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They were going up a couple of years ago. https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS

by dtwest 5y ago

zzleeper 5y ago
What happened in 2019?
- r00fus 5y ago
  Politics. Rates had to go down for the re-election effort.
  - HappyTypist 5y ago
    Rates went down because the underlying economy was seeing slowing growth; particularly due to impacts of the trade war.
    - seanmcdirmid 5y ago
      Trump on the one side of his mouth was trumping up "record economic growth!" but on the other side of his mouth was complaining "the economy will crash if they raise rates!" It is crazy that the Democrats are the fiscal conservatives these days while the Republicans are much more irresponsible (though Obama and Biden are definitely nowhere near Clinton in terms of responsibility, they are way more responsible than Bush/Trump).
      - deleted 5y ago
        [deleted]
  - kyleee 5y ago
    I think that is probably naive, they can't raise rates for many reasons including the fact that it would basically immediately blow up significant parts of the economy that are only enabled/possible due to rock bottom rates
    - r00fus 5y ago
      "immediately blow up" - if such fragility exists, is it a good thing? I mean, even raising rates a few basis points causes such collapse...
      - kyleee 5y ago
        No I think it's an awful situation, but lawmakers and governments have made the bed for us by stepping in over and over to rescue and backstop failing entities and sectors time and time again which has allowed what would otherwise be insolvent and long ago bankrupted entities and business models to flourish
- nostrademons 5y ago
  Corporate debt. Fed raised rates and then when it came time to roll over their debt, a lot of major corporations said "Uh, if interest rates keep going up, we are going to go bankrupt because of the higher costs of debt service." The markets had a taper tantrum (the S&P 500 dropped by about 18% in the second half of 2018), and then the Fed reconsidered and started dropping rates again. Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates, given that the U.S. debt-to-GDP ratio skyrocketed from 105% in 2020 to 130% now.
  - ac29 5y ago
    > Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates Is it even possible for a sovereign nation to go bankrupt in its own fiat currency?
    - native_samples 5y ago
      Sort of. Bankruptcy means you "cannot" pay your debts. The US can get itself into a situation in which for structural reasons it "cannot" pay back its debtors because the political/social costs of the money printing or taxation required are infeasible, e.g. nobody who will do it can get elected. In that case even though it would be technically possible, it wouldn't happen and the US would refuse to pay.

They were going up a couple of years ago. https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS

by dtwest 5y ago

They were going up a couple of years ago. https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS

zzleeper 5y ago

What happened in 2019?

r00fus 5y ago
Politics. Rates had to go down for the re-election effort.
- HappyTypist 5y ago
  Rates went down because the underlying economy was seeing slowing growth; particularly due to impacts of the trade war.
  - seanmcdirmid 5y ago
    Trump on the one side of his mouth was trumping up "record economic growth!" but on the other side of his mouth was complaining "the economy will crash if they raise rates!" It is crazy that the Democrats are the fiscal conservatives these days while the Republicans are much more irresponsible (though Obama and Biden are definitely nowhere near Clinton in terms of responsibility, they are way more responsible than Bush/Trump).
    - deleted 5y ago
      [deleted]
- kyleee 5y ago
  I think that is probably naive, they can't raise rates for many reasons including the fact that it would basically immediately blow up significant parts of the economy that are only enabled/possible due to rock bottom rates
  - r00fus 5y ago
    "immediately blow up" - if such fragility exists, is it a good thing? I mean, even raising rates a few basis points causes such collapse...
    - kyleee 5y ago
      No I think it's an awful situation, but lawmakers and governments have made the bed for us by stepping in over and over to rescue and backstop failing entities and sectors time and time again which has allowed what would otherwise be insolvent and long ago bankrupted entities and business models to flourish
nostrademons 5y ago
Corporate debt. Fed raised rates and then when it came time to roll over their debt, a lot of major corporations said "Uh, if interest rates keep going up, we are going to go bankrupt because of the higher costs of debt service." The markets had a taper tantrum (the S&P 500 dropped by about 18% in the second half of 2018), and then the Fed reconsidered and started dropping rates again. Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates, given that the U.S. debt-to-GDP ratio skyrocketed from 105% in 2020 to 130% now.
- ac29 5y ago
  > Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates Is it even possible for a sovereign nation to go bankrupt in its own fiat currency?
  - native_samples 5y ago
    Sort of. Bankruptcy means you "cannot" pay your debts. The US can get itself into a situation in which for structural reasons it "cannot" pay back its debtors because the political/social costs of the money printing or taxation required are infeasible, e.g. nobody who will do it can get elected. In that case even though it would be technically possible, it wouldn't happen and the US would refuse to pay.