Comments on: How long will interest rates stay low? Pay attention to what the Fed does and not just what it says http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/ Sun, 14 Mar 2010 11:18:11 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: Dan1to http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/comment-page-1/#comment-1856 Dan1to Wed, 18 Nov 2009 17:43:19 +0000 http://jubakpicks.com/?p=2206#comment-1856 DJBarber there is a search function built into this site. (Upper left corner, just below Jubak's picture) You can use it to find older posts. (It comes in handy when trying to remember an idea from a month ago or so.) DJBarber
there is a search function built into this site. (Upper left corner, just below Jubak’s picture) You can use it to find older posts. (It comes in handy when trying to remember an idea from a month ago or so.)

]]> By: Jim Jubak http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/comment-page-1/#comment-1851 Jim Jubak Wed, 18 Nov 2009 16:21:35 +0000 http://jubakpicks.com/?p=2206#comment-1851 One way to find a topic on the blog is to use the tag word cloud at the end of the first (and subsequent pages) of posts. A good sort term would be rally. I'm pretty sure that I've tagged every post that you note with that tag. But I'll try to look back and make sure that's true within the next day or so. One way to find a topic on the blog is to use the tag word cloud at the end of the first (and subsequent pages) of posts. A good sort term would be rally. I’m pretty sure that I’ve tagged every post that you note with that tag. But I’ll try to look back and make sure that’s true within the next day or so.

]]> By: Jim Jubak http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/comment-page-1/#comment-1850 Jim Jubak Wed, 18 Nov 2009 16:19:52 +0000 http://jubakpicks.com/?p=2206#comment-1850 If the Fed only paid attention to domestic economics Krugman would be right but it doesn't. The Fedf also has to pay attention to a falloing dollar and the government's ability to fund its massive debt. To get more overseas investors to buy dollars, you might have to raise interest rates. The nervousness among some parts of the Treasury market right now, for example, doesn't have anything to do with inflation but with the prospect that rates will go up because the U.S. has such huge funding obligations. There's also the insurance factor. The Fed would love to raise rates so that it has move room to maneuver. When you're at 0% you don't have the ability to cut rates to stimulate the economy. The Fed wants to have that tool back in its toolbox as quickly as possible. The Taylor rule also has a major problem--since we don't measure inflation very accurately, especially at the extremes, it's tough to say with any precision what the Fed rate should be. If the Fed only paid attention to domestic economics Krugman would be right but it doesn’t. The Fedf also has to pay attention to a falloing dollar and the government’s ability to fund its massive debt. To get more overseas investors to buy dollars, you might have to raise interest rates. The nervousness among some parts of the Treasury market right now, for example, doesn’t have anything to do with inflation but with the prospect that rates will go up because the U.S. has such huge funding obligations. There’s also the insurance factor. The Fed would love to raise rates so that it has move room to maneuver. When you’re at 0% you don’t have the ability to cut rates to stimulate the economy. The Fed wants to have that tool back in its toolbox as quickly as possible. The Taylor rule also has a major problem–since we don’t measure inflation very accurately, especially at the extremes, it’s tough to say with any precision what the Fed rate should be.

]]> By: doydum http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/comment-page-1/#comment-1848 doydum Wed, 18 Nov 2009 13:43:47 +0000 http://jubakpicks.com/?p=2206#comment-1848 In 6 months, we'll know who is right and who is wrong. From Krugman: The Fed has been up against the zero lower bound since the beginning of 2009, roughly when unemployment rose above 11 percent; right now the Taylor rule says that the Fed funds rate should be minus 6.7%. So why should the Fed even be thinking about raising rates any time soon? We’re not likely to see 7% unemployment for years — and by the time we do, inflation will probably be even lower than it is now. I’d add that the Fed really should be raising its inflation target, meaning an even longer pause before it raises rates. http://krugman.blogs.nytimes.com/2009/11/16/the-madness-of-the-inflation-hawks/ In 6 months, we’ll know who is right and who is wrong.

From Krugman:
The Fed has been up against the zero lower bound since the beginning of 2009, roughly when unemployment rose above 11 percent; right now the Taylor rule says that the Fed funds rate should be minus 6.7%.

So why should the Fed even be thinking about raising rates any time soon? We’re not likely to see 7% unemployment for years — and by the time we do, inflation will probably be even lower than it is now. I’d add that the Fed really should be raising its inflation target, meaning an even longer pause before it raises rates.

http://krugman.blogs.nytimes.com/2009/11/16/the-madness-of-the-inflation-hawks/

]]> By: DJBarber http://jubakpicks.com/2009/11/17/how-long-will-interest-rates-stay-low-pay-attention-to-what-the-fed-does-and-not-just-what-it-says/comment-page-1/#comment-1843 DJBarber Wed, 18 Nov 2009 02:57:32 +0000 http://jubakpicks.com/?p=2206#comment-1843 Mr. Jubak, I relize my suggestion above almost feels like I am asking you to "spoon feed" us. I think the problem that I am having is something that I mentioned some time ago. On your old (and not nearly as good) MSN site, there was a place where you could click and get a complete index of all your stories. On this site, I see the “You may have missed” section and the “recent buys and sells” section, but no matter which one I use I have to scroll through all of the postings rather then just getting to the one I am looking for. If you had an index here, I would probably be able to get to each of the posts that speak to my questions above in a speedier fashion. I suppose, for that matter, that I could just bookmark the post I want to be able to quickly refer back too…. Mr. Jubak,

I relize my suggestion above almost feels like I am asking you to “spoon feed” us.
I think the problem that I am having is something that I mentioned some time ago.
On your old (and not nearly as good) MSN site, there was a place where you could click and get a complete index of all your stories. On this site, I see the “You may have missed” section and the “recent buys and sells” section, but no matter which one I use I have to scroll through all of the postings rather then just getting to the one I am looking for.
If you had an index here, I would probably be able to get to each of the posts that speak to my questions above in a speedier fashion. I suppose, for that matter, that I could just bookmark the post I want to be able to quickly refer back too….

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