In a shock to no one on this board (outside of our leftist friends), ultra low rates are dead.

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https://www.wsj.com/economy/central-banking/why-high-interest-rates-could-be-here-for-the-long-run-c6670448?st=1caymw8rkhr1jix&reflink=article_copyURL_share

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At issue is the neutral rate of interest: the rate that keeps the demand and supply of savings in equilibrium, leading to stable economic growth and inflation. The neutral rate, sometimes called "r*" or "r-star," can't be directly observed, only inferred.

The persistence of strong demand doesn't necessarily mean neutral has risen; it may simply mean higher rates have yet to work their way through the financial system. Households and businesses, having locked in their borrowing at low rates, may be relatively insulated from the recent rise in rates.

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Bold statement. Literally:

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Based on the resilience of economic activity to higher interest rates, "one conclusion you could draw is that r-star must be higher. Another conclusion you could draw, which I think is totally valid based on seeing the same set of information, is that the economy is just not that sensitive to interest rates," said Kris Dawsey, head of economic research at hedge-fund manager D.E. Shaw.

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Biden and Dems directly responsible for this with an assist from Uniparty RINOS:

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There are several factors cited for why neutral may be rising: soaring government deficits and strong investment driven by the green-energy transition and an artificial-intelligence-fueled frenzy for electricity-intensive data centers. Higher productivity from AI could also lift long-run growth and the neutral rate.

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Consensus is the new neutral rate will be double what it has been:

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Investors have already concluded interest rates aren't likely to return to the low levels that prevailed before the pandemic. Interest-rate futures suggest the fed-funds rate will stabilize around 4% in coming years.

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YouBet said:

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waitwhat? said:

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They shouldn't come back unless we have high savings to back the low rates. The low rates we had were artificial and inflationary. Now we're dealing with the painful effects of those low rates.

If Americans stopped consuming so much and taking on so much debt, and started saving more, we would see rates come down in a responsible way.

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Well, let's not forget all the printing of money and completely unconstrained spending by the government at a current pace of $3T per year in new debt.

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I think that's a drop in the bucket compared to the years of "quantitative easing" by the Fed.

Dr. Mephisto said:

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Summary: Yes, everything sucks a whole lot more, so get used to it.

Thanks Evil Democrats and Spineless Republicans.

LGB.

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you misspelled FJB!

Complaining about inflation and high rates at the same time reveals ignorance.

waitwhat? said:

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YouBet said:

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waitwhat? said:

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They shouldn't come back unless we have high savings to back the low rates. The low rates we had were artificial and inflationary. Now we're dealing with the painful effects of those low rates.

If Americans stopped consuming so much and taking on so much debt, and started saving more, we would see rates come down in a responsible way.

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Well, let's not forget all the printing of money and completely unconstrained spending by the government at a current pace of $3T per year in new debt.

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I think that's a drop in the bucket compared to the years of "quantitative easing" by the Fed.

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I think you are arguing that artificially low rates leading to spending by the populace far outweighs what the government has done?? That the governments part to play in this catastrophe is far outweighed by consumer actions?

Surely not? Have you seen how much money was printed and spent by the government since Covid? Since Obama?

BigRobSA said:

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And, this election, we're stuck with the same two morons that spent us here the most recently.

We're ****ed.

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Yep, and whichever side wins they'll have all the feels of their base while taking our country even further into the fiscal crapper.

Thanks, Boomers.

BigRobSA said:

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And, this election, we're stuck with the same two morons that spent us here the most recently.

We're ****ed.

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Congress controls the money

Ironic, isn't it?

It seems like such a short time ago that we had central banks around the world (Germany's comes to mind) threatening to lower interest rates into negative territory. And, I think there was even some talk in the U.S. of that.

Imagine the concept of a negative time value of money, where you have the pleasure of paying the bank to hold your cash for you.

Funky Winkerbean said:

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BigRobSA said:

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And, this election, we're stuck with the same two morons that spent us here the most recently.

We're ****ed.

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Congress controls the money

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President signs off.

Unless you're saying Biden shouldn't be held accountable for spending since 21?

Funky Winkerbean said:

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BigRobSA said:

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Funky Winkerbean said:

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BigRobSA said:

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And, this election, we're stuck with the same two morons that spent us here the most recently.

We're ****ed.

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Congress controls the money

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President signs off.

Unless you're saying Biden shouldn't be held accountable for spending since 21?

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I understand, but the large group (Congress) is supposed to be the metric to control the president. Another example of Congress doing what's best for them, not us.

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And let's not forget that Blue States intentionally shut things down within their borders as a form of hostage situation for Trump. Either the Fed sent out stimulus or those states would've pinned every Covid death on the him not supporting a quarantine.

In hind sight; he should've called their bluff since he got unseated anyway, but the Blue State shutdowns were the impetus.

I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

YouBet said:

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waitwhat? said:

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They shouldn't come back unless we have high savings to back the low rates. The low rates we had were artificial and inflationary. Now we're dealing with the painful effects of those low rates.

If Americans stopped consuming so much and taking on so much debt, and started saving more, we would see rates come down in a responsible way.

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Well, let's not forget all the printing of money and completely unconstrained spending by the government at a current pace of $3T per year in new debt.

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Consumers see congress and poopy drawers spend like drunken sailors, so they say" O hell why not!" Let the good times roll!

One of the lagging indicators of the interest rate change is the real estate price. Will we see a major decrease in RE price?

YouBet said:

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waitwhat? said:

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YouBet said:

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waitwhat? said:

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They shouldn't come back unless we have high savings to back the low rates. The low rates we had were artificial and inflationary. Now we're dealing with the painful effects of those low rates.

