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Rising Interest Rates


August1991

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17 hours ago, August1991 said:

1. It will increase extra government spending - payment on debt.

2. It will increase each family's costs - now, they have to pay more each month.

3. Will it make people work better?

=====

4. Every family in debt is now paying more each month.

1. It is counterbalanced by the fact that inflation makes money that was borrowed in the past worth less.

2. Yes. It is the goal of a raise of interest rates, to control demand in society, so people live with their real money and not borrowed money.

3. Yes, because people will pay with real money - not borrowed - their things. It also makes inflation go down, thus wages are more significant as a result.

4. View point 2.

 

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On 9/18/2022 at 12:03 AM, August1991 said:

1. It will increase extra government spending - payment on debt.

2. It will increase each family's costs - now, they have to pay more each month.

3. Will it make people work better?

=====

Every family in debt is now paying more each month.

the interest rate "rises" have been negligible

inflation is at 8%

interest rates are at 3%

that simply tells you that they are not serious

if they were serious, the interest rate would be well above the inflation rate

but since that would cause the entire economy to collapse

they're not going to do that

in fact, they won't even tolerate a recession

they are addicted to QE now

the central bankers are in the pockets of the polticians

and the Bank of Canada cartel prefers the Liberal elites

so they are not going to bring Justin Trudeau down by raising rates to anything substantial

as that would wipe the Liberals out overnight

they can't stop printing money to keep the rates at net negative, without causing a massive crash

so they have printed themselves into a corner

the cycle we are trapped in now works like this

they jawbone about raising rates, and tick it up by a hundred basis points or so

the stock market tanks, we go into recession

then they panic and go right back lowering rates again

expect the pivot any time now

the economy is just a massive debt bubble

it's a ticking time bomb

if they poke it too hard, it will blow up in their faces, and they know it

Edited by Dougie93
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14 hours ago, Dougie93 said:

the interest rate "rises" have been negligible

inflation is at 8%

interest rates are at 3%

that simply tells you that they are not serious

if they were serious, the interest rate would be well above the inflation rate

but since that would cause the entire economy to collapse

they're not going to do that

in fact, they won't even tolerate a recession

they are addicted to QE now

the central bankers are in the pockets of the polticians

and the Bank of Canada cartel prefers the Liberal elites

so they are not going to bring Justin Trudeau down by raising rates to anything substantial

as that would wipe the Liberals out overnight

they can't stop printing money to keep the rates at net negative, without causing a massive crash

so they have printed themselves into a corner

the cycle we are trapped in now works like this

they jawbone about raising rates, and tick it up by a hundred basis points or so

the stock market tanks, we go into recession

then they panic and go right back lowering rates again

expect the pivot any time now

the economy is just a massive debt bubble

it's a ticking time bomb

if they poke it too hard, it will blow up in their faces, and they know it

Dougie93, Can you please post in paragraphs?

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On 9/18/2022 at 5:48 PM, QuebecOverCanada said:

1. It is counterbalanced by the fact that inflation makes money that was borrowed in the past worth less.

2. Yes. It is the goal of a raise of interest rates, to control demand in society, so people live with their real money and not borrowed money.

3. Yes, because people will pay with real money - not borrowed - their things. It also makes inflation go down, thus wages are more significant as a result.

4. View point 2.

 

1. Let me correct your point: While higher interest rates increase the cost of government borrowing, inflation also means that the GST (for example) means greater government revenues.

2. Agreed. But "... real money... " What's that?

3. Here, QuebecOverCanada, you miss the main issue. More Canadians are going to work less because they think they are under-valued. Inflation confuses people. And as usual, when confused, people feel they're getting ripped off.

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On 9/18/2022 at 12:36 AM, sharkman said:

August.  deleted.  deleted, deleted and deleted some more.

Somehow I feel better now.

I may have edited my OP. It happens.

====

4. Here's the takeaway:

Will a politician such as Biden, Trump, Trudeau, Poilievre - whoever - live with a central banker such as Volcker.

Johnson and Nixon didn't. Ford didn't. To his credit, Carter named the guy. Reagan lived with him.

Edited by August1991
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This period of inflation is a direct result of the over reaction to COVID by the leading economies of the world. They sabotaged their own economies, and hundreds of thousands of HIGHLY skilled professionals retired early rather than deal with the BS vaccines in Canada and the US.  That’s point one, it’s their fault we have this inflation in the first place. 

Second, now we all have to suffer even more with the over reaction to the inflation.  To answer your question, August, yes.  The current crop of politicians will live with whatever they are told to live with by the WEF.  High interest rates?  Sure, can I have another helping please?

Three, this response is now going to blow up in their faces, maybe by the end of September.  The economies are going to crash, and then the level of denial and delusional confidence will have to be ramped up even more.  Remember when they denied inflation was rising at all?

 

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On 9/19/2022 at 11:17 PM, sharkman said:

This period of inflation is a direct result of the over reaction to COVID by the leading economies of the world. They sabotaged their own economies, and hundreds of thousands of HIGHLY skilled professionals retired early rather than deal with the BS vaccines in Canada and the US.  That’s point one, it’s their fault we have this inflation in the first place. 

Second, now we all have to suffer even more with the over reaction to the inflation.  To answer your question, August, yes.  The current crop of politicians will live with whatever they are told to live with by the WEF.  High interest rates?  Sure, can I have another helping please?

Three, this response is now going to blow up in their faces, maybe by the end of September.  The economies are going to crash, and then the level of denial and delusional confidence will have to be ramped up even more.  Remember when they denied inflation was rising at all?

