Economy Everything's Fine! Fed Chairman Powell Hints At Interest Rate Cut

Discussion in 'The War Room' started by Rational Poster, Jul 10, 2019.

  1. Rational Poster

    Rational Poster War Room Messiah Platinum Member

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    Not nearly directly enough compared to just giving bankers more free money.
     
  2. JonesBones

    JonesBones Excuse my contraflow

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    I watched the hearing. The very first thing Powell was asked, by Chair Maxine Waters, was about Facebook. First thing out of the gate. Libra. She is intent on taking this down. Powell agreed it is a problem.
     
  3. JonesBones

    JonesBones Excuse my contraflow

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    Do you realize lowering interest rates is bad for banks and the spread is not in their favor? It has been a terrible environment for banks. They want rates higher.
     
  4. JonesBones

    JonesBones Excuse my contraflow

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    The banking sector's profitability increases with interest rate hikes. Institutions in the banking sector such as retail banks, commercial banks, investment banks, insurance companies and brokerages have massive cash holdings due to customer balances and business activities.


    Increases in the interest rate directly increase the yield on this cash, and the proceeds go directly to earnings. An analogous situation is when the price of oil rises for oil drillers. The benefit of higher interest rates is most notable for brokerages, commercial banks and regional banks.


    https://www.investopedia.com/ask/an...anges-affect-profitability-banking-sector.asp

    To clear up this nonsense. OP clearly shows he doesn't understand the system.
     
  5. Rational Poster

    Rational Poster War Room Messiah Platinum Member

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    Yes yes, the bankers just hate getting free money.
     
  6. JonesBones

    JonesBones Excuse my contraflow

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    lol great answer. It's all about return. Low rates means lower return on their reserves. Derp. You played yourself.
     
  7. Rational Poster

    Rational Poster War Room Messiah Platinum Member

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    For the short term while rates remain low, meanwhile they just borrow as much free money at they can.
     
  8. JonesBones

    JonesBones Excuse my contraflow

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    You are tripling down on stupid. They make money from loaning and get less of a return on that. Whether they loan to other banks or regular people, they are getting less of a return. Just admit you were wrong. It isn't debatable.
     
  9. HockeyBjj

    HockeyBjj Putting on the foil

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    Having a seemingly better economy even at long term damage certainly would fit a Trump re election platform, but wouldn't it then make more sense for the rate change short term boost to happen closer to the election then?

    I feel like that happening now could run out of steam by the time November 2020 rolls around? It would make more sense for this rate change to happen February-April next year for the economy booming when voters enter the polls. Over a year off it will most likely settle, and now that gimmick for short term boost is gone.
     
  10. Rational Poster

    Rational Poster War Room Messiah Platinum Member

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    I understand how loans work, lol.

    When rates are low they'll borrow a lot and lend sparingly, it's not really that hard to understand.
     
  11. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

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    Well, I would probably defer to Powell on the issue, but it doesn't look to me like there's any strong case for raising or cutting rates. It is definitely a concern that we don't have much room to cut to either try to prevent or shorten a recession (and on top of that, we're already running very high deficits), but I'm not sure how that should affect action (we don't want to allow a preventable recession just to be in a better position to recover from it).

    It's kind of pointless now, but I think this shows why there was a case for more fiscal stimulus. It would have been much better to have done it on the spending side--with increased infrastructure spending (not the dumb plan to give tax breaks to private companies that were already doing construction, though)--or at least with a middle-class-focused tax cut. Also another reason the tariffs are such bad policy.
     
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  12. K1levelgrappler

    K1levelgrappler Brown Belt

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    Who gives a shit about this? There’s bigger fish to fry. Some wingnut saw a rainbow on a bus.
     
  13. JonesBones

    JonesBones Excuse my contraflow

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    Trump basically wants it because he thinks China can do whatever they want with their monetary policy and Trump can't, which leaves Trump at a disadvantage. So lowering rates would be a hedge to continue strength to fight the trade war.

    So, yes, Trump is doing this to offset the tariffs.
     
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  14. JonesBones

    JonesBones Excuse my contraflow

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    Are higher interest rates good for bank profits or not?

    They will borrow it from other banks who loan it at a shit rate and don't make much money on that loan. Who do you think loans banks money? Other banks. So, low returns all around.
     
  15. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

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    In a way, but broader point is that Trump just wants the Fed to slam on the gas throughout his presidency. It's pretty amazing to see the same people who were insisting that we needed to immediately raise rates with unemployment at 7%-plus (Trump among them) and very low inflation now saying that we need to cut, while simultaneously claiming that there's been some kind of fundamental improvement in the economy recently. Really drives home how the intense monetary-policy debates of the past 10 years were completely fake, that Republicans really don't think beyond "stimulus when there's a Republican in the WH and contractionary policy if there's a Democrat in the WH." Also should drive home that Trump and other Republicans are aware of the negative impact on the economy of tariffs.
     
  16. Richie Madano

    Richie Madano White Belt

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    [​IMG]
     
  17. ShadowRun

    ShadowRun error Platinum Member

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    Projecting speculation before facts are there to support one's opinion? No way the left would never do that......
     
  18. Yorkist

    Yorkist Red Belt

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    What did you get banned for?
     
  19. Richie Madano

    Richie Madano White Belt

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    Don’t worry about it
     
  20. woodguyatl

    woodguyatl Brown Belt

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    Big banks are making a fortune by investing in the stock market which benefits from this cut. Some big banks loan out less than 15% of their deposits and invest the rest.
     

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