# Fed interest rate hike! **URL:** \ **Category:** Great Debates\ **Created:** [December 17, 2015, 4:05pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700 "2015-12-17T16:05:16Z")\ **Posts on this page:** 19\ **Page:** 3
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [December 31, 2015, 8:49pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/41 "2015-12-31T20:49:30Z")
> [@septimus](#): > > **jerry’smissingfinger** : I wonder if you know how diffuse and confused your discussion sounds. I get a vague impression you think some group of bad guys are doing something bad to the American public – am I right so far? – but who they are and what you think they’re doing is unclear. > > If you want an intelligent discussion, I suggest you shift the focus to your single most important point. I’ve no idea what it is. > \ That was a really good post **septimus** ; I also feel like the OP just spewed out a bunch incoherent rambling that makes no cohesive sense. There is a lot of interesting topics for debates here and I echo your call to **jerry’smissingfinger** to maybe just focus on one topic at a time. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [December 31, 2015, 9:33pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/42 "2015-12-31T21:33:18Z")
Can I talk about one thing? The notion that “raising the debt ceiling” somehow raises the debt. No it doesn’t. Spending money raises the debt. That money is spent when Congress passes spending bills. Not raising the debt ceiling is like getting your credit card statement, and you owe $3000 dollars, and you hit the roof because you only allow yourself to go $2000 in debt. So if you just refuse to raise the debt ceiling to $3000, then you won’t owe the $3000? No, you’ll still owe the $3000. The time to not owe $3000 is gone and past, you should have decided not to owe $3000 last month back when you were on a spending spree at the mall, and back when you were quitting your job so you could make more money. Except you did spend the money, and you are making less money. So what now? You borrowed the money when you spent the money, it’s no good complaining that you don’t want to be $3000 in debt when you are, in fact, $3000 in debt. The “debt ceiling” is a ridiculous farce. The debt is determined by the difference between how much the government spends and how much it raises, not how much we say we’re going to borrow. Want to cut the budget? Go ahead and cut the budget. Want to increase revenue? Go ahead and increase revenue. But don’t whine about the debt ceiling and how we shouldn’t raise it. That’s nonsense. ---
**Author:** ![Bosda\_Di\_Chi\_of\_Tricor](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bosda_di_chi_of_tricor/32/16845_2.png) [@Bosda\_Di\_Chi\_of\_Tricor](https://boards.straightdope.com/u/Bosda_Di_Chi_of_Tricor)\ **Post date:** [December 31, 2015, 9:41pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/43 "2015-12-31T21:41:50Z")
> [@jerry\_smissingfinger](#): > > It’s a Jeffersonian quote to James Madison > > You do understand how the Federal Reserve works right? > > This is not about tax cuts or balanced budget proposal because clearly this has not had any benefit for the middle class. Possibly some relief but not the advantages and increase of wealth the upper class is enjoying. Cite? :dubious: Provide links to a history book, quoting thaty. ---
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [December 31, 2015, 9:50pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/44 "2015-12-31T21:50:26Z")
**Lemur866** : Exactly. What I want to know is why the Republicans don’t reduce spending. They control both the house and the senate and they bitch about it constantly. Why can’t they just pass a bill? I bet they could even get enough Democrats on their side to override a veto if they were a bit balanced in their approach. Hell, even when they controlled the legislature and the Presidency from 2002 to 2006, they increased spending both in real terms and as a percent of GDP. I can only conclude that debt is a problem when a Democrat is president and they need something to make political hay out of. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 31, 2015, 10:12pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/45 "2015-12-31T22:12:34Z")
It’s even worse than that. The Republicans deliberately encourage deficits to increase debt. This serves their “Government is the problem / Liberals are spendthrifts / Starve the Beast / Defund regulation” agenda. Rational observers might regard tax hikes and deficits as _opposite_ approaches, but, talked down to by the Youtube and FoxNews propagandists, some laymen are ignorant enough to paint the tax cutters as those who are fighting the deficit! :smack: Does OP suffer from this particular pathological thinking? I don’t know: his inchoate rage is too confused to follow. ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:09pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/46 "2015-12-31T23:09:52Z")
