Science Denier said:
Logos Stick said:
Science Denier said:
Logos Stick said:
He can only be fired for cause. He can't be fired because Trump has decided he wants a 1% rate, which is completely ******ed btw.
Fire him. Cause = hurting the country by implement different policies based solely on who is POTUS.
Ok, what should the rate be set to and why?
I used the Taylor rule above, which is completely objective. We should be at 5% per that rule.
2.5%. I thought I posted this earlier, but may have been deleted. Or, maybe it didn't actually post.
Anyway, Trump has said he has secured $10 trillion in new investments in the US. Even if you don't believe him, he's working hard to bring at least some manufacturing to the US. To do that, he needs lower interest rates. Companies are NOT going to borrow at 5%. They will at 2.5%.
In your extremely outdated "Taylor rule", you have underestimated the potential GDP growth rate. Right now, labor participation is 62.2. Pre-covid, Trump had that at 63.3%. With the tariffs and influx of investment, that would at least go to 65%, and could reach as high as 70%, with cutting off welfare/Medicade to those not working.
And, yes. There could be some short term pain (inflation). But, it's worth it if it stimulates new construction in either new manufacturing, or updated older manufacturing complexes.
So your rate number is completely arbitrary then.
The bold is not true.
First off, the rate now is not 5%, it's 4.25%. Second, the rate was 5.25% at the peak of the housing bubble and was at 4.2%+ for the two years prior. Companies were borrowing during that time, that's a root cause of the bubble. Industrial production was at the highest level ever at that time! That's just one instance among many. 4.25% is an historically normal rate.
The Taylor rule is not outdated by any means. Its not a hard and fast rule used by the Fed but its not outdated. It is:
- Widely used by economists to benchmark whether monetary policy is too tight or too loose.
- Referenced in Fed research, speeches, and Congressional hearings.
- Useful for transparency: It helps explain how inflation and economic slack might justify a certain rate, even if the Fed doesn't strictly follow it.
- Still updated by Federal Reserve Banks (e.g., Atlanta Fed's Taylor Rule Utility) using current economic data and different assumptions. Here is the link:
https://www.atlantafed.org/cqer/research/taylor-ruleQuote:
Global Perspectives: John B. Taylor on the Taylor Rule, accommodative policy, low interest rates and expanded central bank mandates
Mark A. Wynne
November 24, 2020
John B. Taylor is the Mary and Robert Raymond Professor of Economics at Stanford University and also the George P. Shultz Senior Fellow at the Hoover Institution. A distinguished monetary economist, he is the author of the Taylor Rule, which is widely used to guide and evaluate central bank performance.
https://www.dallasfed.org/research/economics/2020/112470% LPR?!?! We've never hit 70% since we've been measuring it!
Inflation is literally theft. It's never good, short or long term.
