Limit on interest rate increases

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shuresm7b1
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Limit on interest rate increases

Post by shuresm7b1 »

According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
livesoft
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Re: Limit on interest rate increases

Post by livesoft »

My opinion won't matter and I don't think anyone else's opinion will matter either. But to give you some numbers: I think interest rates over the next 10 to 20 years could range from -2% to +22%.

I think inflation is a great way to tax the hidden wealth of people who have it. That is, if I have $10 billion saved up somewhere, then inflation will do its thing with that $10 billion.
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firebirdparts
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Re: Limit on interest rate increases

Post by firebirdparts »

They auction off the bonds. The Fed can buy them all, but if they do, money will be created. So there's not a way to divorce those two events that I can see.

That is to say they can't really control it easily. Not in real life.
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Robot Monster
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Re: Limit on interest rate increases

Post by Robot Monster »

If the Fed doesn't actually have the ability to control a surge of inflation, if there is a limit to their rate increasing powers, wouldn't there be mainstream sources discussing that, e.g. the Wall Street Journal, Bloomberg, etc?
000
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Re: Limit on interest rate increases

Post by 000 »

No there is no hard limit.

They can just keep borrowing as long as the Fed / banks will let them which will have a inflationary effect.

Or, the Fed could do a debt jubilee.

Or, they could mint a platinum coin with whatever value they desire.

Or, they can simply default and unilaterally renegotiate the bond terms, which other sovereign states have done with their bonds.

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whodidntante
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Re: Limit on interest rate increases

Post by whodidntante »

It's not necessary that the US government can meet its obligations with tax revenues because they can do it by creating money. Their ability to do so is unlimited, although the currency will become worthless if they go too crazy with it.
squirm
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Re: Limit on interest rate increases

Post by squirm »

The fed keeps thinking they'll get back to "normalized" rates, whatever that means. They think they can get rates to 3% or so on the ten year, but that's a pipe dream. They can't even stop QE. The damage has been done and many times over.

The fed doesn't control rates like they used to. The overnight rates and bank lending rates are at zero for like forever. What they do control is QE, that is their new boytoy. I will say, I've been amazed how well orchestrated they have the bond, equity and housing market under their control. This is what they will use to control the economy going forward.
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Re: Limit on interest rate increases

Post by squirm »

whodidntante wrote: Sat Dec 04, 2021 4:31 pm It's not necessary that the US government can meet its obligations with tax revenues because they can do it by creating money. Their ability to do so is unlimited, although the currency will become worthless if they go too crazy with it.
The world as we know it ends if the US currency becomes worthless. I hope I never see that day.
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tetractys
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Re: Limit on interest rate increases

Post by tetractys »

shuresm7b1 wrote: Sat Dec 04, 2021 2:17 pm According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
The Fed sets the rate by vote. It’s been >4 x 3% in the past. I don’t believe there are any such wizards posting on this forum, or even cranking out videos.
Booglie
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Re: Limit on interest rate increases

Post by Booglie »

squirm wrote: Sat Dec 04, 2021 4:39 pm The fed keeps thinking they'll get back to "normalized" rates, whatever that means. They think they can get rates to 3% or so on the ten year, but that's a pipe dream. They can't even stop QE. The damage has been done and many times over.
Well, they can. But it would upset [edited by Moderator Misenplace] the stock market. Remember the maxim "stonks only go up"?
Well, you would be better forgetting it if they pull out QE completely, because the market could easily fall 90% and not recover for 20+ years.
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shuresm7b1
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Re: Limit on interest rate increases

Post by shuresm7b1 »

So what do you think is likely to happen based on history? The fed seems to have paralysis from analysis to me. I would just raise 25 basis points, check back in a month and do it again if the world didn't end. The fed seems very afraid to do what I see as insignificant moves.
skierincolorado
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Re: Limit on interest rate increases

Post by skierincolorado »

shuresm7b1 wrote: Sat Dec 04, 2021 2:17 pm According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
Tarriffs are a miniscule insignificant percent of government revenue.
Topic Author
shuresm7b1
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Re: Limit on interest rate increases

Post by shuresm7b1 »

I have no doubt he's a Carnival Barker but the question about what limit interest rates can have it ks interesting to me.

The point he raised seems worth discussion so in spite of all the crap he's peddling.

I'm still interested to know whether interest rates can go up or whether there's a cap that would cause the government to crash
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shuresm7b1
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Re: Limit on interest rate increases

Post by shuresm7b1 »

skierincolorado wrote: Mon Dec 06, 2021 3:53 pm
shuresm7b1 wrote: Sat Dec 04, 2021 2:17 pm According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
Tarriffs are a miniscule insignificant percent of government revenue.
So are there other significant sources of revenue for the government besides taxes?
skierincolorado
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Re: Limit on interest rate increases

Post by skierincolorado »

shuresm7b1 wrote: Mon Dec 06, 2021 5:29 pm I have no doubt he's a Carnival Barker but the question about what limit interest rates can have it ks interesting to me.

The point he raised seems worth discussion so in spite of all the crap he's peddling.

I'm still interested to know whether interest rates can go up or whether there's a cap that would cause the government to crash
Anything could happen. The government could raise taxes. he is correct that if interest rates got much above 3 or 4% the interest payments on government debt would get very large and put the government at risk of default. New revenue would be needed either through much faster economic growth , rapid inflation, or higher taxes.
pizzy
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Re: Limit on interest rate increases

Post by pizzy »

shuresm7b1 wrote: Mon Dec 06, 2021 5:30 pm
skierincolorado wrote: Mon Dec 06, 2021 3:53 pm
shuresm7b1 wrote: Sat Dec 04, 2021 2:17 pm According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
Tarriffs are a miniscule insignificant percent of government revenue.
So are there other significant sources of revenue for the government besides taxes?
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Jags4186
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Re: Limit on interest rate increases

Post by Jags4186 »

shuresm7b1 wrote: Mon Dec 06, 2021 5:30 pm
skierincolorado wrote: Mon Dec 06, 2021 3:53 pm
shuresm7b1 wrote: Sat Dec 04, 2021 2:17 pm According to this video there is a hard limit to how much interest rates can go up in and about 3%. According to this video they simply can't go any higher than that because of the interest costs paid by the government. So what are realistic options?

Whenever somebody says this is impossible and cannot happen I like to think there are other ways that it can. For example he also was mentioning taxes as the only revenue of the government but correct me if I'm wrong tariffs provide additional revenue to the government. Are there other sources the government has for revenue?

So let me know what you think about what the limit for interest rates are in the next 10 to 20 year environment.

https://youtu.be/b8ElD1KktWw
Tarriffs are a miniscule insignificant percent of government revenue.
So are there other significant sources of revenue for the government besides taxes?
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Re: Limit on interest rate increases

Post by LadyGeek »

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