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Fed signals plan to keep key rate at record low.

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posted on Sep, 17 2014 @ 03:39 PM
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WASHINGTON (AP) -- The Federal Reserve signaled Wednesday that it plans to keep a key interest rate at a record low for a considerable period because a broad range of U.S. economic measures remain subpar.

The Fed said it intends to keep its benchmark rate near zero as long as inflation remains under control, until it sees consistent gains in wage growth, long-term unemployment and other gauges of the job market.

The central bank retained language signaling its plans to keep short-term rates low "for a considerable time" after it ends its monthly bond purchases after its next meeting in October.



Fed signals plan to keep key rate at record low.




Stock prices rose after the Fed issued a statement at 2 p.m. Eastern time after a two-day policy meeting. Traders appeared pleased that the Fed seems in no hurry to raise rates. The yield on the 10-year Treasury note ticked up to 2.59 percent from 2.56 percent before the Fed's statement. In its statement, the Fed said it will make another $10 billion cut in the pace of its Treasury and mortgage bond purchases, which have been intended to keep long-term borrowing rates low. It also clarified the process by which it will eventually unwind its low-rate policies. The Fed said it would first increase its key short-term rate before it stops reinvesting its bond holdings, which have driven the Fed's balance sheet to a record of nearly $4.5 trillion. On Wednesday, the central bank also issued updated forecasts for growth, inflation and interest rates. The median short-term rate supported by Fed policymakers at the end of 2015 is now 1.38 percent, up from 1.13 percent at its June meeting.


I'm sure the FED thinks we the people are idiots. And well, a lot of the country is, but still...no one remember 2008 I guess. This is pattern and repetition. If people would stop cheering Obammy on, saying he is bringing America back to the greatness of the Eisenhower years this type of BS wouldn't be able to fly without protest. In fact, most will call this DOOM PORN since the stock market has been posting record breaking profits while the new American work week and part time hours become apart of everyday normalicy. But those that watch bubbles know another one is about to burst. Look at the crashes in 1929 and 2008 (and to a lesser extent 1987) and wash rinse and repeat. The financial markets have become its only fantasy reality show instead of a present economic reality, and such a state of affairs never lasts forever. It is just a matter of time before another pop occurs.

You cannot print money Q3 to infinity and expect it to go on forever, even though with our money not being backed up by something tangible allows idiots to continue this trend. There have only been three POTUSES that tried to stop this, and 2 were assasinated. Jackson tried and died before he could do it. Lincoln (Greenbacks) and Kennedy (the EO) tried and were gunned down 6 months after their attempt.

Stick a fork in America folks, she's over done.




posted on Sep, 17 2014 @ 03:44 PM
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I'm sure the FED thinks we the people are idiots. And well, a lot of the country is, but still...no one remember 2008 I guess. This is pattern and repetition. If people would stop cheering Obammy on, saying he is bringing America back to the greatness of the Eisenhower years this type of BS wouldn't be able to fly without protest.


Um, Obama didn't take power until Jan 2009.


And 2, does it matter? Who can borrow these days?



posted on Sep, 17 2014 @ 04:16 PM
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No one should expect a full recovery of the housing market until lending rates come up from these contrived lows.



posted on Sep, 17 2014 @ 04:33 PM
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a reply to: AugustusMasonicus

So are you saying the banks are waiting till interest rate profit goes up to release inventory?
That might work out better for new home buyers that can refinance later but there is still a lot of cloud inventory that needs about
two decades to become marketable at the current US inflation rate.


edit on 17-9-2014 by Cauliflower because: (no reason given)



posted on Sep, 17 2014 @ 04:50 PM
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originally posted by: intrepid

I'm sure the FED thinks we the people are idiots. And well, a lot of the country is, but still...no one remember 2008 I guess. This is pattern and repetition. If people would stop cheering Obammy on, saying he is bringing America back to the greatness of the Eisenhower years this type of BS wouldn't be able to fly without protest.


Um, Obama didn't take power until Jan 2009.


And 2, does it matter? Who can borrow these days?


