Interest Rates - Seriious thread

[Tony]

I have a couple hundred grand in a money market fund. Why is none of your business, but it does not make shit.

But I have a question. Why are interest rates not always 0-1% all the time? What advantage is there for the US, or the world as a whole to have interest rates anything other than close to 0%? I always see these guys on CNBC and Peter Schiff pushing to raise interest rates, but what is the advantage of having interest rates at say 8% versus close to 1%?

I get there needs to be balance in investments, but rates have been near 0% for 8 years and the economy has not collapsed, so not sure why there is a push by some to raise them by a few basis points.

[gauchojake]

[anonamoose]

[ToasterOven]

[Sloppy Joe]

[MumblesBadly]

I have a couple hundred grand in a money market fund. Why is none of your business, but it does not make shit.

But I have a question. Why are interest rates not always 0-1% all the time? What advantage is there for the US, or the world as a whole to have interest rates anything other than close to 0%? I always see these guys on CNBC and Peter Schiff pushing to raise interest rates, but what is the advantage of having interest rates at say 8% versus close to 1%?

I get there needs to be balance in investments, but rates have been near 0% for 8 years and the economy has not collapsed, so not sure why there is a push by some to raise them by a few basis points.

This article is a few months old, but the reasoning still applies:
http://www.bloomberg.com/news/articl...-yellen-speech

(Federal Reserve Chair) Yellen expects to raise interest rates this year if the economy meets her forecasts, with a gradual pace of tightening to follow. While the labor market is nearing full strength, “we are not there yet,” she said Friday in a speech in Providence, Rhode Island.

Delaying first rate increase until employment and inflation return to the Fed’s objectives “would risk overheating the economy,” Yellen said.

P.S. At least holding it in a money market fund was better than holding it in gold. (***Zing!!!***)

[anonamoose]

[Tony]

Trying to upgrade the content on this site, and you get what you get. I have plenty of sites in the rotation to ask financial questions like this. I gave PFA first chance.

My net worth is exploding and I am trying to get some free interest rate advice. Like the old expression, there if nothing for free. Looks like I will be stroking a check to an advisor for $2-$3K for how to invest against 0% interest rates.

[GrenadaRoger]

I have a couple hundred grand in a money market fund. Why is none of your business, but it does not make shit.

But I have a question. Why are interest rates not always 0-1% all the time? What advantage is there for the US, or the world as a whole to have interest rates anything other than close to 0%? I always see these guys on CNBC and Peter Schiff pushing to raise interest rates, but what is the advantage of having interest rates at say 8% versus close to 1%?

advantage of 8% is less risk of inflation and boom/bust business cycles caused by cheap financing (low interest rates)...the disadvantage is unemployment and political upheaval

[Daly]

I can't help you with improving your yield.

I don't have the time to walk you through the importance of interest rates, but can and will in the next few days of this is a serious question.

Only short term advice I can give at this point is if you have that much liquid cash earning < 1% you should be spreading it around to multiple banks so you get FDIC insurance up to $100K. only reason to have that much cash in what is effectively a non interest bearing account is for the safety of it.

[Lord of the Fraud]

Trying to upgrade the content on this site, and you get what you get. I have plenty of sites in the rotation to ask financial questions like this. I gave PFA first chance.

My net worth is exploding and I am trying to get some free interest rate advice. Like the old expression, there if nothing for free. Looks like I will be stroking a check to an advisor for $2-$3K for how to invest against 0% interest rates.

Bait is too obvious.


Unless he's onto his second bottle of tequila, he aint nibbling on this effort.

[MumblesBadly]

I have a couple hundred grand in a money market fund. Why is none of your business, but it does not make shit.

But I have a question. Why are interest rates not always 0-1% all the time? What advantage is there for the US, or the world as a whole to have interest rates anything other than close to 0%? I always see these guys on CNBC and Peter Schiff pushing to raise interest rates, but what is the advantage of having interest rates at say 8% versus close to 1%?

I get there needs to be balance in investments, but rates have been near 0% for 8 years and the economy has not collapsed, so not sure why there is a push by some to raise them by a few basis points.

Tony,

When the Fed wants to slow or lower inflation, it takes action to raise the cost of borrowing by banks, which in turn usually raises interest rates for borrowers. These higher borrowing costs will usually slow the economy if the increase in nominal interest rates in higher than the expected change in inflation rates. The rare exception is when borrowers, on average, believe that the expected returns on their investments are growing faster even when adjusted for inflation, and those periods are so rare that most of the action is due to changes in expected inflation.

So, why have been there been periods of much higher interest rates? Primarily because borrowers expected much higher inflation rates. Historically, inflation-adjusted short term risk-free interest rates have been about 0.5% based on historical analysis of Treasury bill rates and inflation. Which means that Treasury bill rates lower than 0.5% usually means that the Federal Reserve is ndirectly subsidizes bank profits in order to shore up the financial system.

In fact, Japan's central bank has been doing this for about two decades given how badly its banks were hurt by the late 1980's collapse in real estate prices, the cross-ownership of Japanese banks, the ridiculous level of crony lending to Japanese industries, the unwillingness of Japan's government to force Japanese banks to recognize the losses on their books, nor allow foreign investors to inject new capital into the financial system in exchange for sustaintial voting control of any of Japan's major banks.

And while that last paragraph seems like a digression, the US government did one particular thing in reaction to the 2008-2009 financial crisis similar to the Japanese that many economists believe amounted to a Full Tilt-style management of the crisis: It allowed the banks holding crap mortgages and mortgage-backed securities to not reflect their lower (and often worthless) value on their books.

