patrick.net

Sorry Patrick, but no, they are not "bailing out the younger generation" who they will screw also. They are bailing out high roller Wall Street gamblers with everyone else's money.

IMO the Fed's influence is vastly overrated. There is simply vast amounts of cash looking for safe places right now and that pushes down interest rates due to wealth inequality. You can see this by looking at velocity of money

There's a pretty strong correlation between velocity and interest rate and it has nothing to do with the Fed.

Wait till they go negative interest rates!

Old Savers

The impact of negative interest rates means that retired people can no longer rely on fixed income to fund their expenses because under a negative interest rate regime there are no interest payments.

Artificially low interest rates have already decimated many retirees’ savings as they have had to pull principal out because the interest payments were not large enough to fund their expenses. Under negative interest rates, the bank will perform the task of depleting and accelerating the decline of retiree's principal by taking their cut each month.

Unable to fund their own retirements, many retirees will remain in the labor force or re enter it, competing with younger workers for jobs, or risk their savings in the stock market or vote for increased retirement benefits from their governments.

Central planners are undeterrred by the predicament of the impact of negative interest rates on retirees – old people own stocks and homes too and they go up under our zero and negative interest rate policies, so they too benefit from our interest rate policies. Suck it up!

https://smaulgld.com/dark-side-negative-interest-rates/

"We are basically in the extreme bailing out the younger generation and putting it on the backs of retirees with this interest-rate policy, and I continue to think it's wrong," said Demchak in a quarterly earnings call Wednesday.

Oh, now that those low-interest-rates policies have kept up the inflated property values of old farts, it's OK to raise them. No politician ever had a problem fucking over the young to prop up the wallets of the old.

The Fed should have kept interest rates at 7% or more back in 2001 to 2010. There would have been no bubble or burst or Second Great Depression. The Fed should have let property prices fall so that the young could have bought. Then they wouldn't need to bail out the young today. Monetary policy is nothing more than jumping from one bailout to the next, with each bailout caused by its predecessor.

Good! Good!

Dan8267 says

The Fed should have kept interest rates at 7% or more back in 2001 to 2010. There would have been no bubble or burst or Second Great Depression. The Fed should have let property prices fall so that the young could have bought. Then they wouldn't need to bail out the young today. Monetary policy is nothing more than jumping from one bailout to the next, with each bailout caused by its predecessor.

That will take a revolution.

Fed is forcing America's retirees to bail out younger generation

This is non-sense. Retirees are living off the production of younger generations, not the other way around.
If anything the inflated values of assets are killing younger generations.

The elderly can create a portfolio of 60% stocks, 40% bonds funds and withdraw 4% per year. As low interest rates inflated stock values due to kick in the ass money flow follow, their portfolio balances would have increased and they would not have to rely on traditional low risk CD approach to make it through retirement. In most cases, 4% withdrawal rate can last indefinitely even in cases of significant market downturns.

tatupu70 says

If their board of directors were OK with their management staff making decisions that caused their shareholders to lose Billions of dollars, how is it the Federal Reserve's fault??

You're getting excited or your "?" key is repeating. I'm not going to waste time on your excitement. Obviously the personnel decisions result from the fact that the executives succeeded in getting the "TBTF" banks more money than ever before, via the Fed and federal bailout legislation. If the "TBTF" had been allowed to fail, they would have gone BK or been bought out. Many banks, probably most, had better management and some would have been in a position to replace the failed banks if the failures had been allowed to fail. That's how a market works, when it is allowed.

tatupu70 says

My argument is that you see the Fed bogeyman behind every tree....

That is merely a lie, not an argument. You like fights, and you seem to do nothing else. I referred already to fiscal policy, and I could also mention extraordinary legislation enacted by Congress at the behest of Hank Paulson, among other factors. The Fed did have some very significant effects though. If you think all its actions had no effect, then obviously you must conclude that its continued existence is a waste of money and it should be abolished. Congratulations, you must now vote for Ron Paul.

curious2 says

You're getting excited or your "?" key is repeating. I'm not going to waste time on your excitement.

