best, etc. Pick the company and plan you want and keep it to yourself."
#5
Absolutely not. In fact, i think they waited too long. I don't even care if it creates a short term recession (I don't think it will). It needs to be done.

1) I don't think the economy needs this artificial support
2) we need to unwind this stimulus asap
3) we need to restore these tools in case we need them in the future
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Never argue with idiots. First they bring you down to their level, then they beat you with experience.

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#6
Funny trade today. Post Fed announcement the DOW went up 150 points only to reverse and now we are down 270 points. All in the last 75 mins.
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#7
My long-terms gains going bye bye.. POOFF
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SmilieSmilie
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#8
The Bank of Japan lowered interest rates to under 0 today. That's right, they are now paying people to take their money. This is not good for us. The rest of the world is easing, we are raising. The Fed needs to reverse course. At a minimum, they need to put more than a pause on any further hikes. I'm in the camp that we will see zero again before we see another hike.
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#9
Hindsight of Fed action is always 20/20.

BOJ going negative is more indicative of their domestic struggle. Also, it is highly likely that their negative rate is due to the US QE policy. Trying to out "ease" each other is a bad policy to chase, especially when things aren't terrible or heading south.

Being a consumer, the US is more protected from international inputs (China) into the system than the other way around.
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#10
Quote from MakeitRainDolla View Post :
My long-terms gains going bye bye.. POOFF
Much worse today than when you posted. I watched my stuff burn all January and I'm probably so stupid I'll watch it burn all February and pretend it will come back soon. It's 2008/2009 part 2.
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#11
Quote from sasquatchexpress View Post :
Hindsight of Fed action is always 20/20.

BOJ going negative is more indicative of their domestic struggle. Also, it is highly likely that their negative rate is due to the US QE policy. Trying to out "ease" each other is a bad policy to chase, especially when things aren't terrible or heading south.

Being a consumer, the US is more protected from international inputs (China) into the system than the other way around.
They had to do it to fight the strong yen. Regardless of what people think of the Japanese economy, it's seen as the other reserve currency and the yen stays stubbornly strong.

Japan's economy is not what many people think. Yes, it's shrinking but not because of poor efficiency but because of a shrinking working population. The Japanese are getting old and the aren't making enough new ones. The population is shrinking. If you are of working age in Japan, you are doing fine. There just aren't enough of them. So the "fix" is to either start cranking out more babies or open the door to immigration. Since young Japanese women aren't doing their "duty" by having babies, they've opened the door a crack to immigration. Which historically was frowned upon in Japan.
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#12
Quote from Dr. J View Post :
At some point, we must ween off the drug of artificially low interest rates.
That's been said mostly by people who've been the most wrong with their economic predictions, including the the recovery, and who also predicted hyperinflation from the fiscal and economic stimulus or who want the US to return to the gold standard. So why hasn't there been an inflation problem, and why has the US had one of the best growth rates since the Great Recession?
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#13
Quote from Dr. J View Post :
At some point, we must ween off the drug of artificially low interest rates.
When and under what conditions, other than inflation?

Why doesn't it bother you that the people who've been arguing for a return to "normal" interest have been wrong on almost everything about the economy since the Great Recession started? These are the people who also believe in the gold standard, have said fiscal stimulus has done nothing good, $500B deficits in a weak economy are not austerity, and have been crowing about inflation.
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