..... interest rates [should] go up sooner rather than later.
Why?
Because money has been artificially cheap due to QE. Therefore, interest rates need to compensate for that. In fact, if interest rates had been higher earlier, then they wouldn't need to rise as much as they will need to rise in the future.
Because money has been artificially cheap due to QE. Therefore, interest rates need to compensate for that. In fact, if interest rates had been higher earlier, then they wouldn't need to rise as much as they will need to rise in the future.
Pretty much nobody denies these extremely low rates caused a housing and asset bubble. Which burst after interest rates increased but the bubble was caused by the low interest rates. That's pretty standard economics.
If it's "standard economics", give me one cite from one decent academic economist from one decent academic journal, or stop. (Please, no left-wing or right-wing crap pulled out of headlines).
Quote:
Originally Posted by asdasd
Those rates are nominal as far as I know which means that a few years of negative real interest rates caused the problems of 2008.
'Negative real interest rates....' prior to 2008? In which year was that? Where did you find this incredible piece of data?
You really have absolutely no clue of what you're talking about, do you?" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />
The monarchy in GB has no power. She calls the government into session, but that's it. If she tried to intervene, then that would be the end of the monarchy. They are kept around because the British like them, for the most part, and they're great for tourism.
Yeah, but what’s the point of calling them your leader if they’re not? She’s on the money of a dozen or so countries, for heaven’s sake; you’d think she’d’ve earned* her way there. This all seems very fragile. “It is because it is” scenarios never do well for very long. Take Microsoft. People buy Microsoft products because Microsoft is the product to buy. Now that Apple has shot an arrow through the glass facade, everything’s slowly going to come crashing down.
*Yeah, I groaned, too. Wasn’t intentional.
Funny how you clumsily denigrate foreigners, their customs, language, economies, leaders and 'Constitutional Monarchy without, I suspect, being remotely bothered that you are still fighting The War of Independance, if the words you choose are to be believed.
Not so, the pound is directly tied to the euro, so that doesn't make a difference. Also Germany is doing much better than England, some other countries too.
It depends when you look, a short while ago England was nearly bankrupt like Portugal and Greece.
Also the reason taxes aren't lowered has nothing to do with a demand for services from the government. In fact people demand less services and less government personnel, but to no avail.
The real reason behind this is that we have no real democratie, we live in a tax dictatorship. We are not protected by law not even by human rights. When you protest you ruin your live so almost no one does that.
The only thing government over here are afraid of is revolution and they tune the tax in such a way to not get over that line.
The European Parliament is installed to give local governments an excuse for very unpopular actions, because it's Europ that wants it, noting to do about that.
The pound is not directly tied to the Euro.
Germany is having problems now too. Their economic growth has slowed down dramatically.
I'd like to know where there is a demand for less services in the EU. That would be a unique situation. There are riots every time that is proposed.
Just my opinion, and please don't take this as an attack, but it seems you're very combative this morning. May I inquire why? I'm actually in a very good mood considering the huge jump with AAPL. I hope you didn't short the stock for some reason.
Just trying to point out some logical errors here, of which there are many today.
I think Merkel will be pressured by Germans to leave the EU since they are practically the only country paying for their "collective" mess. My guess is they will leave within 6 years and the entire EU will unravel soon after.
Germany's policies, which seem to be benefitting Germany, while hampering everyone else, is one of the causes of their present problems.
Because money has been artificially cheap due to QE. Therefore, interest rates need to compensate for that. In fact, if interest rates had been higher earlier, then they wouldn't need to rise as much as they will need to rise in the future.
Heh heh! Cute!
I have absolutely no idea of what you're talking about.
Funny how you clumsily denigrate foreigners, their customs, language, economies, leaders and 'Constitutional Monarchy without, I suspect, being remotely bothered that you are still fighting The War of Independance, if the words you choose are to be believed.
I see no denigration nor anything even remotely close to what you’re claiming. What are you misreading?
If it's "standard economics", give me one cite from one decent academic economist from one decent academic journal, or stop. (Please, no left-wing or right-wing crap pulled out of headlines).
Here's the IMF warning about how low interest rates are right now fueling asset bubbles.
There are plenty of papers on interest rates and bubbles. It's a trivial outcome of cheap money that people can borrow more and push up housing prices or other asset classes bought with leverage. Added to that of course cash exits low interest securities and goes seeking a yield.
As for the negative real interest rates. I doubt you even know what "real interest rates" mean. In the two graphs I linked to the nominal US interest rates fell to 1% post 2002 and the ECB was < 2%. The real interest rate is simply the nominal interest rate minus inflation. Inflation wasn't that low at that time ( in parts of the eurozond the real interest was -2 or -3%. Like Spain or Ireland. Guess what happened?).