My apologies. I will keep close tabs on the number of question marks that I use from now on.

curious2 says

Obviously the personnel decisions result from the fact that the executives succeeded in getting the "TBTF" banks more money than ever before, via the Fed and federal bailout legislation

So, what you're saying is that the directors were OK with losing Billions as long as they were able to make millions in the following years?

curious2 says

If the "TBTF" had been allowed to fail, they would have gone BK or been bought out. Many banks, probably most, had better management and some would have been in a position to replace the failed banks if the failures had been allowed to fail. That's how a market works, when it is allowed.

Some were bought out and a couple were allowed to fail. Certainly that would have been the ideal solution. Whether or not you agree, the people in charge thought there was a real risk of the economy imploding. That would have been a market "working" sure. But "working" can mean 50% unemployment, millions homeless and hungry. Wouldn't you rather have a market that was helped over that?

curious2 says

That is merely a lie, not an argument

You clearly don't know the definition of lie.

curious2 says

You like fights, and you seem to do nothing else. I referred already to fiscal policy, and I could also mention extraordinary legislation enacted by Congress at the behest of Hank Paulson, among other factors. The Fed did have some very significant effects though. If you think all its actions had no effect, then obviously you must conclude that its continued existence is a waste of money and it should be abolished. Congratulations, you must now vote for Ron Paul

That's quite amusing, coming from the poster that has picked a fight was almost everyone here. Fiscal policy is legislative action. The Fed does not control legislative actions.

The Federal Reserve actually contributes money to the Federal Government. I'm not sure abolishing it would save any money. Regardless, I think it does serve a purpose and its actions do have some effects. Just not the effects you attribute.

tatupu70 says

That's quite amusing....

Thanks. I've learned a lot from some of the PatNet posters, and I wish that I could include you in that list. Since I can't, I don't see a need to waste time on your endless questions.

curious2 says

Thanks. I've learned a lot from some of the PatNet posters, and I wish that I could include you in that list. Since I can't, I don't see a need to waste time on your endless questions.

Suit yourself. I only count two questions in my last post, but it's certainly your prerogative to answer or not answer whatever you please.

dublin hillz says

The elderly can create a portfolio of 60% stocks, 40% bonds funds and withdraw 4% per year. As low interest rates inflated stock values due to kick in the ass money flow follow, their portfolio balances would have increased and they would not have to rely on traditional low risk CD approach to make it through retirement. In most cases, 4% withdrawal rate can last indefinitely even in cases of significant market downturns

Yeah, but how many people are going to be able to come up with ~ 2M needed it invest at 4% in order to comfortably retire+

The Fed has been stealing through counterfeiting and financing war since it's inception.

Very simply stealing through inflation.

Here is a historic inflation calculator:

http://www.westegg.com/inflation/

do an experiment enter 1 dollar in 1800 and then enter 1912. You will find that you could buy a dollar's worth of goods in 1912 for 57 cents pointing out that there was deflation from 1800 until 1912.

Then from 1912 until 2014 and 1 dollar's worth of goods will cost you $24.16

The Fed steals money through counter fitting. I know this is impossible to understand for the libbys. But for the rest of you this clearly proves what the Fed does.

Indigenous, if you are going to insult people and imply they are unintelligent, at least spell "counterfeiting" correctly. Otherwise your post will become self-satire. BTW what do you have against G.Gorden Libby and his family, they are fascists.

I don't like some of the can goods

Yet no mention of the inflation thing...

Sure, seniors are being screwed by low interest rates, but that's why they got Medicare Part D.
https://en.wikipedia.org/wiki/Medicare_Part_D

Medicare Part D, also called the Medicare prescription drug benefit, is a United States federal-government program to subsidize the costs of prescription drugs and prescription drug insurance premiums for Medicare beneficiaries.

Of course when interest rates go back up they will still have their new welfare plan.

tatupu70 says

IMO the Fed's influence is vastly overrated.

You can't and will never win this argument, since the Fed could and should be abolished then. Calling pumping trillions of "liquidity" into the economy overrated influence is simply denial.

