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Liberty News ForumLNF Forums HereEconomics, Financial News › Fed Funds Rate, Historical Graph
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Very Hot Topic (More than 25 Replies) Fed Funds Rate, Historical Graph (Read 5,646 times)
Rabbit_Reborn
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Fed Funds Rate, Historical Graph
Oct 2nd, 2015 at 12:33pm
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The Fed Funds Rate is coming up on 7 full years at 0%.

A few questions:

1. Why does the Federal Reserve drop the interest rates? What purpose does that serve?

2. When was the last time the Fed Funds Rate was held at 0% for 1 full year?

3. What lessons can be learned from the current levels of interest rates and the state of economy in the United States?



There might be follow up questions. I'm looking for honest discussion here. I'm by no means an expert on our Central Bank.
  

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Re: Fed Funds Rate, Historical Graph
Reply #1 - Oct 2nd, 2015 at 1:06pm
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Rabbit_Reborn wrote on Oct 2nd, 2015 at 12:33pm:
The Fed Funds Rate is coming up on 7 full years at 0%.

A few questions:

1. Why does the Federal Reserve drop the interest rates? What purpose does that serve?

2. When was the last time the Fed Funds Rate was held at 0% for 1 full year?

3. What lessons can be learned from the current levels of interest rates and the state of economy in the United States?

https://upload.wikimedia.org/wikipedia/commons/thumb/3/31/Federal_Funds_Rate_195...

There might be follow up questions. I'm looking for honest discussion here. I'm by no means an expert on our Central Bank.

They have been trying to control inflation, but, as I understand it raising rates could result in the excessive dollars pouring back into our economy resulting in hyper-inflation.  It appears that the feds are now backed into a corner.
  


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Re: Fed Funds Rate, Historical Graph
Reply #2 - Oct 2nd, 2015 at 1:27pm
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On Drudge.





Record 94,610,000 Americans Not in Labor Force...
Participation Rate Lowest Since 1977...
Record 56,647,000 Women Not Working...
Jobs Up ONLY For IMMIGRANTS; Down 262,000 For 'Native-Borns'...
'Payrolls Disaster'...
'Fed never going to raise rates'...
IT'S UGLY!
FLASHBACK: IT'S GOING TO BE GREAT...
Bank Stocks Tumble...
Markets at 'panic levels'...




  


"Without morals a republic cannot subsist any length of time; they therefore who are decrying the Christian religion, whose morality is so sublime and pure (and) which insures to the good eternal happiness, are undermining the solid foundation of morals, the best security for the duration of free governments."

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Re: Fed Funds Rate, Historical Graph
Reply #3 - Oct 2nd, 2015 at 1:33pm
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Seawolf wrote on Oct 2nd, 2015 at 1:27pm:
Record 94,610,000 Americans Not in Labor Force...
Participation Rate Lowest Since 1977...


Not that facts matter to you but .. .. .


Baby Boomers And The Labor Force

At 39.8%, the labor force participation rate for those 55 years of age and over is the lowest it's been since April 2009 (chart 1).

Millions of "baby boomers" a generation typically defined as those born during the post-war baby boom that took place between 1946 and 1964 have retired from the workforce over the past six years.

This is putting massive downward pressure on the total labor force participation rate, which currently stands at 63.0% (chart 2).


  

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Re: Fed Funds Rate, Historical Graph
Reply #4 - Oct 2nd, 2015 at 1:35pm
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Fiddler wrote on Oct 2nd, 2015 at 1:33pm:
Not that facts matter to you but .. .. .


Baby Boomers And The Labor Force

At 39.8%, the labor force participation rate for those 55 years of age and over is the lowest it's been since April 2009 (chart 1).

Millions of "baby boomers" a generation typically defined as those born during the post-war baby boom that took place between 1946 and 1964 have retired from the workforce over the past six years.

This is putting massive downward pressure on the total labor force participation rate, which currently stands at 63.0% (chart 2).



Are you aware that the Fed just stated we are broke?  Does this concern you putting aside politics?
  


"Without morals a republic cannot subsist any length of time; they therefore who are decrying the Christian religion, whose morality is so sublime and pure (and) which insures to the good eternal happiness, are undermining the solid foundation of morals, the best security for the duration of free governments."

Charles Carroll, signer of the DOI
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Re: Fed Funds Rate, Historical Graph
Reply #5 - Oct 2nd, 2015 at 1:38pm
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Fiddler wrote on Oct 2nd, 2015 at 1:33pm:
Not that facts matter to you but .. .. .


Baby Boomers And The Labor Force

At 39.8%, the labor force participation rate for those 55 years of age and over is the lowest it's been since April 2009 (chart 1).

Millions of "baby boomers" a generation typically defined as those born during the post-war baby boom that took place between 1946 and 1964 have retired from the workforce over the past six years.

This is putting massive downward pressure on the total labor force participation rate, which currently stands at 63.0% (chart 2).



Retirees account for about half of the drop in labor force.

http://www.usnews.com/news/articles/2014/07/17/baby-boomers-are-a-big-part-of-la...

http://www.factcheck.org/2015/03/declining-labor-participation-rates/

So the Labor Force Participation Rate would still be dropping, even removing all of the recent retirees.
  

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Re: Fed Funds Rate, Historical Graph
Reply #6 - Oct 2nd, 2015 at 2:21pm
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Rabbit_Reborn wrote on Oct 2nd, 2015 at 1:38pm:
Retirees account for about half of the drop in labor force..


I think the article says that..

How is the Participation Rate calculated?  If we look at the chart below it seems something changed in the way it is calculated since the 60s..


  

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Re: Fed Funds Rate, Historical Graph
Reply #7 - Oct 2nd, 2015 at 4:53pm
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Fiddler wrote on Oct 2nd, 2015 at 2:21pm:
I think the article says that..

How is the Participation Rate calculated? If we look at the chart below it seems something changed in the way it is calculated since the 60s..

http://static3.businessinsider.com/image/542eec70eab8ea39105c0cbd-1200-900/cotd-...

Reasonable question. I don't know how they have changed it in the past. It's hard enough finding one definition of how it's measured currently (some seem to indicate all adults over 18, while others put the range at 18-65).
  

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Re: Fed Funds Rate, Historical Graph
Reply #8 - Oct 2nd, 2015 at 10:02pm
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Rabbit_Reborn wrote on Oct 2nd, 2015 at 12:33pm:
The Fed Funds Rate is coming up on 7 full years at 0%.

A few questions:

1. Why does the Federal Reserve drop the interest rates? What purpose does that serve?


I heard someone on CNBC today put it pretty well.  The low rates, and thus low borrowing costs, accelerate planned spending.  That is, by making it cheaper to borrow, more folks will borrow and will carry out various economic activity that they might have waited to do.

The obvious problem is what happens when the rates go up or they run out of stuff to accelerate.

Quote:
2. When was the last time the Fed Funds Rate was held at 0% for 1 full year?


Last year...   Wink

Quote:
3. What lessons can be learned from the current levels of interest rates and the state of economy in the United States?


That the fed cannot be as effective in boosting the economy as they think.  Especially when factoring the down side of the business cycle.
  
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Re: Fed Funds Rate, Historical Graph
Reply #9 - Oct 2nd, 2015 at 10:09pm
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The argument that retirees are responsible for the labor participation rates surge is only salable if you argue that retirees need not be replaced. Are all jobs people in the marketplace retired from useless and disposable?

This argument, to me, is one of the most ridiculous arguments ever made to defend an economic strategy ever concocted.

You would have to be a fool to advance it.
  
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