When an organization literally not responsible to the population of a country can make all the decisions affecting its economy, there is no way to control it. Ouch. Read more @ http://www.zerohedge.com/news/2014-09-12/fed-has-big-surprise-waiting-you
http://www.tradingeconomics.com/country-list/interest-rate Yeah, like .25 Interest rates rising to say .50 is going to burn down the entire economy.
Actually, this whole mess of an economy is too complex for me to have any proper grasp of. I do know that it's being controlled and manipulated from the top to keep it going.
Going from 0.25 to 0.5 should not have any impact, and the actual rate of 0.5 will not, but the signal it sends will do the damage. That signal is that the free money is coming to an end, QE and all its variations are winding down. Remember early this year when Yellen hinted the slop trough was going to be shut down? The market had a fit, and Yellen quickly backed off her comments. Without fed intervention, the rate should be at least 2%, probably more like 5%. By keeping the rate artificially low for so many years, and by dumping so much cash into the system, the fed has severely warped the economy. That giant pile of cash sitting in vaults is a time bomb, if it ever starts moving in the economy we are going to see massive inflation. The fed recognizes it has created a bubble, but they dont know what is going to happen when ZIRP & QE etc are stopped. Once the merry go round stops, nobody is sure what rates will do. As this states http://www.zerohedge.com/article/st...-itself-between-deflation-and-hyper-inflation "Another option is to raise the interest rate paid to banks on their reserve deposits, which would raise the opportunity cost of lending and thereby tend to exert upward pressure on market rates generally and slow the growth of loans and the money stock. However, because the Fed has little experience with paying interest on reserves, it is difficult to predict how much bank loans would change in response to an increase in the interest rate paid on reserve deposits. " And lurking in the wings is the interest on the federal debt. If rates go up to around the 5% level, the interest payments on the debt will devour the budget.
I don't know, and I don't think anyone can truly answer that question. This is a big bubble and it has global implications, when the US economy rises or falls it brings the global economy with it. The St. Louis Fed is more open in its research and has posted a lot of papers on this subject, and they don't know what is going to happen. This is new territory, the fed doesn't even completely understand why inflation and money supply are now so disconnected. The optimistic side is if you use the last 3 major downturns (1987, the tech bubble, and the housing bubble) as models then the market will recover quickly and within 1 year or so everything will be back on track. The pessimistic side is that in pre-2007 bubbles the US had a robust recovery and a firm global position which could absorb the next downturn and provide a reserve with which to build a recovery, but those conditions don't exist post-2007. The pessimists side is that the US has not recovered from 2007, there is no reserves in the US or fed or IMF, the fed will not be able to reign in all that cash it has injected through QE before it starts moving and triggers high inflation, and the next downturn will be systemic (not just housing, or just tech, or just banking), with major ramifications in all aspects of American life. You might be more insulated than most people, but I don't know if you will come out unscathed. I don't think anyone knows what to invest in these days.
you've been fooled, the fed has to answer to congress here's where congress tells the fed what its job is: Federal Reserve Act Section 2A. Monetary policy objectives The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. here's where congress makes the fed report on its progress: Section 2B. Appearances Before and Reports to the Congress (a) Appearances Before The Congress. In General. The Chairman of the Board shall appear before the Congress at semi-annual hearings, as specified in paragraph (2), regarding the efforts, activities, objectives and plans of the Board and the Federal Open Market Committee with respect to the conduct of monetary policy; and economic developments and prospects for the future described in the report required in subsection (b). Schedule. The Chairman of the Board shall appear before the Committee on Banking and Financial Services of the House of Representatives on or about February 20 of even numbered calendar years and on or about July 20 of odd numbered calendar years; before the Committee on Banking, Housing, and Urban Affairs of the Senate on or about July 20 of even numbered calendar years and on or about February 20 of odd numbered calendar years; and before either Committee referred to in subparagraph (A) or (B), upon request, following the scheduled appearance of the Chairman before the other Committee under subparagraph (A) or (B). (b) Congressional Report. The Board shall, concurrent with each semi-annual hearing required by this section, submit a written report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking and Financial Services of the House of Representatives, containing a discussion of the conduct of monetary policy and economic developments and prospects for the future, taking into account past and prospective developments in employment, unemployment, production,investment, real income, productivity, exchange rates, international trade and payments, and prices. (c) Public Access To Information. The Board shall place on its home Internet website, a link entitled 'Audit', which shall link to a webpage that shall serve as a repository of information made available to the public for a reasonable period of time, not less than 6 months following the date of release of the relevant information, including the reports prepared by the Comptroller General under section 714 of title 31, United States Code; the annual financial statements prepared by an independent auditor for the Board in accordance with section 11B; the reports to the Committee on Banking, Housing, and Urban Affairs of the Senate required under section 13(3) (relating to emergency lending authority); and such other information as the Board reasonably believes is necessary or helpful to the public in understanding the accounting, financial reporting, and internal controls of the Board and the Federal reserve banks. http://www.federalreserve.gov/aboutthefed/fract.htm
Because a blog reports something about what they claim about "most people" reactions, it's an "ouch"? How so? I certainly would like to see valid evidence that "most people" believe that modest interest rate increases, when they are done because economic activity justifies them, it will "kill the economy."
The Fed is audited every year by both government and independent auditors. Congress does not have to "direct" that it be audited each year. The Fed is probably the most heavily audited entity on Earth.