Dan8267 says

The Fed should have kept interest rates at 7% or more back in 2001 to 2010. There would have been no bubble or burst

No, the bad lending came from bad underwriting, bad appraising, bad bond rating, bad derivatives engineering, and bad due diligence.

funny thing all these bad actors doing these bad things made tons of money, the beauty of the un- or de- regulated free market.

8 million loans were foreclosed in the aftermath, and interest rate policy had JACK SHIT to do with that.

Tho Fed intervention did prevent ANOTHER 8 million loans from defaulting 2010-now.

8 million loans doesn't sound so bad until you do the math on $200,000 per of unrecoverable debt. That's a trillion or two.

Shows the $7T debt bubble we were sitting on going into the down cycle.

Now, the Fed was also responsible for policing our financial system, and that is something Greenspan and his cohorts utterly failed at, because markets cannot fail, only be failed.

Bellingham Bill says

No, the bad lending came from bad underwriting, bad appraising, bad bond rating, bad derivatives engineering, and bad due diligence.

None of that deters from the fact that very low interest rates drove tens of millions to speculate in real estate. Without demand for loans, the bubble and burst and economic collapse would not have happened.

mell says

You can't and will never win this argument, since the Fed could and should be abolished then. Calling pumping trillions of "liquidity" into the economy overrated influence is simply denial.

I'm under no illusion that I could ever change your mind.

But I didn't say putting liquidity in the market was overrated. Or at least I didn't mean to--only that claiming that the Federal Reserve sets 10 year treasuries or LIBOR is ridiculous. Interest rates are set by the market and while the Fed can influence them over short periods, the market is large enough that it sets the rates.

But saying that the Fed doesn't set rates doesn't mean they are useless and should be abolished. Being a lender of last resort is valuable. Having an independent entity control money supply is valuable as well--although I would agree that the independence of the Fed is sometimes in question.

Dan8267 says

Bellingham Bill says

No, the bad lending came from bad underwriting, bad appraising, bad bond rating, bad derivatives engineering, and bad due diligence.

None of that deters from the fact that very low interest rates drove tens of millions to speculate in real estate. Without demand for loans, the bubble and burst and economic collapse would not have happened.

Is that why there has been a real estate bubble and crash roughly every 18 years from the start of the republic until the great depression then the cycle restarted after WWII no matter what the interest rates were? Interest rates were 10% or more for the 1980's housing bubble which burst in 1989. http://www.businessinsider.com/the-economic-crash-repeated-every-generation-1800-2012-1?op=1

bob2356 says

Is that why there has been a real estate bubble and crash roughly every 18 years from the start of the republic until the great depression then the cycle restarted after WWII no matter what the interest rates were?

That is interesting, so the next one will be in 2024.

When Altimeters starts to set in on me, I'll take all of my money out of the bank and bury it somewhere.
Ask me where I hid it some two years later, when I'm drooling my 12 O Clock apple sauce.
If I guess right you can have it.

Tenpoundbass says

When Altimeters starts to set in on me

When?

(sorry, you left the door wide open)

Pneumatic tube travel will displace air travel in the not so distant future, forcing plane parts onto the Amazon Ebay juggernaut...

tatupu70 says

Tenpoundbass says

When Altimeters starts to set in on me

When?

"I think that in effect the destruction of retirement income for retirees, we have trained people their whole lives that once they retire and they are supposed to change their 401(k) and put it into kind of a less-risky fixed-rate investment portfolio, today they can't do it, they can't live on it," said Demchak. "So we are stretching out the need for people to work, we are destroying their ability to retire with the savings they have today."

True, but do we expect to enact progressive laws for Manufacturing and Innovation support when the goverment has grown 3X over the past 20 years while private sector manufacturing has shrunk 2.5x?

If not then what are the options?

SoftShell says

Pneumatic tube travel will displace air travel in the not so distant future, forcing plane parts onto the Amazon Ebay juggernaut...

Is that true? Cool!

Tax Breaks for Import Substitution.