Now, it does that at the expense of the average person, but it will definitely prop up the bubble just long enough for the next election cycle to hit.
In the same way that UBI would disproportionately benefit poor people, but considered with its downstream effects could benefit rich people too.
Youre implying the country exerting financial responsibility to control inflation isn’t good.
Not using interest rates to control inflation caused the stagflation crisis of the 70s, and ended when Volcker set rates to 20%.
This is why in a hot economy we raise rates, and in a not economy we lower them
(oversimplification, but it is a commonly provided explanation)
Not necessarily. Sure, it that money is chasing fixed assets like housing but if that money was invested into production of things to consume its not necessarily inflation inducing is it? For example, if that money went into expanding the electricity grid and production of electric cars, the pool of goods to be consumed is expanding so there is less likelihood of inflation.
People are paid salaries to work at these production facilities, which means they have more money to spend, and the competition drives people to be willing to spend more to get the outputs. Not all outputs will be scaled, those that aren't experience inflation, like food and housing today
Another way to look at this: Low interest rates can induce demand and drive inflation. But they also control the rates when financing supply-side production; so they can also ramp up supply to meet increased demand.
1. Not all goods and services are like this, obviously. Real estate is the big one that low interest rates will continue to inflate. We need legislative-side solutions to this, ideally focused at the state and local levels.
2. None of this applies if you have an economy culturally resistant to consumerism, like Japan. Everything flips on its head and things get weird. But that's not the US.
This means stocks will return less in low rates environment unless there is a lot of additional growth.
> Low interest rates make borrowing cheap, so companies flood money into real estate and stocks
also https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...
Of course, this is just one way that interest rates affect the economy, and it's important to bear in mind that lower interest rates can also stimulate investment which help to create jobs for average people as well.
Precisely! Yet the big problem in the Anglosphere is that most of that money has been invested in asset accumulation, namely housing, causing a massive housing crisis in these countries.
People like my parents, who are both 65, could just park their money at a local bank and have an FDIC-insured savings instrument that roughly tracks inflation and helps invest in the local economy. They don't have to worry about cokeheads in lower Manhattan making bets that endanger their retirements like they have numerous times.
If they do that with lower interest rates, they're more likely to lose money instead of preserving it or slightly increasing it. Which, of course, gives the cokeheads more money to gamble with.
Recently, I've heard many left wingers, as a response to Trump's tariffs, start 1) railing about taxes being too high, and that tariffs are taxes so they're bad, and 2) saying that the US trade deficit is actually wonderful because it gives us all this free money for nothing.
I know all of these are opposite positions to every one of the central views of the left of 30 years ago, but politics is a video game now. Lefties are going out of their way to repeat the old progressive refrain:
> "The way that Trump is doing it is all wrong, is a sign of mental instability, is cunning psychopathic genius and will resurrect Russia's Third Reich, but in a twisted way he has blundered into something resembling a point..."
"...the Fed shouldn't be independent and they should lower interest rates now."
Personally I trust Jerome Powell more than any other part of the government at the moment. The man is made of steel.
[0]: https://www.bloomberg.com/news/articles/2024-07-03/senator-w...
That doesn't really change what I said regarding interest rates though.
That's not the redistricting Newsom wants for 2028, and I tend to agree that Dems have to play the game right now, but I'd really like to see them present some sort of story for why it's not going to happen again.
This makes me feel dread. I just don't see him dragging moderates in the middle of the country to the polls, or getting people in the leftist part of the Democratic Party to not "but but but" their way out of voting against fascism again.
Oh well.
The seeds were planted after Nixon resigned and it was decided to re-shape the media landscape and move the overton window rightwards in the 1970s, dismantling social democracy across the west and leading to a gradual reversal of the norms of governance in the US (see Newt Gingrich).
It's been gradual, slow and methodical. It has definitely accelerated but in retrospect the intent was there from the very beginning.
If you see it that way this is just a reversion to the mean.
You could say that was when things reverted back to "normal". The FDR social reconstruction and post WW2 economic boom were the exception, anomaly. But the Scandinavian countries seem to be doing alright. Sure, they have some big size problems (Sweden in particular) but daily life for the majority in those countries appears to be better than a lot of people in the Anglosphere.
About what? Like seriously what would they even do other then try and lame duck him?
The big issue is Dem approval ratings are even lower then Trumps so how the hell are they going to gain any seats?
Add in the fact that everyone has been moving to red states for the last decade the seat re-balancing of the house is really going to favor Republicans.
Nvidia the poster-child of this "bubble" has been getting effectively cheaper every day.