> [@septimus](#): > > We often have threads where noobs try to learn basic finance and economics from the Board’s experts. My advice to expert and noob alike is not to bother with this thread. > > Not a big supporter of ’ this “man” ', are you? 🆒 ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:11pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/47 "2015-12-31T23:11:12Z")
> [@septimus](#): > > :eek: :eek: :smack: > > The FRB just raised its target interest rate to a breathtaking 0.50% (reminiscent of Weimar Germany?) > Or, in more easily grasped units, _ **500 MILLION** _ nanopercents. > > **The Horror! The Horror!** > L.O.L. 😃 :dubious: ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:12pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/48 "2015-12-31T23:12:17Z")
> [@septimus](#): > > I want to put this horrific interest rate hike into perspective. This is the first time in history that the FRB has DOUBLED the target rate in one fell swoop. The notorious rate doubling from 6.5% to 13% in the late 1970’s took over four years to complete. And the FRB has already threatened to raise the rate again – that would amount to a TRIPLING. > > And note that, due to the explosive exponential power of tyrannical compound-interest, the 500 MILLION nanopercent rate is actually more than 501.2 MILLION nanopercents of simple interest. An extra 1,200,000 nanopercents may not seem like much, but to debtors already staggering under the weight of 0.5% interest it can be back-breaking. > > Let’s do the calculations. Borrow a mere million dollars at the target rate and you will have to pay $13.70 of vigorish EVERY DAY. This usurious rate reminds us of Brooklyn loansharks! And you better believe the Fed will send boys around to break your kneecaps if you can’t come up with the $13.70. > > (At least there’s one silver lining in this horrid cloud. Next year is a leap-year, and since the Fed is too stupid to multiply its base rate by 366/365, the daily vigorish on your million-dollar loan will drop to $13.66 throughout the coming year. But in 2017 it will automatically jack back up to the higher rate.) > > **jerry’smissingfinger** , how am I doing? I’ve tried to discern the key idea in your post and bolster your case. Have I missed anything? Nope you got it all:rolleyes: ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:15pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/49 "2015-12-31T23:15:05Z")
> [@septimus](#): > > **jerry’smissingfinger** : I wonder if you know how diffuse and confused your discussion sounds. I get a vague impression you think some group of bad guys are doing something bad to the American public – am I right so far? – but who they are and what you think they’re doing is unclear. > > If you want an intelligent discussion, I suggest you shift the focus to your single most important point. I’ve no idea what it is. > > [1] Why is the hike “rare”? Is that your way of saying that rates have been at record lows since the 2008 credit crisis? > [2] Are you saying you “agree” with the hike? Was it correct, but done for the wrong reason? > [3] So the FRB (or somebody else?) wants to raise the price of petroleum?? Do you think raising interest rates furthers that goal? > [4] Did you listen to the rhetoric of other administrations? Is there some particular reason you distrust this one? Does expressing your inchoate hatred of a particular politican further the debate here? > [5] Why did you put “man” in quotation marks? BTW, many of us will agree that private banks have too much power in today’s America but we’d prefer if you inform yourself before arguing on our side. 