Reply to When will rates come down again?

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Reply to "When will rates come down again?"

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[quote=Anonymous][quote=Anonymous]It doesn’t matter if trump or his roadie lowers the fed funds rate to zero: mortgage rates are determined by the 10 year treasury rate, which is determined by supply/demand in the treasury auction market. If investors are at all spooked by increasing debt levels or potential inflation, they will demand a higher rate in those auctions, toadies be damned. [/quote]

Yup, and we aren't far off from a Treasury market crisis like what happened to the UK because of Liz Truss in 2022. The idea that the Fed can just QE themselves around it is just foolish- that sort of thing only works when you still have strong fundamental external demand. That's why QE didn't drastically impact inflation before.  Not the situation anymore.  If we print trillions, the induced inflation will just get priced into interest rates and will go down in inflationary spiral.

Also it's funny to have people yet again seem to forget who was president in 2020.  That was the last time the Fed did a QE program- QE4.  In fact, the Fed has reduced it's balance sheet since June 2022- now just under $7 trillion, from $9 trillion in summer 2022.

https://www.pgpf.org/article/how-do-quantitative-easing-and-tightening-affect-the-federal-budget/

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