Legalize-It-Ags 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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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

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What is trump going to do? His pandemic nonsense is partially responsible for this. The uniparty knows it has no option but to keep spending. When it crashes, they'll just eliminate the constitution and further enslave us.

rgleml said:

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

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Exactly. Younger people that blame everything on boomers need to realize that things have really come off the rails since we have started to retire. Maybe time to look in the mirror

Eh, yield curve is still inverted, so short term rates will either come down or there's a recession, which would result in a cut in rates. Everyone is ignoring the yield curve in this discussion.

Highway6 said:

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rgleml said:

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

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Exactly. Younger people that blame everything on boomers need to realize that things have really come off the rails since we have started to retire. Maybe time to look in the mirror

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Eh, every generation has faults. Boomers facilitated, either directly or through fat, complacent, inaction, the Marxist creep that has destroyed almost all of our proud institutions from government, to media, to academia, to sports, and even religion to an extent. Millenials and Z are direct representatives of the cultures that raised them. And this happens every time a society gets to this point in the debt fueled currency destruction phase of a long term growth cycle. The end result is a generation born into global instability and war that will largely be the generation that fights us out of depression and into the next boom cycle, and will go down as the hard-working, survive to the next day generation. Not a coincidence that current children are named generation alpha.

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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.

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In certain cases, namely when U.S. dollar short-term liquidity is the primary concern, the answer is yes.

Moreover, I would argue that when bank 'high-yield' money market and CD rates were in the .5% range, and inflation was at the Fed's target of 2%, folks were in fact paying to have banks hold their money. When those instruments matured (or funds withdrawn, as the case may be) they were returned in devalued dollars.

Now if liquidity and security were not a concern, those funds would, as you stated, be invested elsewhere.

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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When Powell attempted to pivot the first time I distinctly remember, pre pandemic, some people on here against it because the other central banks pushed low rates. The Frontline doc dissected this this last year, but this mess has me worried.

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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The government can start that trend. It does Joe American no good to save money when debt is just forgiven and the value of our currency is going to *****

You make good points, but the 2 most destructive presidents in our history (Obama and Biden) were not put in office by the votes of boomers

Highway6 said:

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You make good points, but the 2 most destructive presidents in our history (Obama and Biden) were not put in office by the votes of boomers

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Like I said, all generations have faults. It isn't a new phenomenon that each one wants to blame the other. But my point was that the boomer generation, partly through direct policy whether it be government, corporate executive, or voter base in general, and partly through inaction due to complacency, fostered the environment that the current younger generations grew up in and were influenced by. It can be argued generation X has a small hand in that too, though they weren't influential enough by the time the ball got rolling downhill. That doesn't mean the red blooded 70 year old farmer in west Texas is to blame for everything. He likely did his part. But remember, we are talking about the general generation.

Boomers have been leading corporate America, government, the media, wall street, and the country for a long time now. Many still are. If the younger generations are to blame for the state of the country, you have to first wonder who raised them. You then move on to who was in charge of the institutions in our country that influenced them during their upbringing. They didn't wake up idiots and Marxists. They were taught it.

There was a generation that could have stood up against the leftist takeover of every institution when it was in its early stages. If Millenials elected Obama, then Boomers failed to prevent academia, Hollywood, and government from being subverted by the far left in the 60's, 70's, and 80's. Would any other generation have done differently in their shoes? No. It was a time of rapid innovation that came with its own brand of world instability. Hands were full, business was booming (then it wasn't, then it was again). The time that Boomer's had influence over, zooming out and taking the whole instead of sum of the parts, was and still is a period of general economic expansion. Generations in those types of periods have never rocked the boat. But in the background, their kids were being manipulated.

In the end, every generation has blame. The Progressive (1843-1859), Missionary (1860-1882), and Lost (1883-1900) generations should be blamed for the acts that started us down this path because they were the ones who voted to hand over the people's right to mint money to a group of unelected bankers in partnership with the government in 1913, mainly out of fear. A path that us, our kids, and grandkids will be paying the price for.

YouBet said:

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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.

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I'm not saying it's simple consumer actions of taking on credit card debt, as an example. It was the Fed keeping interest rates artificially low to the point that banks are/were able to make large loans to individuals and businesses at ridiculously low rates.

The Fed allowed banks to take out loans at 0% interest for years, which they turned around and loaned out to others. That was widely inflationary and is what creates bubbles. And yes, I'd wager the actions of the federal reserve with artificially low interest rates and quantitative easing resulted in even more inflation than the federal government's deficit, which is mostly funded by treasury notes and bonds held by private institutions and individuals. Even I bought a treasury note a couple months ago just to try it out.