 

Sharkman, astute - except your first point.

1. This period of inflation is not a direct result of Covid. It is a result of trust, and recent abuse of power over the past 40 years or so- the so-called Great Moderation.

2. In the 1970s, central bankers raised interest rates - politicians had to manage budgets. Which politician now can manage a budget when interest payments take a larger share?

====

Mulroney did, and he imposed a federal VAT in Canada.

Moreover, he negotiated a free-trade agreement - changing how Canadians view Americans.

With Meech, Mulroney came close to changing how how we view ourselves.

 

 

Edited by August1991
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Is the WEF telling the UK prime minister to do what she's doing?  Here's a hint, she's doing the exact opposite of everybody else and isn't working either. 

And everybody's mad at her too, blaming her for the same things were blaming liberals for here and democrats for in the usa.

I don't remember what her name is, and there's no point in bothering to learn that she is down close to 20 points in the latest poll I heard.

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Funny how some people are given slack and others are not.  The new Italian leader probably won’t be given any either.  Because both of these women just so happen to be right of center politically speaking, in their respective countries.

Meanwhile Biden, in an obviously scripted question, said the pandemic was over and sent stocks tumbling to the tune of 10 billion in a day.  Quite a different response for him.  

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5 minutes ago, sharkman said:

Funny how some people are given slack and others are not.   

I give any leader slack when they are accused of 'causing' a global phenomenon.  This includes Biden, Truss, Trudeau, Meloni and even Trump.

Leaders who scapegoat, though, are scrummy bottom feeders... imo

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5 hours ago, Michael Hardner said:

I give any leader slack when they are accused of 'causing' a global phenomenon.  This includes Biden, Truss, Trudeau, Meloni and even Trump.

Leaders who scapegoat, though, are scrummy bottom feeders... imo

To be clear, I wasn’t accusing you.  I could have been more specific, I’m talking about the news media in general.  What Biden did cost billions of dollars.

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Two ways interest rate hikes do help.

1. It stops people from borrowing money they don't have.

2. It gets people to spend money they have in the bank instead.

I wish it would make people save money, but 24%+ on credit cards and 1% on a savings account with a minimum balance seems to point out the extra $$ only goes to bankers and no one else.

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17 hours ago, herbie said:

Two ways interest rate hikes do help.

1. It stops people from borrowing money they don't have.

2. It gets people to spend money they have in the bank instead.

I wish it would make people save money, but 24%+ on credit cards and 1% on a savings account with a minimum balance seems to point out the extra $$ only goes to bankers and no one else.

Well Herbie, rising interest rates are not going to aid the stock markets.

https://www.cnbc.com/2022/09/27/stock-market-losses-wipe-out-9-trillion-from-americans-wealth-.html
 

“Americans’ holdings of corporate equities and mutual fund shares fell to $33 trillion at the end of the second quarter, down from $42 trillion at the start of the year, according to data from the Federal Reserve.….

…Economists say the drops could soon start rippling through the economy, adding pressure to Americans’ balance sheets and possibly hurting spending, borrowing and investing.”

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42 minutes ago, herbie said:

Well sharkman, the stock markets don't affect my savings or spending only those who invest in it. Joe Average doesn't sink his money into stock, he sinks it into surviving.

Anyone who has a pension plan of any kind.  The pension revenues are invested in the markets.  The Canada pension plan probably is too.  The financial system is all interconnected, unfortunately.

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On 9/27/2022 at 5:12 PM, herbie said:

Two ways interest rate hikes do help.

1. It stops people from borrowing money they don't have.

2. It gets people to spend money they have in the bank instead.

I wish it would make people save money, but 24%+ on credit cards and 1% on a savings account with a minimum balance seems to point out the extra $$ only goes to bankers and no one else.

Credit card companies are not owned by the banks. 2 separate entities.

Credit card companies are basically just loan companies.

Banks are loan companies too but a bit more business activities.

Using them as examples is false as they are separate in every way.

You can go to a bank and get a line of credit or loan at about 7% or, you can use your credit card at 24%.

Having said that, they are both businesses on the stock market and their obligation is to their shareholders.

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I'm not arguing the points you made.

Just that nobody has the interests of consumers in mind. All you can do is not borrow and hope you get a little more from your savings.

Or do something utterly beyond the consideration of 95% and use your money to make more for yourself and not shareholders or employers.

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On 9/27/2022 at 5:12 PM, herbie said:

Two ways interest rate hikes do help.

1. It stops people from borrowing money they don't have.

2. It gets people to spend money they have in the bank instead.

I wish it would make people save money, but 24%+ on credit cards and 1% on a savings account with a minimum balance seems to point out the extra $$ only goes to bankers and no one else.

Inflation is caused by too much money (cash) in the economy.

Higher interest rates are a signal that there will be less money (cash).

Our various central banks create/print this money/cash and signal what they're doing through the interest rate.

=====

Bitcoin (blockchains) cannot change this. Reverting to gold would be worse. 

Edited by August1991
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4 hours ago, herbie said:

Various central banks? Inflation is happening all over?
You mean it's not all Justin's fault?

Still trying to get an explanation for why bananas from Nicaragua are 1/3 the price of apples from Kamloops just down the road....

An economist won a Nobel Prize (Robert Lucas) to create the mathematics of your idea.

I'm still not convinced whether it matters.

=====

In the 1930s, there was the Great Depression.

Since 1982 or so, we've had the Great Moderation - this means that people trusted money.

Recently. people don't.

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