Since then, the major banks have slowly worked a lot of those junk assets off of their books, so the need to shore up those banks with an indirect interest cost subsidy has waned. And because the Yellin and the other Fed Board members probably believe that the US banking system is finally out of the extreme danger that followed from the 2008-2009 financial crisis, it feels that banks should expect that indirect subsidy to be cut back starting later this year.

[MumblesBadly]

Trying to upgrade the content on this site, and you get what you get. I have plenty of sites in the rotation to ask financial questions like this. I gave PFA first chance.

My net worth is exploding and I am trying to get some free interest rate advice. Like the old expression, there if nothing for free. Looks like I will be stroking a check to an advisor for $2-$3K for how to invest against 0% interest rates.

You shouldnt have to pay $2-$3k to learn how to invest $200,000 in relatively liquid assets. In fact, if you open an account with Vangaurd and invest with them, their financial advisors are free. And if you really need to preserve capital in the short run (less than 5 years), suck it up and keep it very safe investments.

[anonamoose]

I thought the better answer had to do with lending to business and not so much inflation.

As we came off the Great Recession, the plan was to remove any benefit banks might feel from higher Fed interest rates. The banks were supposed to lend money not sit on it.

Even at near zero interest rates banks worldwide were unwilling or at least cautious about providing money for business growth. Kinda still a problem.

Don't too quickly confuse the success of the stock market with a great economy. If Tony can't get a decent interest rate from the bank maybe he invests in the stock market and thus further bids up the Nasdaq & Dow averages.

The rest of us were happy to borrow cheap and invest that cash in the market. Binkage. Too late Tony.

Free money for so long will have its consequences. I personally got a hunch about auto loan defaults. Heard an ad today on radio... "If you can demonstrate $350 take home a week - this dealership guaranteed you a $30k loan". Sounds like mortgage qualification just prior to housing collapse.

Speaking of autos. This American Life recent piece on NUMMI (Toyota & GM) partnership was gold.

You're feeding a troll. Bottomset is a plumber that makes maybe 40k a year. 3 months ago he was trying to day trade with 10k trying to make 10% a month and now he claims he has hundred of thousands in the bank earning the lol interest rate of nothing point nothing. This is simply his way of trying to find alternatives for the 10k that he was trying to invest months ago.

[Tony]

I thought the better answer had to do with lending to business and not so much inflation.

As we came off the Great Recession, the plan was to remove any benefit banks might feel from higher Fed interest rates. The banks were supposed to lend money not sit on it.

Even at near zero interest rates banks worldwide were unwilling or at least cautious about providing money for business growth. Kinda still a problem.

Don't too quickly confuse the success of the stock market with a great economy. If Tony can't get a decent interest rate from the bank maybe he invests in the stock market and thus further bids up the Nasdaq & Dow averages.

The rest of us were happy to borrow cheap and invest that cash in the market. Binkage. Too late Tony.

Free money for so long will have its consequences. I personally got a hunch about auto loan defaults. Heard an ad today on radio... "If you can demonstrate $350 take home a week - this dealership guaranteed you a $30k loan". Sounds like mortgage qualification just prior to housing collapse.

Speaking of autos. This American Life recent piece on NUMMI (Toyota & GM) partnership was gold.

You're feeding a troll. Bottomset is a plumber that makes maybe 40k a year. 3 months ago he was trying to day trade with 10k trying to make 10% a month and now he claims he has hundred of thousands in the bank earning the lol interest rate of nothing point nothing. This is simply his way of trying to find alternatives for the 10k that he was trying to invest months ago.

I do not have a million dollars. But I am north of $250K. I do not need to explain anything to you. Remember the subject line and go away.

[anonamoose]

You're feeding a troll. Bottomset is a plumber that makes maybe 40k a year. 3 months ago he was trying to day trade with 10k trying to make 10% a month and now he claims he has hundred of thousands in the bank earning the lol interest rate of nothing point nothing. This is simply his way of trying to find alternatives for the 10k that he was trying to invest months ago.

I do not have a million dollars. But I am north of $250K. I do not need to explain anything to you. Remember the subject line and go away.

Well then you should keep doing whatever you did with the 10k to get it to 250k.

[Tony]

I do not have a million dollars. But I am north of $250K. I do not need to explain anything to you. Remember the subject line and go away.

Well then you should keep doing whatever you did with the 10k to get it to 250k.

Would you STFU, please? Look at the title of the subject. Just go fuck yourself. If I wanted to backhand you would have done so. Go find a shitty thread and camp out it in that one. POS.

[Sloppy Joe]

In all seriousness, opening a bank account can help you save money instead of cashing those checks and immediately burning through half of it at a local dive.

Local banks will occasionally take on individuals with a history of delinquency.

I think that some banks can impose daily limits to help keep your alcoholism at bay. Plus, given your history with losing passwords, having to remember a pin number will mitigate any late night splurges on handles of Popov.

GL

[DJ_Chaps]

Tony, hun, tune into my stock show tomorrow.

[anonamoose]

Well then you should keep doing whatever you did with the 10k to get it to 250k.

Would you STFU, please? Look at the title of the subject. Just go fuck yourself. If I wanted to backhand you would have done so. Go find a shitty thread and camp out it in that one. POS.

Oh I'm sorry it's "25k" you turned into 250k

http://pokerfraudalert.com/forum/sho...hlight=trading

I am not looking to day trade too much, maybe $25K at the max at a time.