I am unclear

So what event will cause the govt to raise rates to at a minimum 1 percent from .5 and while they are at it why not set it at 0. Who cares? What is this mickey mouse monopoly money created and lent and consumer borrowing and spending joke economy and society we got here in north am....

Official response from submitted

FED fears that all the new money it pumped into the economy to offset the massive 2008 crisis and its aftermath (that the bottom 90% have still not recovered from) might start running after hard assets (land, real estate, gold, commodities, etc.) and so drive up prices (i.e. a massive inflation). FED fears it might be hard to stop that once it got going. So best policy is to raise rates now to slow economy and thus hopefully dissuade people from borrowing to bid-up prices still more. Its a long shot policy, but the FED's record in predicting or solving the 2008 crisis is awful so why imagine it can see and act well now? System is careening from one crisis and "policy" to another as it spirals downward. Hence the votes for Brexit and Trump as people seek to escape a declining system or magically put it into reverse. Neither will happen. The only real solution is system change and that still scares folks.


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  • commented 2016-11-28 03:05:44 -0500
    PPL in the US don’t realize how good they have it. I met a guy from Miami, he said, ya man its getting hard, a nice house costs like 600k now and your only making 100k with hardly any education ..lol…I was like ya that sucks man, try 2.6 million and makin 69k with lots of education and skills and a line up of ppl with 10 times more skills and education to take your job for less…CANADA has gone down the economic shitter….
  • commented 2016-11-28 02:56:47 -0500
    Yes of course. But this insane asset “real estate” inflation is absolutely insane. Even if you are in the top 5th percentile of income earners you can not buy anything? Let alone the rest of the ppl in the 94.9 and down percentile. Unless they take on 2 3 million in debt amortized over 30 years at 2 percent and if rates move or you have any accident well, your life is as economically stable as a guy walking a tight rope (ANXIETY MUCH). Wtf? In Canada it is a catastrophe, in cities such as Vancouver and Toronto the median household income is 76k. The average detached house in an area where the median income is slightly higher ie 100k, the price of a tear down is 2.5 million? You need to earn roughly 300 percent more than your neighbours to buy a tear down and even still live hand to mouth earing 300k gross? Wtf are they doing….BTW all this stuff is and has been purley dependant on ppl from mainly China bringing money and speculating in housing while locals business owners and top earners are totally hopeless……The govt has done this fully knowing what it has done….I say we hang the rats for treason……And non of the foreign investments are going anywhere except in housing and causing retarded inflation none ever set up businesses invest in it to employee high paid ppl or anything of the sort its real estate real estate and only real estate…..I was an agent in Vancouver and had a client who was a heart surgeon at VGH he earned 240k or so and in Canada he would be in the top 95 percentile, we went to put an offer on a house for 2 mil, 8 agents all Chinese over bid the thing to 2.5 mil and we lost out. I literally handed in my licence then next week…5 months later they put up the house for 3.4 million and advertised it in Chinese newspapers IN CHINA.. and it sold for 3.3 they house was old and not worth more than 100k …Locals are totally funked…Even if you are a stud and kill it and get in the top 4 percentile of professionals income earners you have zero chance of buying a home and raising a family in Vancouver and now Toronto ( they have literally cause prices of houses to increase more in the past 2 years than they have gone up in the past 100 years) without being in debt up to your eyeballs and having financial anxiety 24/7..They did put the 15% foreign buyer tax in Van and sales plummeted 65 or so percent the week after and they kept yapping that it was a healthy market and economy. 75k median house hold income….lol. MEDIA IS a pure misinformation disgusting entity…..The only solution is you exterminate all sell out politicians and media rats and put in place human beings with a soul and who are not manipulating information and econ policy for their own and immediate friends and family gain at the detrimine to 99 percent of everyone else….I have faith….I told the mayor, if you are going to allow business ppl from 3rd world nations to come into our city and compete with us on housing aand kick our ass 100 percent of the time, in our own city, you better make it competitive in our city to be able to compete with them, namely eliminate minimum wage and all labour laws, so we can also pay our employees 5 dollars a day and pay 5 percent tax and make large enough profits as businessmen so we can compete with these ppl from abroad and pay 5 million for a tear shitty rundown home in an average location…..he never replied… He says we don’t see a problem…This is toronot now btw…Got I home we have a 2008…..Unless your family bought something in 2013 or prior, I don’t give a …. what you do or how much your earn unless you earn 4 times the Prime minister of Canada, you are not buying a house working and living in Toronto and raising a family without being 3 weeks away from loosing it all….Nice economy we got hey? If you think you have problems of inequality in the US you aint seen nothing…I went to LA and all the other states, you earn more and it costs way less to live compared to Toronto and Vancouver (is a pure joke) You pay less taxes and business is way more lucrative and the opportunities to make money there are 1000 times better than in Canada. In Canada you have like 8 apartment buildings with a cap rate of 8 percent or higher in the US you have 80,0000, your Silicon valley pay 3 times more for the same it skills in Canada, your minimum wage is lower for business ppl, ….Yes if you are not educated and not ambitious it probably sucks, but in Canada if you are educated and ambitious its still like getting water from a stone….The only ppl they like seeing with money in socialist Canada and they love them and actually depend on them to keep the pure debt running economy is ppl who didn’t make it in Canada….The median income to debt ratio of Canadians is 170 percent, it was 150 in the us just before the crash….were at 170 and real estate prices keep going up…its disgusting….
  • tagged this with good 2016-11-28 02:56:46 -0500
  • responded with submitted 2016-11-27 14:53:31 -0500
  • published this page in Ask Prof. Wolff 2016-11-16 17:54:04 -0500

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