Guest Post by Anthony Sanders
The Night Of The Living Fed! Short-term Rates Down 500 Basis Points Since Dec 2006 Zombifying Savers (And Not Helping Mortgage Borrowers)
The Federal Reserve Open Market Committee (FOMC) will be meeting Wednesday to decide whether to raise the Fed Funds target rate or continue to taper The Fed’s asset purchases.
The Federal Reserve helped to push down interest rates, particularly compared to the end of 2006. Short-term rates (those utilized by savers and seniors) by 500 basis points. Long-term rates (those utilized by mortgage borrowers) have fallen by 250 basis points, about half the decline of short-term rates.
But has The Fed’s aggressive easing (and rate lowering) done any good for the target mortgage borrowers? Mortgage debt outstanding continues to fall, house prices continue to rise as mortgage purchase applications deteriorate.
The FOMC will look at inflation compared to labor market “improvements.” While inflation is only 1.7% (according to the CPI YoY), Urban Consumers Owners Equivalent Rent of Residences is growing at a rate of 2.7%.
While Owner’s Equivalent Rent of Residences is growing at 2.7%, average wage growth is lagging at 2.0% growth.
Food is shooting through the roof, which is an important cost to American consumers.
The US Dollar?
Yes, it is “The Night of the Living Fed!” where wages and interest rates remain zombified.
Courtesy of Jessie’s Cafe Americain.
I have chart fatigue.
OK, but they sure are purdy. Like that food chart. It’s got six colors, five solid lines, and a dotted line, two lines going down, and four going up …. not to mention a shitload of numbers to the east, west, north and south. Frankly, my dear, I don’t know what the fuck is going on.
I am a simple man. I need simple charts. No more than two colors or lines/bars.
For, example, here I can INSTANTLY see that I need to convert Ms Freud to vegetarianism.
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And, here, I can INSTANTLY see she doesn’t exercise enough.
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My gosh, Stuck, who enjoys exercise when they are 60????????? John
When you get those tasty offers in the mail, you know…”Take advantage of our high yield savings accounts and earn 00 .80% interest”. Get a firm grip on yourself and just say NO. Why transform yourself into a savings zombie to forever feel like a complete dipshit idiot. Figure out what items you would use from the grocery that have a long shelf life and buy a years supply cuz a year from now you will be shocked at the prices. That really will be tasty savings income and high yield to boot if said items are a BOGO or on sale at a discount.
@bluestem-your name reminds me of my years living in the flint hills of Kansas. Beautiful country just like it was 200 years ago. Buffalo are gone but cattle sub for them. Good people hardscrabble would like them I think.
Fancy-schmancy graphs like those would have impressed the dickens outta my econ prof….however, here on planet earth? Not so much. I don’t need no steekin’ multi-color charts to inform me all I really need to do is bet my very bottom dollar on the concept that the fed will do whatever profits the fed and their banker pals the most- and damm anyone else. Paranoia you shrill? Sure- you betcha. Now go chart the price of ANY TBTF bank from 2007 to present…. Nuf said