The money printing isn't necessarily just from the federal deficit, it's also from near 0% interest loans to major banks.

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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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4% is A LOT better than I expect and is still considered "low" by average rates over 30+ years.

bmks270 said:

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The interest rates and inflation are absolutely effecting the profitability of project financing. Making a lot of projects not profitable, especially with the inflation of raw materials, and therefore are reduced in scope or never executed on.
These economists don't actually build anything, they're theorists who don't know what is really going in business.

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If it weren't for gov't funded/subsidized Mega projects, the construction industry would be in much worse shape. As these wrap up over the next 12-18 months, it's going to be pretty interesting...and not in a good way.

Outside of some multi-family and Data Center projects, I'm not sure what's worth the finance costs to build in the near term.

You are certainly more educated than I on the events and people that brought our country to this point. In looking back on my adulthood, I was always more concerned with providing for my family than politics. Many people my age would say the same. I just assumed that the school board, legislators, and the President had our best interest in mind and did their jobs accordingly. I could not have been more wrong.

No one who thinks with any objectivity at all can possibly think things are better under biden then they were when Trump was POTUS.

Old guy comment. The bank I worked for in the early 80's was making used car loans for 18-20% for our floor plan dealers.

Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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I bought my first house at 9.25% in 1995. Re-fi'd 2 years later at 7.25% and felt good about that.

I just got a loan for 6.25% to buy what should be the house where I die.
I do regret not being able to hold on to that 3% mortgage I got during the 2020 refi of my house in California but... I would have had to stay in California so... worth it.

What area did you end up buying in?

AggieDruggist89 said:

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

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IMHO no in areas of growth. Price may stabilize is some areas of growth. In areas of mass exodus like California I have no idea.

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government."

Thomas Jefferson, First Inaugural Address, March 4, 1801

Wycliffe said:

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Personally I don't think so. The price of homes isn't increasing, the vslue of the dollar is plummeting.

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Agreed. It may now be to the point that raising interest rates will increase the rate of inflation accelerate the further devaluation of the dollar.

Highway6 said:

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You make good points, but the 2 most destructive presidents in our history (Obama and Biden) were not put in office by the votes of boomers

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Agreed.

jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The term stagflation comes to mind.

richardag said:

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jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The term stagflation comes to mind.

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https://www.schiffsovereign.com/trends/peter-schiff-stagflation-is-here-but-theyre-still-clueless-150755/

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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Trump frequently expressed favoring negative rates:

Germany, and so many other countries, have negative interest rates, “they get paid for loaning money,” and our Federal Reserve fails to act! Remember, these are also our weak currency competitors!

— Donald J. Trump (@realDonaldTrump) September 3, 2019

“Go across the world and you’ll see either very low interest rates, or negative rates. The President wants to be competitive with these other countries on this, but I don’t think he’ll fire Jay Powell (even if I should!).” We should always be paying less interest than others!

— Donald J. Trump (@realDonaldTrump) September 22, 2019

“Over in Europe and Japan they have NEGATIVE RATES. They get paid to borrow money. Don’t we have to follow our competitors?” @Varneyco Yes we do. The Fed doesn’t have a clue! We have unlimited potential, only held back by the Federal Reserve. But we are winning anyway!

— Donald J. Trump (@realDonaldTrump) October 29, 2019

Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.

— Donald J. Trump (@realDonaldTrump) November 18, 2019

jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The previous norm didn't have debt as a % of GDP at these levels. Nor deficits at these levels. In fact, these levels haven't been seen since WW2.

2008:
Fed Rate: 5.5%
Total UST Debt: $10 Trillion
Interest Payments: $380 Billion
US Gvt Deficit as % of GDP: -1.5%

2024:
Fed Rate: 5.5%
Total UST Debt: $34.7 Trillion
Interest Payments: $1.1+ Trillion
US Gvt Deficit as % of GDP: -6.19% at end of 2023, lower now.

You cannot compare the previous "norm" to now. And when people bring up how "normal" these rates are, they conveniently only go back about 20-30 years, which is understandable as those are the years they have experienced. But we are in apples and oranges territory. It is literally not possible for the debt to EVER be paid off. And it's increasingly not possible for the deficit to be back to "normal" levels, as the majority of the spending is mandatory entitlements and interest on debt.

Texker said:

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richardag said:

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jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The term stagflation comes to mind.