If Americans stopped consuming so much and taking on so much debt, and started saving more, we would see rates come down in a responsible way.

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Well, let's not forget all the printing of money and completely unconstrained spending by the government at a current pace of $3T per year in new debt.

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I think that's a drop in the bucket compared to the years of "quantitative easing" by the Fed.

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I think you are arguing that artificially low rates leading to spending by the populace far outweighs what the government has done?? That the governments part to play in this catastrophe is far outweighed by consumer actions?

Surely not? Have you seen how much money was printed and spent by the government since Covid? Since Obama?

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Y'all are both right but the rate needs to settle somewhere above free money. Greenspan championed this after the Great Recession but it was too much of a free money decade. The rate should not be close to zero and QE shouldn't be the norm, and the government should stop printing money.

Aglaw97 said:

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YouBet said:

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waitwhat? said:

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YouBet said:

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waitwhat? said:

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They shouldn't come back unless we have high savings to back the low rates. The low rates we had were artificial and inflationary. Now we're dealing with the painful effects of those low rates.

If Americans stopped consuming so much and taking on so much debt, and started saving more, we would see rates come down in a responsible way.

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Well, let's not forget all the printing of money and completely unconstrained spending by the government at a current pace of $3T per year in new debt.

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I think that's a drop in the bucket compared to the years of "quantitative easing" by the Fed.

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I think you are arguing that artificially low rates leading to spending by the populace far outweighs what the government has done?? That the governments part to play in this catastrophe is far outweighed by consumer actions?

Surely not? Have you seen how much money was printed and spent by the government since Covid? Since Obama?

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Y'all are both right but the rate needs to settle somewhere above free money. Greenspan championed this after the Great Recession but it was too much of a free money decade. The rate should not be close to zero and QE shouldn't be the norm, and the government should stop printing money.

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I completely agree; I'm just perplexed at the claim that government actions are a drop in the bucket compared to consumer actions. That is just illogical if that is what he is claiming that is.

As of two years ago, we had printed 80% of all US dollars since 2020. That number has only gone up in the last two years especially since we are running a pace of $3T printed every 100 days.

Picard said:

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Legalize-It-Ags said:

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I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

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You thinking the rates are going to drop significantly again is both hilarious and a significant indicator of how wrong most Americans are.

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Yep. 6.79% on a rapidly depreciating asset is an amazing deal.

You're welcome. Our country wouldn't be as great as it is without us boomers.

Ribeye-Rare said:

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Ironic, isn't it?

It seems like such a short time ago that we had central banks around the world (Germany's comes to mind) threatening to lower interest rates into negative territory. And, I think there was even some talk in the U.S. of that.

Imagine the concept of a negative time value of money, where you have the pleasure of paying the bank to hold your cash for you.

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Do negative rates actually lead to depositors paying to give banks their money? If so, banks wouldn't get any money. It would all be invested, will have fled to other markets, or already be gone due to widespread banking turmoil. Negative rates are a last ditch effort in troubling economic times to try and stimulate a depressed borrower class. The lender would be paying the borrow interest for the borrower to borrow money. Essentially begging the borrower to please borrow money. If you ever see this happen here, it will be BECAUSE deposits have fled and the FED has stepped in completely with newly printed money. And it will only happen after rates are slashed to zero with the economy and markets failing to stop going down. Before it gets to that, there will be bail ins. They won't let all the money leave and banks fail to get to the point of negative rates.

Legalize-It-Ags said:

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I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

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Lol! Even if rates drop, they finance used cars at a significantly higher rate. They usually require GAP insurance as well. Good luck.

Picard said:

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Legalize-It-Ags said:

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I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

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You thinking the rates are going to drop significantly again is both hilarious and a significant indicator of how wrong most Americans are.

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In two years? Assuming trump gets into office, I don't think that's unrealistic. If trump doesn't get elected… well… I'm glad I got the rate I did then

General Jack D. Ripper said:

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Legalize-It-Ags said:

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I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

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Lol! Even if rates drop, they finance used cars at a significantly higher rate. They usually require GAP insurance as well. Good luck.

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Thanks. Gap is usually only like $300 and I would just get that added into the loan. So not a big deal.

94chem said:

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Picard said:

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Legalize-It-Ags said:

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I just got 6.79% on my truck loan the other day. Not great but considering the average is 8-9% I'll take it. Will likely refi in a year or two or whenever they drop.

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You thinking the rates are going to drop significantly again is both hilarious and a significant indicator of how wrong most Americans are.

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Yep. 6.79% on a rapidly depreciating asset is an amazing deal.

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Trucks maintain their value better than cars. It's depreciating but I put a lot down so I didn't have to finance a ridiculous amount.

I recently bought a tractor at 0% financing for 72 months. This particular tractor was the only one out of the 10 or so I looked at that the dealer was not charging an additional 3 or 4% fee for financing with 0% interest. I was very surprised at them not charging that fee so I jumped all over it. It was a previous model year and inventory that one dealer got from another that closed which may have had something to do with it. I dont think that a lot of folks realize that finance price is usually different than cash price a lot of times. I looked at outside financing and it would have been cheaper to pay the financing fee of ~3% to get 0% interest than to get financing from a bank or credit union.

I honestly don't remember why I started telling that story, but I went through the effort to type it out so it will remain.

Your dealer more than likely paid the fees out of his profit.

Funky Winkerbean said:

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Your dealer more than likely paid the fees out of his profit.

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That would make sense, because I was very caught off guard when they told me this particular one was not subject to the financing price but rather the cash price. Gotta do what you gotta do to move inventory I guess. Wish I would have bought one earlier though, already been so helpful around the place.