Which political party is currently enacting legislation which will effect “small savers” negatively more than anything to do with interest rates, and in real time? Which political party has shown time and time again the only people they care about are the 1%? Which political party does absolutely nothing to assist “small savers” and in fact do their upmost to ensure as few people as possible can afford to save at all?
Nobody’s fooled by the “b-b-b-b-b-but both sides” bullshit anymore, champ.
Yikes, I looked this up. That’s sure a drag on things.
I’m butting in here, Stiglitz’ textbook is really good
https://www.amazon.com/Principles-Macroeconomics-Fourth-Joseph-Stiglitz/dp/0393168190
And I’d read EK Hunt’s History of Economic Thought alongside it.
http://sgpwe.izt.uam.mx/files/users/uami/atm/Libros/E._K._Hunt_Mark_Lautzenheiser_History_of_EconomBookZZ.org.pdf
But I’d say the best way to torture macro into your brain is to take a brick n mortar class. Making sense of all the functions on your own can be pretty… daunting.
Not really. Interest rates since 2008 have held at a low level that has only been touched once before, very briefly during the late 1930’s.
They sure could. That’s because builders were putting up 900 square foot starter homes on 1/6 acre lots. No one back then felt that a five bedroom house with a pool and family room was their birthright as an AMerican.
Hey, if Obama had voted against the bank bailouts, I absolutely would have voted for him. My point was not that the Republicans are going to fix this, but that the Democrats won’t, either.
Interesting, because it has the reverse effect on me. I remember when I was in college in the early 80s that mortgage rates in the middle double digits. In fact there were difficulties because mortgage rates were closing in on the maximum permitted under state antiusary laws. And back then most banks were limited to operating in one state, unlike credit cards companies, so they couldn’t avoid those laws by simply chartering themselves in Delaware.
They also had livable wages and an income tax on corporations and the wealthy that encouraged investment instead of hoarding, so, ya know, not really comparable. But I feel your “lazy greedy poors just want more than they can afford” sentiment. Well not really, I think it’s a mode of thought for sociopaths, but it’s the thought that counts. It’s also mortgage companies pushing people to buy more than they can afford throughout the years leading up to the 2008 depression, but again, stupid poor people should have known better, right?
“But the conservative turn in American governance inaugurated by Ronald Reagan pulled way back on that. The Fed itself also went nuclear to fight inflation around 1980: It jacked interest rates into the stratosphere, causing a massive recession and a wipeout for the working class.”
That’s a little bit of historical revisionism. Paul Volcker was a Carter appointee, and inflation had been a serious issue in the 1970s. The rate of inflation outpaced economic and wage growth, so people were seeing their purchasing power eroded for years (recall ‘stagflation’?). Everyone complained about inflation, but no one had the political will to do anything about it, because it would be a bitter pill, as Volcker’s actions demonstrated. In fact, Volcker took an enormous amount of political heat from Congress, and Reagan replaced him with the more pliant Greenspan as soon as he could.
It may be because I wasn’t paying for a mortgage then, but I was buying lunch and groceries for much less. 
(Which the next two articles on BB will be promoting. Stay tuned!)
Double-digit CD rates were an aberration: they only existed during a fairly brief period of abnormally high inflation.
The financial crisis in 2008-9 caused the Fed to institute a number of measures to lower interest rates, easing the plight of financial firms (but not saving those such as Lehman Bros., which was terribly over-leveraged. The government also didn’t do a lot to help consumers trapped in mortgages they couldn’t afford).
Still, despite the Fed’s policy actions, low interest rates may be the new normal for the U.S. economy. Economic historian Thomas Piketty has noted that most countries had near-zero inflation for most of the 19th century. He believes the long-term economic growth rates in developed nations will stabilize around 1.5% annually. Low growth also means low inflation, generally speaking. But that is not really the main economic problem we have. The problem is that people with capital to invest, who generally aren’t buying CDs, but buying businesses or shares of them, are earning returns that outpace inflation. They are doing ok, and given low tax rates in the US (about to get lower), are keeping a lot of what they earn, and are passing it on to their heirs (about to get easier and cheaper due to changes in the estate tax). Meanwhile, the non-investor class, which is most of us (most middle class people have hardly enough investments to count), is losing ground. And so we are tilting farther and farther into inequality, and the political system is now controlled by people who want the current economic regime maintained, or tilted farther in their favor.
Well I was in college, I didn’t have a mortgage. But there were some older students with mortgages and the rates were high, even for suicide “balloon mortgages,” In fact it was the reappearance of non- and negatively-amortizing loans during the run up to the great recession, despite low mortgage rates that convinced me that when the RE bubble popped it was going to be BAD. Although I didn’t realize HOW bad. The thing that gets me is that it took something like 40-50 years to forget the lessons of the Great Depression, but are ALREADY busy trying to forget the lessons of the Great Recession a mere 10 years on.
The latter understand the externalities of things like climate change and automation and the end of the postwar American economic anomaly just as well as many of us here do. The difference is that they have made the choice not to look at solutions but instead accelerate the problems (and in the process cement their families’ positions at the top). Libertarian techbros are additionally counting on it bringing about the Singularity, which they’ll ensure will have a very steep price for entry. Either way, it’s a right-wing greedhead’s version of the foolish Marxist’s maxim “the worse, the better,” and Putin’s Russia with its extreme inequality, its mix of soft and hard authoritarianism, and its new version of Tsarist service nobility is their current favoured model.
That’s been baffling to me, too. It was also disheartening but somewhat understandable that at almost the exact moment the disastrous consequences of the fascist era died out of living memory right-wing populist movements would re-emerge. That Americans can’t remember the lessons of the run-up to 2007 after a decade can’t just be explained away by saying that they’re all getting more stupid, “Idiocracy”-style.
My current working theory is that during that time social networks have come into their own as a means of distancing people from the past and encouraging them to constantly “live in the moment,” resulting in all the soporific and amnestic effects and bad decisions that come along with that sequential approach to life.
DH and I ‘own’ (the bank still has dibs on half of it) a 1100 square foot house. We bought it 15 years ago, when interest rates were relatively low and the real estate market had just finished its latest crash. At that time, despite having a 20% down payment due to some prudent investments, we still ended up agreeing to pay almost 10 years’ worth of our combined income, and thought it the best we could do. I don’t see that being anywhere near a McMansion.
Of course, raising the interest rate now that the 1% own everything and the rest of us finance it from them…
At the risk of oversimplifying, the problem seems to be that most people don’t have enough money.
Gee, I wonder how that came about. Equally sarcastically, how could that ever be rectified?
Guillotine.jpg
Thanks for proving my point.
Carter’s admin was really what paved the way for the DLC, with voices like Volcker catching more ear and left-ish institionalists like Galbraith being marginalized.
Carter even squashed a progressive revolt eerily similar to that of last year at the 78 (I think) convention.
The latter understand the externalities of things like climate change and automation and the end of the postwar American economic anomaly just as well as many of us here do.
Yeah, I think the smarter ones do understand externalities: they just want somebody else to bear the cost of them. They don’t want the bill to come due now, or to fall on them, even if the costs (for example of climate change) could reasonably be attributed to their activities. This requires of course a level of obfuscation, lying, and corruption to sell the idea of not holding them accountable, and to make it happen.
rue, Carter wasn’t really very liberal i a lot of ways. But Volcker was still basically right. In the short term, his policy forced a recession, but in the long run, we’ve been better off inflation-wise; we’ve never had a repeat of the 1970s. The low-rate policies that came later and fostered a series of investment bubbles were not his fault.
