If interest rates were at sane levels, the fiat experiment would have ended long ago. They'll just continue to inflate their way out of debt. Your kid's starter home will cost $1 million.
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- Thread starter Warstud
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It can be, if necessary. Who is going to stop it?
Remember what happened just recently on a global scale...
Indeed. That was more about controlling behavior in the public square. Nobody (at scale) was going into homes of private citizens to lock them in there (or conversely, drag them out). There aren't even enough LEO to enact this sort of thing.
It’s the very definition of fiat. It’s actually its ultimate form and that’s exactly what the plan for one world currency is, 100% digital, 100% traceable.
By your logic the dollar is also not fiat as there is large infrastructure in place in order to print it and distribute it.
Were discussing it the wrong thing to start because the largest buyers are foreign central banks followed by foreign private accounts. However in relation to this discussion - in the USA they don't need to confiscate it. They can call it strategic and make it illegal to own / transact, in which case they affectively end holding it - although a few people did in the 30's - most don't think that far ahead.
Unless you have control of the internet itself its not a safe haven. Don't get me wrong, I am not anti bit coin, but its strayed a long ways from its original premise anyway.
I suspect the majority of it is in the custody of wall street firms at this point anyway - hence the government is happy to discuss / promote it. So much for an independent currency.
In 1971 the median home price was $25K. In 50 more years $1M will be the monthly payment
One of the people I follow in Twitter thought it was a short at $299. Happy I am not them.
I don't think the world's richest man gives a rip what anyone thinks of him. In my way of thinking - when you have upset both sides this much, your clearly doing something right.
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What are “sane” levels for interest rates?
Honest question.
I remember when car loans were 18%. Mortgages were 16%.
I thought that was high back then, and the Fed was trying to stamp out inflation. It worked, but things sure were expensive to buy on credit.
I thought 3% for a mortgage was crazy low.
So, again, what are “sane” levels to you?
He very clearly does care what people think…he won’t shut up about it and tweets incessantly.
I think a lot of people miss the difficult balance the Fed must maintain between inflation and a growing economy. The Fed’s only tool, a blunt one at that, is interest rates, and those two mandates require the exact opposite. Raise rates to lower inflation while risking a shrinking economy or lower rates to stimulate the economy while putting upward pressure on inflation. Can’t have it both ways.
Inflation and GDP are working against each other right now. Every indication shows that if push comes to shove, the Fed will choose floating the economy over inflation.
First you have to define what rate? Fed funds? The 10 year aka "risk free rate". A home mortgage?
Generally market dynamics set the rates - is inflation rising or slowing will affect rates the most - and its a adder to inflation. The fed manipulates (or tries to) the market rate with the short term rate or by monetizing the debt - ie QE, the fed balance sheet.
So its really hard due to the manipulation to know what the rates should be. I would say current rates, 4.5% on the 10 year, is probably a little low compared to inflation. Clearly the bond market feels inflation is going to fall.
Mortgage rates at 16% If I am not mistaken were when inflation was at 12%. So comparatively that wasn't much different than today in real rate terms?
I think everyone agrees at this point that zero made no sense. Zero fed funds would assume your at -2% deflation, which we never were. It was pure grift to the banks and the wealthy, and there still laughing about how they got away with it.
As an aside, US mortgages are a very poor way to measure rates because they turn the bonds into GSE guaranteed securities - ie there basically a US government bond, and there much lower than elsewhere in the world. Auto loans also because the asset underlying the loan is often worth less than the loan - ie there closer to a credit card than a mortgage. So they have less to do with bond rates and inflation rates, than say a corporate bond.
Wait. You jumped on me for writing this.
When?
Maybe I misunderstood what you said? Or just disagreed? Or was just feeling disagreeable that day in general
Winter, some month back. I said the market sets the rates, you said the Fed. We both knew/know Fed sets the FFR.When?
Maybe I misunderstood what you said? Or just disagreed? Or was just feeling disagreeable that day in general
Well I agree with that with a caveat - the fed has severally manipulated the long treasury market - by holding $7T of long dated treasuries on their balance sheet and also how the fed treats tier 1 capital at banks. So yes the market sets the rate, up to the point where the fed no longer likes the range - which is anytime the 10 year gets over 4.6% lately.
Is that what I said?
Yes, basically and I said we will remain in a range until we aren't.
Actual nominal inflation is probably 2-3x the stated value, so at a minimum Fed Funds rate should be at least double.
This is sort of a mirage because output/input/size of the economy is all measured in USD which is on a terminal decline of devaluation since abandoning the Gold Standard. They have other tools besides STIRs. Namely, and more famously, QE/T.
Timely. Gold has overtaken the Euro as official central bank reserves. I can totally see the banks saying "its a national asset and only we can hold it".
Chart from page 12. Its a official ECB report. https://www.ecb.europa.eu/pub/pdf/ire/ecb.ire202506.en.pdf
Chart from page 12. Its a official ECB report. https://www.ecb.europa.eu/pub/pdf/ire/ecb.ire202506.en.pdf
They return loans after hours, then reloan them premarket
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Home mortgage?
7% to 10%