😉 > [6] Does watching the numbers spin further your understanding? Or just feed your inchoate rage? > [7] Do you have a cite for this claim? Either way, why do you confuse interest rates and debt? If a government wanted to increase its debt, which way do you think it would prefer interesdt rates to go? > > It might be interesting to understand you viewpoint. Can you help with that? > > [8] What specific “mess” are you referring to? The debt? The debt is mostly due to Bush-era tax cuts, e.g. reducing the “Death Tax.” Do you favor an increase in the estate tax? > [9] Are you referring to 19th century history? Do you want a return to the gold standard? Moneys like Bitcoin? > > In another post, you mention that stocks fell slightly in response to the interest rate hike. Is there any reason why that should be a surprise? > > You mention that the interest rate was hiked a mere 11 moinths before the general election. Do you think the Fed is trying to influence the election? Which way? > > There’s more from you, but I’ll stop here. > > Try writing a single coherent paragraph summarizing the most important point you’re trying to make. seems pretty patient ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:17pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/50 "2015-12-31T23:17:25Z")
> [@septimus](#): > > I, and everyone engaging you here, knows far more about these matters than you do. I probably understand economics as well as most of them. Most of them obviously have far far more patience than I do. > > [Oops: I’ve partly conflated you with another December 2015 goldbug Now it’s your thread have fun with it:rolleyes: ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [December 31, 2015, 11:22pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/51 "2015-12-31T23:22:41Z")
> [@septimus](#): > > It’s even worse than that. The Republicans deliberately encourage deficits to increase debt. This serves their “Government is the problem / Liberals are spendthrifts / Starve the Beast / Defund regulation” agenda. > > Rational observers might regard tax hikes and deficits as _opposite_ approaches, but, talked down to by the Youtube and FoxNews propagandists, some laymen are ignorant enough to paint the tax cutters as those who are fighting the deficit! :smack: Does OP suffer from this particular pathological thinking? I don’t know: his inchoate rage is too confused to follow. WTF are you talking about?..Holy shit, can’t you see how off topic you are or are you one of those chicks that just like to bravely interweb argue behind the safety of a key board? Since you’re so smart go ahead, I’m all ears ---
**Author:** ![Happy\_Fun\_Ball](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/happy_fun_ball/32/17664_2.png) [@Happy\_Fun\_Ball](https://boards.straightdope.com/u/Happy_Fun_Ball)\ **Post date:** [January 1, 2016, 1:40am UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/52 "2016-01-01T01:40:53Z")
Dude, you are the one that couldn’t lay out a cohesive debate topic. I, personally would like to debate the wisdom of QE or the effects of having such low interest rates on society, but you are all over the map in your OP and have brought no data. You suck, not **septimus**. ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [January 1, 2016, 4:46am UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/53 "2016-01-01T04:46:34Z")
> [@Happy\_Fun\_Ball](#): > > Dude, you are the one that couldn’t lay out a cohesive debate topic. I, personally would like to debate the wisdom of QE or the effects of having such low interest rates on society, but you are all over the map in your OP and have brought no data. You suck, not **septimus**. Noted there is plenty of data and links. I did some of the research and posed a question, i am not going to spoon feed you information. The topic is all over the place because septimus took it that way, I even copied his post so people could see. The numbers are there for you to research and debate, there is a link, there is date from records I have kept, there are quotes from people involved, I don’t know how much more you want. You disagree fine, tell me why! Don’t be a little bitch. Oh …Happy New Years all:D ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [January 1, 2016, 6:50pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/54 "2016-01-01T18:50:21Z")
> [@Bosda\_Di\_Chi\_of\_Tricor](#): > > Cite? :dubious: > Provide links to a history book, quoting thaty. I’ll actually back up jerry on this (even though most of his argument is weak). He slightly mischaracterized it and gave it too much important, of course. I believe the conversation is discussed in Joseph Ellis’ [American Sphinx](http://www.amazon.com/American-Sphinx-Character-Thomas-Jefferson/dp/0679764410/ref=sr_1_1?ie=UTF8&qid=1451673518&sr=8-1&keywords=american+sphinx). In it he relates a series of letters between Jefferson and Madison while Jefferson is in France and Madison is leading the constitution convention. At one point Jefferson floats the idea that not only should no generation be able to foist debt on the next one (i.e. a balanced budget) but the government should be dissolved every 19(?) years