There are plenty of papers on interest rates and bubbles. It's a trivial outcome of cheap money that people can borrow more and push up housing prices or other asset classes bought with leverage. Added to that of course cash exits low interest securities and goes seeking a yield.
As for the negative real interest rates. I doubt you even know what "real interest rates" mean. In the two graphs I linked to the nominal US interest rates fell to 1% post 2002 and the ECB was < 2%. The real interest rate is simply the nominal interest rate minus inflation. Inflation wasn't that low at that time ( in parts of the eurozond the real interest was -2 or -3%. Like Spain or Ireland. Guess what happened?).
An "IMF warning" (and a news report of that) amounts to a silly hill of beans. You are unable to show me a single decent study because there is none.
On the matter of real interest rates in the US, you simply have no idea what you're talking about. The cluelessness in your post was revealed in your prior post when you linked: (a) the data on the Fed Funds rate; and (b) the nominal rate at that. No one uses the nominal Fed Funds rate to infer real interest rates. It's typically done using TIPS.
An "IMF warning" (and a news report of that) amounts to a silly hill of beans. You are unable to show me a single decent study because there is none.
On the matter of real interest rates in the US, you simply have no idea what you're talking about. The cluelessness in your post was revealed in your prior post when you linked: (a) the data on the Fed Funds rate; and (b) the nominal rate at that. No one uses the nominal Fed Funds rate to infer real interest rates. It's typically done using TIPS.
I truly wish you would stay away from posting economic FUD (but I suppose there's no law against it): look up the data. And move along.
Sure we'll accept anonymous person on the inter web over IMF warnings about bubbles.
Looking up your data I see negative interest rates in 2012. Which doesn't seem like a very long time. In that time the housing market has "recovered" from it's 2008 nadir, which indicates my point.
Retail rates are really what matters, what are banks loaning at etc. I don't have all that data for the US, however its clear that interest rates in the US were historically low in the naughties. There is very little doubt about this historic fact regardless of whether they were really negative or not. In the Eurozone countries - which I also mentioned - many banks track the ECB rate ( trackers) and mortgages are variable. Since the ECB rate was set to help economic growth in the slow growing centre of Europe but not the fast growing periphery, from 2004 to 2008 retail mortgage rates were negative in Ireland and Spain where inflation was higher than the ECB rate. Consequently they had large housing booms ending in a housing collapse as savings flowed from the centre to the periphery of the EU.
There is no FUD on this.
I really didn't think this was in dispute, except maybe amongst the geniuses who caused the boom bust cycle.
Sure we'll accept anonymous person on the inter web over IMF warnings about bubbles.
Looking up your data I see negative interest rates in 2012. Which doesn't seem like a very long time. In that time the housing market has "recovered" from it's 2008 nadir, which indicates my point.
Retail rates are really what matters, what are banks loaning at etc. I don't have all that data for the US, however its clear that interest rates in the US were historically low in the naughties. There is very little doubt about this historic fact regardless of whether they were really negative or not. In the Eurozone countries - which I also mentioned - many banks track the ECB rate ( trackers) and mortgages are variable. Since the ECB rate was set to help economic growth in the slow growing centre of Europe but not the fast growing periphery, from 2004 to 2008 retail mortgage rates were negative in Ireland and Spain where inflation was higher than the ECB rate. Consequently they had large housing booms ending in a housing collapse as savings flowed from the centre to the periphery of the EU.
There is no FUD on this.
I really didn't think this was in dispute, except maybe amongst the geniuses who caused the boom bust cycle.
Look, I don't understand what you're trying to say.
You made a claim that "low interest rates cause bubbles". I gave you evidence that showed otherwise.
Then you said this is all "standard economics". I asked you for an academic cite. You gave me none.
Then you said you were talking about real interest rates, and gave me data on nominal Fed Funds rates. I told you that you should look at Treasury Inflation Protected Securities (TIPS) to get market-determined, real interest rates, and gave you a link.
Then you said that real interest rates were negative prior to the 2008 crisis, and I gave you actual data based on TIPS, from the Federal Reserve, that showed you were wrong with that claim.
I wish you'd stop making these bombastic statements about what are fairly subtle economic points. At this point, I'd like to move along.
Look, I don't understand what you're trying to say.
You made a claim that "low interest rates cause bubbles". I gave you evidence that showed otherwise.
Then you said this is all "standard economics". I asked you for an academic cite. You gave me none.
Then you said you were talking about real interest rates, and gave me data on nominal Fed Funds rates. I told you that you should look at Treasury Inflation Protected Securities (TIPS) to get market-determined, real interest rates, and gave you a link.
