July 17, 2006

COME DOWN OFF OF THERE BEN, YOU'VE PROVED YOUR MANHOOD:

Economists in survey don't want rates raised (Barbara Hagenbaugh and Barbara Hansen, 7/17/06, USA TODAY)

The Federal Reserve will raise interest rates next month, then be done for the year, according to economists surveyed by USA TODAY.

But some economists aren't sure that's a good idea.

Nearly two-thirds of the 54 economists surveyed July 7-12 expect Fed policymakers will raise interest rates when they next meet Aug. 8.

But 61% say they wouldn't raise rates if they were the ones sitting within the Fed's marbled walls. Most of the economists expect the Fed will take the increase back early next year by cutting interest rates once.


Except that the rates have nothing to do with economics--they're just psychological.

Posted by Orrin Judd at July 17, 2006 7:55 AM
Comments

oj- If you're in the business of borrowing short and lending long (providing capital) rates are everything. Maybe your thinking of the Keynesian hangover influencing policy today.

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 9:03 AM

Long term global deflation is a reality the Fed can't overcome.

Posted by: oj at July 17, 2006 9:17 AM

Taxes,fuel,basic materials and healtcare seem to be unaffected by deflation.

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 10:05 AM

Taxes, food, clothing, basic health care, and shelter are at record lows. Medicine and transport are mere consumer goods in the modern economy.

Posted by: oj at July 17, 2006 10:11 AM

Shelter? What world do you live in?

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 10:14 AM

oj-

Financing costs have risen, what, 20% since 12/05.

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 11:04 AM

You're talking about pennies. Taken as a percent of your income, you pay a fraction compared to what your father, grandfather, and so forth paid for housing.

Of course, belief in inflation requires such ignorance.

Posted by: oj at July 17, 2006 11:08 AM

A family of 4 in 1950 had federal income tax exemptions of about 65,000 in inflation adjusted dollars. The house my dad bought in 1968 for 158,000 recently sold for 3.4 million.Local school taxes and costs per pupil have doubled over the last 8 years (approx. 9% per annum)in nearby communities. In New York State the increase is even more.I could go on but my ignorance prevents me.

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 11:49 AM

And you pay a lower percentage of your income for your mortgage, your taxes, food, etc. than he did. How many rooms did he have tvs and telephones in? How many cars did you own? etc.

Posted by: oj at July 17, 2006 12:16 PM

I'm an agnostic about current inflation although inflation is all about pennies in the short term (.01 cent on the dollar is 1% smart guy)The compounding of inflation, over time, is what destroys savings and purchasing power.Labor costs are coming down due to globalization while the cost of government at all levels is going up, just about everything it regulates or funds is going up and the costs tend to be fixed.

Posted by: Tom C.,Stamford,Ct. at July 17, 2006 1:49 PM

No, it isn't.

Posted by: oj at July 17, 2006 2:09 PM
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