and a new constitution created. This process would include wiping out all debts, public and private. Madison attempts to steer Jefferson away from this idea–doing so gently according to Ellis–because he realizes this is completely unworkable (if Madison was on Twitter he’d call it insane). Ellis points out that this idea would be attractive to Jefferson because he was perpetually in debt. The idea died with Madison. I’m working from memory but I’m pretty sure a budget guarantee was never discussed at the convention. So really it’s just an off-hand, fanciful notion by a single (albeit important) member of the revolutionary generation. It should be noted that President Jefferson would later put the government in debt with the Louisiana Purchase so really the idea that the Founding Fathers wanted (or expected) a balanced budget is a non-starter. ---
**Author:** ![ArcAngle](https://avatars.discourse-cdn.com/v4/letter/a/bc8723/32.png) [@ArcAngle](https://boards.straightdope.com/u/ArcAngle)\ **Post date:** [January 2, 2016, 10:31am UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/55 "2016-01-02T10:31:20Z")
Under what circumstances does the nations debt become a tangible problem? The concept of QE is that inflation has been steadily/rapidly increasing for ‘some time now’; when does that become a tangible problem? The concept of QE (or creating new money in general), seems reasonable in principle, at least because the fact that population increases over time (if there was an absolute unwavering quantity of money at all given times, and the game of life being ever in commencement, and the population ever growing, we can see how such would lead to problems). So the idea is that a population ever growing, requires an ever growing quantity of jobs along with it, so is the idea that newly printed money is given to job creators to create jobs, something which is more enticing to do when you are not using your own pocket money? ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [January 2, 2016, 11:34am UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/56 "2016-01-02T11:34:06Z")
> [@jerry\_smissingfinger](#): > > . . . are you one of those chicks that just like to bravely interweb argue behind the safety of a key board? > [@jerry\_smissingfinger](#): > > Don’t be a little bitch. If you want to snarl at other posters, make insulting insinuations, or resort to name calling, take it to The BBQ Pit. Do not engage in that behavior in this forum (or any forum other than The BBQ Pit). [/Moderating] ---
**Author:** ![jerry\_smissingfinger](https://avatars.discourse-cdn.com/v4/letter/j/e56c9b/32.png) [@jerry\_smissingfinger](https://boards.straightdope.com/u/jerry_smissingfinger)\ **Post date:** [January 7, 2016, 4:52pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/57 "2016-01-07T16:52:24Z")
Another market bloodbath China’s CSI 300 halted trading over night after tumbling 7% in 14 minutes for the second time in a week. S&P down 2.40% DJIA down 2.33% Dow Trannies down 23% since last January Most small caps already in a Bear market. Feds raising rates while the rest of the world is easing monetary policy. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [January 7, 2016, 7:54pm UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/58 "2016-01-07T19:54:13Z")
> [@jerry\_smissingfinger](#): > > Another market bloodbath … > > … Feds raising rates while the rest of the world is easing monetary policy. U.S. stocks are still trading well above their record-setting 2013 levels. European and Pacific stocks, OTOH, are still far from their 2007 highs. [Some analysts are unsure that the U.S. economy is, relatively, a disaster.](http://www.nytimes.com/2016/01/08/upshot/can-us-remain-an-island-of-stability-in-the-global-economy.html)🆒 ---
**Author:** ![Zach29](https://avatars.discourse-cdn.com/v4/letter/z/e0b2c6/32.png) [@Zach29](https://boards.straightdope.com/u/Zach29)\ **Post date:** [January 12, 2016, 1:56am UTC](https://boards.straightdope.com/t/fed-interest-rate-hike/740700/59 "2016-01-12T01:56:07Z")
At this point, any interest rate hike would not really be a “hike” at all, but rather the Fed cutting back on making their subsidized loans at lower interest rates. It costs a huge amount of money to manipulate market interest rates for prolonged periods of time, and the cost comes out in the form of inflation of the currency. The Fed knows they cannot keep interest rates down for prolonged periods of time, it is not a permanent or sustainable solution. [Previous page](https://boards.straightdope.com/t/fed-interest-rate-hike/740700.md?page=2)