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https://www.schiffsovereign.com/trends/peter-schiff-stagflation-is-here-but-theyre-still-clueless-150755/

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Good read. Thanks for sharing

Sea Speed said:

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What area did you end up buying in?

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Don't want to share specifics just yet but I will share more after I get fully moved in by the end of July.
As predicted, it will be 775xx

I've still got a couple properties in the area. It's booming.
My wife does interior design and a lot of her clients are in that area, let me know if yall need some assistance.

I think the more appropriate thread title would be, low inflation is over.

We're in fiscal dominance at this point versus monetary. The fed will be forced to 1) lower rates and 2) monetize the deficits that our dear legislators are so inept at curtailing. They'll sacrifice the currency via inflation to keep the bond market viable.

The normal tool the Fed uses to control inflation will become ineffectual.

Really the only thing that digs us out of the hole is some type of heretofore unpredicted renaissance in energy efficiency or productivity.

Heineken-Ashi said:

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jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The previous norm didn't have debt as a % of GDP at these levels. Nor deficits at these levels. In fact, these levels haven't been seen since WW2.

2008:
Fed Rate: 5.5%
Total UST Debt: $10 Trillion
Interest Payments: $380 Billion
US Gvt Deficit as % of GDP: -1.5%

2024:
Fed Rate: 5.5%
Total UST Debt: $34.7 Trillion
Interest Payments: $1.1+ Trillion
US Gvt Deficit as % of GDP: -6.19% at end of 2023, lower now.

You cannot compare the previous "norm" to now. And when people bring up how "normal" these rates are, they conveniently only go back about 20-30 years, which is understandable as those are the years they have experienced. But we are in apples and oranges territory. It is literally not possible for the debt to EVER be paid off. And it's increasingly not possible for the deficit to be back to "normal" levels, as the majority of the spending is mandatory entitlements and interest on debt.

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Interesting choice of years.

Of course in 2008, they were still doing stated income loans right up until somebody figured it out and caused the GFC.

Today, they require a heck of a lot more documentation to give you money so the next economic collapse won't be blamed on subprime mortgages. But, it wouldn't surprise me if we get another economic crash right around the time of the US Presidential Election.

Sea Speed said:

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I've still got a couple properties in the area. It's booming.
My wife does interior design and a lot of her clients are in that area, let me know if yall need some assistance.

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For sure.
Sunday afternoon, I went to Academy near NASA Rd 1, Baybrook Mall, Bass ProShops and HEB at 646 & I-45.
From a consumer spending standpoint, it's a zoo.
I-45 construction is also going gangbusters.
And they're still printing carbon copy houses from the 200s to the 500s with no end in sight.
Also, no shortage of Ford Super Duty trucks.

A sharp contrast from the Los Angeles that I left 9 months ago where the only thing booming was the homeless population.

HollywoodBQ said:

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Heineken-Ashi said:

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jja79 said:

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Today's rates are more the norm than the artificially low rates of the recent past. I started in banking in 1979 and before long rates were 18%+.

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The previous norm didn't have debt as a % of GDP at these levels. Nor deficits at these levels. In fact, these levels haven't been seen since WW2.

2008:
Fed Rate: 5.5%
Total UST Debt: $10 Trillion
Interest Payments: $380 Billion
US Gvt Deficit as % of GDP: -1.5%

2024:
Fed Rate: 5.5%
Total UST Debt: $34.7 Trillion
Interest Payments: $1.1+ Trillion
US Gvt Deficit as % of GDP: -6.19% at end of 2023, lower now.

You cannot compare the previous "norm" to now. And when people bring up how "normal" these rates are, they conveniently only go back about 20-30 years, which is understandable as those are the years they have experienced. But we are in apples and oranges territory. It is literally not possible for the debt to EVER be paid off. And it's increasingly not possible for the deficit to be back to "normal" levels, as the majority of the spending is mandatory entitlements and interest on debt.

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Interesting choice of years.

Of course in 2008, they were still doing stated income loans right up until somebody figured it out and caused the GFC.

Today, they require a heck of a lot more documentation to give you money so the next economic collapse won't be blamed on subprime mortgages. But, it wouldn't surprise me if we get another economic crash right around the time of the US Presidential Election.

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I mean, would you like to me to go back to any of the prior 20 years leading up to 2008? The glaring imbalance between debt levels, deficit levels, and federal interest will only show worse. The post had nothing to do with 2008 other than picking a depressed period with the same Fed funds rate and looking at the economic backdrop compared to now.

You are right though, pain is coming.