Then you said that real interest rates were negative prior to the 2008 crisis, and I gave you actual data based on TIPS, from the Federal Reserve, that showed you were wrong with that claim.
I wish you'd stop making these bombastic statements about what are fairly subtle economic points. At this point, I'd like to move along.
I gave you
1) The IMF talking about low interest rates and bubble worries.
2) A link to a clear paper on why asset prices increase with interest rate decreases.
You have attacked some details of the posts but not the substance. To hell with the TIPs. The claim that rates were negative was not material to the overall claim that low interest rates cause bubbles. Which remains standard economics despite you trying to squirrel out of the argument.
Comments
Why?
Because money has been artificially cheap due to QE. Therefore, interest rates need to compensate for that. In fact, if interest rates had been higher earlier, then they wouldn't need to rise as much as they will need to rise in the future.
Because money has been artificially cheap due to QE. Therefore, interest rates need to compensate for that. In fact, if interest rates had been higher earlier, then they wouldn't need to rise as much as they will need to rise in the future.
Groan....
Pretty much nobody denies these extremely low rates caused a housing and asset bubble. Which burst after interest rates increased but the bubble was caused by the low interest rates. That's pretty standard economics.
If it's "standard economics", give me one cite from one decent academic economist from one decent academic journal, or stop. (Please, no left-wing or right-wing crap pulled out of headlines).
Those rates are nominal as far as I know which means that a few years of negative real interest rates caused the problems of 2008.
Funny how you clumsily denigrate foreigners, their customs, language, economies, leaders and 'Constitutional Monarchy without, I suspect, being remotely bothered that you are still fighting The War of Independance, if the words you choose are to be believed.
The pound is not directly tied to the Euro.
Germany is having problems now too. Their economic growth has slowed down dramatically.
I'd like to know where there is a demand for less services in the EU. That would be a unique situation. There are riots every time that is proposed.
You read like an extremist.
Just trying to point out some logical errors here, of which there are many today.
Nope! Never short anything.
Germany's policies, which seem to be benefitting Germany, while hampering everyone else, is one of the causes of their present problems.
Heh heh! Cute!
I have absolutely no idea of what you're talking about.
I see no denigration nor anything even remotely close to what you’re claiming. What are you misreading?
Here's the IMF warning about how low interest rates are right now fueling asset bubbles.
http://www.telegraph.co.uk/finance/economics/10989500/IMF-fears-ultra-low-rates-are-fuelling-asset-bubbles.html
I suppose none if them are "academic."
There are plenty of papers on interest rates and bubbles. It's a trivial outcome of cheap money that people can borrow more and push up housing prices or other asset classes bought with leverage. Added to that of course cash exits low interest securities and goes seeking a yield.
As for the negative real interest rates. I doubt you even know what "real interest rates" mean. In the two graphs I linked to the nominal US interest rates fell to 1% post 2002 and the ECB was < 2%. The real interest rate is simply the nominal interest rate minus inflation. Inflation wasn't that low at that time ( in parts of the eurozond the real interest was -2 or -3%. Like Spain or Ireland. Guess what happened?).
Here's the IMF warning about how low interest rates are right now fueling asset bubbles.
http://www.telegraph.co.uk/finance/economics/10989500/IMF-fears-ultra-low-rates-are-fuelling-asset-bubbles.html
I suppose none if them are "academic."
There are plenty of papers on interest rates and bubbles. It's a trivial outcome of cheap money that people can borrow more and push up housing prices or other asset classes bought with leverage. Added to that of course cash exits low interest securities and goes seeking a yield.
As for the negative real interest rates. I doubt you even know what "real interest rates" mean. In the two graphs I linked to the nominal US interest rates fell to 1% post 2002 and the ECB was < 2%. The real interest rate is simply the nominal interest rate minus inflation. Inflation wasn't that low at that time ( in parts of the eurozond the real interest was -2 or -3%. Like Spain or Ireland. Guess what happened?).
An "IMF warning" (and a news report of that) amounts to a silly hill of beans. You are unable to show me a single decent study because there is none.
On the matter of real interest rates in the US, you simply have no idea what you're talking about. The cluelessness in your post was revealed in your prior post when you linked: (a) the data on the Fed Funds rate; and (b) the nominal rate at that. No one uses the nominal Fed Funds rate to infer real interest rates. It's typically done using TIPS.
Here's the actual data (you don't get to invent your own!), from the US Fed, on US real interest rates, month-by-month, for the period January 2003 - October 2014 -- it has not been negative for a very long time.
I truly wish you would stay away from posting economic FUD (but I suppose there's no law against it): look up the data. And move along.
An "IMF warning" (and a news report of that) amounts to a silly hill of beans. You are unable to show me a single decent study because there is none.