Yeah. And my point about 2008 was the crash.



posted on Sep, 17 2014 @ 04:53 PM
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As far as I can see, it's exactly the same situation in the UK..say EU even. Interest rates have been at record lows since 2008. The most obvious reason is that wages have been going nowhere, even though jobs are on the increase. Of course the flatlining makes the outcome for some no better because the wage condition itself is so low and the buying power is less and less even though food etc are also low, (at least many of the supermarkets would have you believe that with price cuts), but the reality is that foodstuffs had hefty rises in the intervening years for no apparent reason.
What's maybe something to consider is that the FRB is afraid to go into a fiat money spending spree until they can claw back a heap of gold..probably a big heap of gold that they likely never had, or subverted it somewhere else for the chosen few. They certainly had a heap of gold that wasn't theirs, Germany has asked for their reserves to be returned to Germany, and the FRB has refused not to put to fine a point on it, although I think the year 2020 was mentioned
cheeky buggers.
Did anyone hear about The FRB building in New York, a spit away from the J.P. Morgan building having interconnecting tunnels? So a client of any sort wants to view his booty of gold in the FRB, or J.P. Morgan for that matter from time to time, all they do is to is to get some poor sod to trundle gold from one building to another to keep the client happy when he/she/they arrive. Hilarious! Of course if the client/s then wants to take the booty away with they..(the unexpected) they might just get the same result as the Germans.



posted on Sep, 17 2014 @ 04:54 PM
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This is good news and bad news. The good news is that this gives those of us who know whats coming a bit longer of a chance to pay of debts and stack as much cash as possible. The bad news is that this is just going to make things worse when the bubble pops. The rate of inflation will be huge and combined with the effects on large businesses due to Obamacare its looking scary. Oh well, We the People voted for these idiots, to bad even tho I didnt I still get caught up in the mess along with everybody else.



posted on Sep, 17 2014 @ 04:54 PM
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The Fed said it intends to keep its benchmark rate near zero as long as inflation remains under control


Inflation under control? Are they out of their F'ing minds? Food inflation this year is at 22%, general inflation is at 11%. Just because CPI claims a low number doesn't mean inflation is under control.



posted on Sep, 17 2014 @ 04:58 PM
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a reply to: Aazadan

And what do you think contributed most to that? Transportation costs? Ie: The cost of fuel? That's a tax that is undocumented imo.



posted on Sep, 17 2014 @ 05:01 PM
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originally posted by: AugustusMasonicus

No one should expect a full recovery of the housing market until lending rates come up from these contrived lows.

Agreed. There is a spike in London probably caused by the strangely rich, though that only highlights the bull.



posted on Sep, 17 2014 @ 05:11 PM
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a reply to: Cauliflower

No, what I am saying is that new home buyers and those looking to 'upgrade' will not do so as there is not a huge impetus since you will get a larger return by placing your money in the stock market and remain where you are; either renting or in your current property.

Once the rates begin to go up real estate becomes more attractive and funds will shift from issues and holdings to tangible assets. The inversion many home owner's are experiencing is being protracted by the Fed's easy money policy.






edit on 17-9-2014 by AugustusMasonicus because: (no reason given)



posted on Sep, 17 2014 @ 05:15 PM
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originally posted by: intrepid
And what do you think contributed most to that? Transportation costs? Ie: The cost of fuel? That's a tax that is undocumented imo.


Exactly, many refer to that as 'the hidden tax'.



posted on Sep, 17 2014 @ 05:23 PM
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When the government makes it more expensive to transport goods to the market, the cost of goods goes up. Just like when they raise minimum wage, the cost of pizza and chicken nuggets must go up. Then, when the costs of goods goes up, so follows the cost of living.

New homes must be built, and the cost of lumber, insulation, electrical wiring goes up, as those all have transportation costs involved... and the wages the installers make goes up... thanks to the unions, and the cost of goods those workers have to buy. So now, new homes and apartments cost more to build than the older ones so they command higher rent and such. Now, to be fair, older homes and apartments offering the same amenities can claim at least some cost equity or parity since they provide the same as the new builds, and raise their costs, commensurate.

Now, the cost of living has increased because it costs more to get food to the table, and housing costs must be 'fair'. This causes a movement towards increasing minimum wage, which begets an increase in food costs... and....


I am going to posit the following:
My wife works for one of those larger general retail chain stores. California just bumped minimum wage to $9.00. So, whereas previously she earned nearly $1.00 per hour more than 'new' hires, she is now less than $0.40 difference. So what is fair? If minimum wages increase, should existing employees be entitled to a proportional increase in wages as well, so as to maintain the perceived equity with regards to employment history and duration?

