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Economy
Federal Reserve sets new targets for interest rates
2012-12-13
The US Federal Reserve has said it plans to keep interest rates at close to zero at least until the US unemployment rate falls below 6.5%.

The Fed previously had a date-driven target, rather than a data-driven one.

The Fed also said it will continue to buy $85bn (£53bn) a month of government bonds and mortgage-backed securities to try to boost the economy.

But changes in the way it does this will mean more money is pumped into the economy.

"The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labour market conditions," the Fed said in a statement.

US stocks rose after the announcement. The Dow Jones, which had been little changed before the statement, jumped 70 points to 13,318.
Numerical thresholds

Interest rates in the US have been close to zero for several years now, and the Fed again kept them at below 0.25%.

But in a surprise move, the Fed adopted numerical thresholds for future interest rate policy, something which had not been expected until next year. It said that it expects to keep rates at this exceptionally low range as long as:

the unemployment rate remains above 6.5%
inflation between one and two years ahead is projected to be no more than a half percentage point above the committee's 2% longer-run goal
longer term inflation expectations continue to be well anchored

The Fed had previously said it expected to maintain rates at their current level until 2015.
Meanwhile back in the real world:
First Hong Kong, Now Aussie Central Bank Gets Ugly Case Of Truthiness

"Central banks can provide liquidity to shore up financial stability and they can buy time for borrowers to adjust, but they cannot, in the end, put government finances on a sustainable course... They can't shield people from the implications of having mis-assessed their own lifetime budget constraints and therefore having consumed too much."

Posted by:tipper

#10  "Somehow the lazy, no-skill, losers must be embraced by our society and allowed to work for their livelihood and dignity."

I'd love it if they worked, rammer. I'm just tired of the legions who think I'm supposed to work to support them.

I agree we're far too over-regulated, both locally and nationally.
Posted by: Barbara   2012-12-13 21:49  

#9  Barbara I disagree. Somehow the lazy, no-skill, losers must be embraced by our society and allowed to work for their livelihood and dignity.

Right now, with licensing rules for mani-pedi providers, cab drivers, bikini-waxers, and nutrition-advisers, minimum wage laws and mandatory unemployment and health insurance, these sorts of people cannot get any employment whatsoever.

Shall we let them die from exposure and hunger?

That is the Minnesota way, but the weather doesn't cooperate in California or Florida quite the same.

Let's find ways to permit the least able American to survive today, and hope for a better tomorrow.
Posted by: rammer   2012-12-13 21:14  

#8  I'm with you, Barbara.

My post was an attempt at a play on words with Champ's comment about, "...at some point you've made enough money".

Posted by: no mo uro   2012-12-13 16:35  

#7  "At some point I really think that if you are a lazy, low skill loser you really have been given enough government forbearance."

If you're a lazy, low-skill loser, you're due NO forbearance, as far as I'm concerned, no mo.

If the clowns in the gummint want to give to support the losers, they should have to use their own money. How much "forbearance" do you think there'd be then? >:-(
Posted by: Barbara   2012-12-13 13:18  

#6  25% of GDP as federal taxes and fees
45% of GDP as federal expenditures
Therefore
Real GDP is ~80% of the current value.
Posted by: Bright Pebbles   2012-12-13 11:40  

#5  So next year we'll have

7.5% unemployment
M1 increasing at 10% year over year
2% inflation
3.3% mortgage 30 yr rate
25% of GDP as federal taxes and fees
approaching $1 Trillion in student debt

and Obama still being worshipped as a hope and change savior

45% of GDP as federal expenditures
Posted by: lord garth   2012-12-13 11:04  

#4  If the interest rates had been allowed to rise to the actual cost of borrowing money ten years ago the housing bubble would have been mitigated to one extent or another. And we wouldn't be in nearly the mess we are in.

Interest rates need to go to at least seven or eight percent to cleanse the filth out of our economy. It will happen quickly and be over quickly. Better to rip a bandaid off then pull it off slowly.

I forget who said it first but the problem right now in America isn't that the wealthy and successful have it too easy but that those who have failed to thrive in the private sector aren't allowed to fail.

At some point I really think that if you are a lazy, low skill loser you really have been given enough government forbearance.
Posted by: no mo uro   2012-12-13 09:45  

#3  Then what?

Confiscate private homes and businesses. Those magic checks for the welfare recipients and public employees and grant recipients and rent seekers still have to be sent out, doncha know? Gotta fund 'em somehow. If they won't give these up willingly, just send the Lansing union guys to make sure they give them up.
Posted by: no mo uro   2012-12-13 09:38  

#2  Keep printing money until all existing savings are effectively confiscated. Then what?
Posted by: Glenmore   2012-12-13 09:14  

#1  The federal Mirror reserve said that without more mirror bending, Americans would continue to appear to be fat.
It announced plans to double the curvature of mirrors in order to keep Americans thin and healthy.
Posted by: Bright Pebbles   2012-12-13 06:01  

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