On the matter of real interest rates in the US, you simply have no idea what you're talking about. The cluelessness in your post was revealed in your prior post when you linked: (a) the data on the Fed Funds rate; and (b) the nominal rate at that. No one uses the nominal Fed Funds rate to infer real interest rates. It's typically done using TIPS.
Here's the actual data (you don't get to invent your own!), from the US Fed, on US real interest rates, month-by-month, for the period January 2003 - October 2014 -- it has not been negative for a very long time.
I truly wish you would stay away from posting economic FUD (but I suppose there's no law against it): look up the data. And move along.
Sure we'll accept anonymous person on the inter web over IMF warnings about bubbles.
Looking up your data I see negative interest rates in 2012. Which doesn't seem like a very long time. In that time the housing market has "recovered" from it's 2008 nadir, which indicates my point.
Retail rates are really what matters, what are banks loaning at etc. I don't have all that data for the US, however its clear that interest rates in the US were historically low in the naughties. There is very little doubt about this historic fact regardless of whether they were really negative or not. In the Eurozone countries - which I also mentioned - many banks track the ECB rate ( trackers) and mortgages are variable. Since the ECB rate was set to help economic growth in the slow growing centre of Europe but not the fast growing periphery, from 2004 to 2008 retail mortgage rates were negative in Ireland and Spain where inflation was higher than the ECB rate. Consequently they had large housing booms ending in a housing collapse as savings flowed from the centre to the periphery of the EU.
There is no FUD on this.
I really didn't think this was in dispute, except maybe amongst the geniuses who caused the boom bust cycle.
Anyway heres a technical discussion, of a sort.
http://marginalrevolution.com/marginalrevolution/2013/08/asset-prices-and-interest-rates.html
Sure we'll accept anonymous person on the inter web over IMF warnings about bubbles.
Looking up your data I see negative interest rates in 2012. Which doesn't seem like a very long time. In that time the housing market has "recovered" from it's 2008 nadir, which indicates my point.
Retail rates are really what matters, what are banks loaning at etc. I don't have all that data for the US, however its clear that interest rates in the US were historically low in the naughties. There is very little doubt about this historic fact regardless of whether they were really negative or not. In the Eurozone countries - which I also mentioned - many banks track the ECB rate ( trackers) and mortgages are variable. Since the ECB rate was set to help economic growth in the slow growing centre of Europe but not the fast growing periphery, from 2004 to 2008 retail mortgage rates were negative in Ireland and Spain where inflation was higher than the ECB rate. Consequently they had large housing booms ending in a housing collapse as savings flowed from the centre to the periphery of the EU.
There is no FUD on this.
I really didn't think this was in dispute, except maybe amongst the geniuses who caused the boom bust cycle.
Anyway heres a technical discussion, of a sort.
http://marginalrevolution.com/marginalrevolution/2013/08/asset-prices-and-interest-rates.html
Look, I don't understand what you're trying to say.
You made a claim that "low interest rates cause bubbles". I gave you evidence that showed otherwise.
Then you said this is all "standard economics". I asked you for an academic cite. You gave me none.
Then you said you were talking about real interest rates, and gave me data on nominal Fed Funds rates. I told you that you should look at Treasury Inflation Protected Securities (TIPS) to get market-determined, real interest rates, and gave you a link.
Then you said that real interest rates were negative prior to the 2008 crisis, and I gave you actual data based on TIPS, from the Federal Reserve, that showed you were wrong with that claim.
I wish you'd stop making these bombastic statements about what are fairly subtle economic points. At this point, I'd like to move along.
Simple mistake.
It's still doing way better than most (maybe all).
I live there I know (and I do).
Thanks but no, you got that wrong, I am what you call a realist (maybe you will some time in the future discover what I mean).
Look, I don't understand what you're trying to say.
You made a claim that "low interest rates cause bubbles". I gave you evidence that showed otherwise.
Then you said this is all "standard economics". I asked you for an academic cite. You gave me none.
Then you said you were talking about real interest rates, and gave me data on nominal Fed Funds rates. I told you that you should look at Treasury Inflation Protected Securities (TIPS) to get market-determined, real interest rates, and gave you a link.
Then you said that real interest rates were negative prior to the 2008 crisis, and I gave you actual data based on TIPS, from the Federal Reserve, that showed you were wrong with that claim.
I wish you'd stop making these bombastic statements about what are fairly subtle economic points. At this point, I'd like to move along.
I gave you
1) The IMF talking about low interest rates and bubble worries.
2) A link to a clear paper on why asset prices increase with interest rate decreases.
You have attacked some details of the posts but not the substance. To hell with the TIPs. The claim that rates were negative was not material to the overall claim that low interest rates cause bubbles. Which remains standard economics despite you trying to squirrel out of the argument.