i am watching world news right now and they are talking of a recession with a rise in unemployment. just wondering what intrest rates do in a recession.
do intrest rates go up or down in a recession?
- Thread starter bigbrother8
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Stop watching the news. We aren't in a recession.
http://newsbusters.org/blogs/ken-shepherd/2007/09/07/msnbc-sees-pending-economic-collapse
http://newsbusters.org/blogs/ken-shepherd/2007/09/07/msnbc-sees-pending-economic-collapse
Pablo's right. We're NOT in a recession.
But to answer your question, interest rates (as set by the Federal Reserve Bank) are decreased to add liquidity.
But to answer your question, interest rates (as set by the Federal Reserve Bank) are decreased to add liquidity.
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Not yet.
Recession = Neighbor is unemployed
Depression = You are unemployed.
But to answer the question...it depends
Things are changing though. We are probably looking at stagflation. (if there is a recession)...low employment and inflation (weak dollar). Plus the Government will "stimulate" (Definition = spend money they don't have) the economy
In inflation interest rates go up. Here is the Catch-22. Is the Government gonna' worry about inflation = rais interest rates. OR Worry about the economy = Lower interest rates. It can't do both. No rabbits to pull out of hats.
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As natural cycles go, we are overdue..... but I won't go political.
Typically the fed will reduce interest rates IF possible. And this Fed has indicated they will if necessary. The overly worrying about inflation is going to be the death of us.
Typically the fed will reduce interest rates IF possible. And this Fed has indicated they will if necessary. The overly worrying about inflation is going to be the death of us.
Rates are coming down, doesn't mean YOUR rates are coming down.
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Since they're talking about it ...anyone who can save themselves is long gone ..leaving the rest to deal with the fall out.
Why do you worry about employment numbers? You seeing negative data only means that the rate of unemployment outpaced the spin statisticians who configure the definition of "unemployed". Currently, IIRC, working one hour a week qualifies you as employed. It may be a month. Kinda meaningless in the whole scam ..err scheme of things.
Got me swinging. The supply of money appears elastic. So far we haven't seen an inflationary situation where interest rates have been forced upward ..at least in a very long time.
Recessions are our cruel friend ..our true failsafe that stops up the drain on our $$$. They attempt to stop us from engaging in self destructive behaviors ..much to the dismay of Wall St.
Then again, just like the outside contractors that I observed tearing out some structural steel ..with the guy burning on the member that he was actually sitting on for support ..some people just can't seem to recognize bad habits ..even when it bites them in the arse. They, as soon as possible, go right back to the same totally senseless self defeating behavior.
How do you measure the size of the economy when the gov is fudging the inflation numbers so much? How much "hedonics" does it take to make a 5 %age point difference in economic growth?
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Figures don't lie ..but liars sure do figure. My local cost of living has gone way up. The lack of federal funds (they used to send most of our income taxes back to us) has caused all state and municipal costs to climb way out of whack with the alleged cost of living. The amount the tax man takes from part time workers is now 21% between SS, state tax, medicare, etc...etc. The relief from the FIC is nothing compared to what was added on.
The financiers like to wiggle and wave that % of growth number out there. It doesn't mean much if you have a 5% growth in your economy ..and a 5.00001% growth in population ..and a 6% unemployment rate (whatever the REAL number is and growing).
The financiers like to wiggle and wave that % of growth number out there. It doesn't mean much if you have a 5% growth in your economy ..and a 5.00001% growth in population ..and a 6% unemployment rate (whatever the REAL number is and growing).
JHZR2
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more money chasing the same amount of goods generally yields inflation. IMO it is something that will be induced in order to pay the debts incurred by various things that are going on. Inflation paid for Vietnam, Korea, etc. in a way. Also if you look at the way that markets grew during times of historically high inflation, perhaps there is something else behind it, like a method to fill retiree's savings to make up for shortfalls in other programs they paid for.
There is a lot of control that goes on behind the scenes that we arent privy to knowing... lots of backroom deals, Im sure...
Bills to pay dont get paid unless there is magically some more money around... more money is good for paying off old debts, but more money also produces higher obtainable prices, which we are seeing slowly but surely and sometimes quickly)
JMH
There is a lot of control that goes on behind the scenes that we arent privy to knowing... lots of backroom deals, Im sure...
Bills to pay dont get paid unless there is magically some more money around... more money is good for paying off old debts, but more money also produces higher obtainable prices, which we are seeing slowly but surely and sometimes quickly)
JMH
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Inflation punishes savers and rewards borrowers. Thus, inflation is seen as "normal" and even "good" these days if it's not too high a rate because everyone's in debt and more debt is the only realistic way to keep the overall economy expanding. I hate the concept of rewarding debtors at the expense of savers.
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Tell that to Wall St. and 1600 Pennsylvania Avenue and those who occupy (on occasion) E Capitol St NE & 1st St NE.
Generally, though not always, the Fed responds by lowering interest rates to stimulate the economy. But they also try not to overdo it and induce inflation. Of course, all this can be overwhelmed by increased fiscal stimulation, geopolitical factors etc so it's hard to predict what direction rates will actually move.
Best thing to do is to make sure your investments/loans are diversified enough to allow you take advantage of any market condition. For instance, I recently financed a car at 5.9% even though I could have paid for it in cash. Financing allowed me to free up money for the stock market, but if the market starts to tank, I'll just liquidate my growth stocks and pay off more principal on the loan. I am guaranteed 5.9% returns that way even in a declining market.
Best thing to do is to make sure your investments/loans are diversified enough to allow you take advantage of any market condition. For instance, I recently financed a car at 5.9% even though I could have paid for it in cash. Financing allowed me to free up money for the stock market, but if the market starts to tank, I'll just liquidate my growth stocks and pay off more principal on the loan. I am guaranteed 5.9% returns that way even in a declining market.
Do I have this correct, you borrowed money to invest?
Schmoe,
I've already sold most of my high risk funds. I've got one more growth fund that I may sell to pay off more principal on my car loan and mortgage. I'm not too worried about it. It's a great time to payoff various loans that I took out when the market was rockin.
I've already sold most of my high risk funds. I've got one more growth fund that I may sell to pay off more principal on my car loan and mortgage. I'm not too worried about it. It's a great time to payoff various loans that I took out when the market was rockin.
I hear you. I decided to try and "ride" it out. Market always seemed to rebound, but now I don't know. If interest rates do get lowered and market bounces back, I'm going to get out around the peak. Just too much unknowns in the pot these days and plus, 08 is an election year. Might be a good time to get back in then.
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