I, for one, would be highly peeved if I were hired just before this wage bump, and were a 'lead' in some department, and found out that where once I earned $0.90 more than the new guy, I now earned $0.10 more. That is an implicit demotion whichever way you look at it. It might be 'fair' to the 'new guy' and helps him cover his cost of living, but is entirely 'unfair' to the existing employees and does nothing to help him.


note- though gender specific pronouns were used above, nothing in the above should be interpreted as implying some gender-specific bias.
edit on 9/17/2014 by abecedarian because: (no reason given)



posted on Sep, 17 2014 @ 05:53 PM
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What the Fed forgets is that the low rates are a disincentive to put money in banks.

I for one am really rethinking putting my money in banks. With the way they can limit withdrawals if they want to and the government can use it as an additional source of income by seizing it like they did in Greece; it is almost a gamble to put money in the bank.

When people stop putting money in banks because there is no incentive to do so, and there is actually disincentive with fees, etc. Then there will be less and less money to lend.

A vicious circle yes.



posted on Sep, 17 2014 @ 06:17 PM
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originally posted by: intrepid
a reply to: Aazadan

And what do you think contributed most to that? Transportation costs? Ie: The cost of fuel? That's a tax that is undocumented imo.



Drought, farm bill, fuel costs, and most importantly, pumping $85 billion into the economy every single month. That's 1 trillion per year created and injected directly into corporate expense accounts. That has a huge impact on inflation.


originally posted by: abecedarian
My wife works for one of those larger general retail chain stores. California just bumped minimum wage to $9.00. So, whereas previously she earned nearly $1.00 per hour more than 'new' hires, she is now less than $0.40 difference. So what is fair? If minimum wages increase, should existing employees be entitled to a proportional increase in wages as well, so as to maintain the perceived equity with regards to employment history and duration?


The Henry Ford approach, which he validated with his success was that if you paid your employees more money, they in turn would have the money to purchase your products letting you broaden your customer base and recover what you paid out in wages.
edit on 17-9-2014 by Aazadan because: (no reason given)



posted on Sep, 18 2014 @ 03:03 PM
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originally posted by: Aazadan

originally posted by: intrepid
a reply to: Aazadan

And what do you think contributed most to that? Transportation costs? Ie: The cost of fuel? That's a tax that is undocumented imo.



Drought, farm bill, fuel costs, and most importantly, pumping $85 billion into the economy every single month. That's 1 trillion per year created and injected directly into corporate expense accounts. That has a huge impact on inflation.


originally posted by: abecedarian
My wife works for one of those larger general retail chain stores. California just bumped minimum wage to $9.00. So, whereas previously she earned nearly $1.00 per hour more than 'new' hires, she is now less than $0.40 difference. So what is fair? If minimum wages increase, should existing employees be entitled to a proportional increase in wages as well, so as to maintain the perceived equity with regards to employment history and duration?


The Henry Ford approach, which he validated with his success was that if you paid your employees more money, they in turn would have the money to purchase your products letting you broaden your customer base and recover what you paid out in wages.


The problem is with the repeal of Glass-Stegall and other acts, how can you essentially force corporations to take the henry ford approach, or at least feel they have to divest back in their country of origin. I believe deregulation has pushed America off the proverbial cliff, and this is a power play by corporations to take over as their own authoritative body outside of national sovereignity.



posted on Sep, 18 2014 @ 03:39 PM
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originally posted by: ArchPlayer
The problem is with the repeal of Glass-Stegall and other acts, how can you essentially force corporations to take the henry ford approach, or at least feel they have to divest back in their country of origin. I believe deregulation has pushed America off the proverbial cliff, and this is a power play by corporations to take over as their own authoritative body outside of national sovereignity.


Minimum wage laws are a good start. That establishes a floor that allows people to afford products, it also shrinks the wealth gap. A small wealth gap being essential to the middle class existing. Another thing we can do is force legislation that says for every X sales in the US the company selling the product must provide Y jobs here. That brings back a decent sized portion of the jobs, which in turn lowers the unemployment rate thereby increasing the supply of jobs and making companies offer better terms in order to have an employee. It changes the job market from an employers market to an employees market.

Those are two options but I don't expect to see either (beyond possibly a token boost to the minimum wage), precisely because of what you stated in your last sentence.







 
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