Why Interest Rates Take So Long To Affect The Economy

1. Interesting yo

2. Rate cuts commence in June 2024, taking 6-8 months to complete. A potential crash, if any, might occur by March 2025. The soft landing narrative is gaining traction, making this big recession everyone is calling for less likely. With $1 million from a business sale, I'm seeking profitable investment opportunities for the next 3 years.

3. “Mom, when is dad coming back from getting milk at the grocery store?”

   “There’s gonna be a long a variable lag.”

4. 到時歐洲 要過嚟生少少耕田

5. 牛羊魚 淨係保安 沒有 插秧 沒有收割

6. “Fighting inflation by creating more employment”

   That’s the gist basically.

   Capitalism is a death cult.

7. Increasing interest rates are going to continue to increase bank failures because it puts their commercial paper and treasuries underwater. They need to freeze interest rates to prevent a deep recession in the economy. At the same time the White house needs to help industry to increase gas and oil output to reduce fuel prices. The war on oil only serves to increase energy prices which trickles out to the rest of the economy as inflation. Lowering interest rates, tightening the money supply, reducing government spending and increasing the cheap supply of fuel will result in reduced inflation and a booming economy.

8. cough Transitory cough

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10. Please do AMD

11. Increasing interest rates are going to continue to increase bank failures because it puts their commercial paper and treasuries underwater. They need to freeze interest rates to prevent a deep recession in the economy. At the same time the White house needs to help industry to increase gas and oil output to reduce fuel prices. The war on oil only serves to increase energy prices which trickles out to the rest of the economy as inflation. Lowering interest rates, tightening the money supply, reducing government spending and increasing the cheap supply of fuel will result in reduced inflation and a booming economy. Presto, no inflation and no recession. Of course there are a lot of other agendas out there that will never let all of that happen, so hello recession and sticky inflation.

12. This video delves into the intricate relationship between interest rates and their impact on the economy, addressing why changes in rates by the Federal Reserve take time to manifest their effects. It offers a clear explanation of the "long and variable" lags in monetary policy, highlighting the unpredictable nature of how and when these changes influence economic growth. It's a great resource for understanding the complexities of monetary policy and its real-world implications for businesses and households.

13. In this case, split investment is also a great measure. I am not old but I have 3 years of investment experience. I always choose the situation that best suits me to invest with the help of multiple mentors. Blindly going in-depth is not a good method. You need to choose the one that suits you best based on the actual situation.

14. I think most lnvestors like myself right now are more interested in how we can enhance our earnings during this period of adjustment given the current economic difficulties that the country is experiencing in 2023. I'm at a crossroads deciding if to liquidate my $620k stock/bond portfolio, or just wait for favorable times since the market always recover.

15. In light of the impending recession and the fact that inflation remains above the federal reserve 2% target in this time of conflicts and war, several leading market analysts have expressed their views on how dire they believe the economy will be, next recession and how far stocks may go. I need advice on what investment to make because i want to build a portfolio for my children that will be worth at least 800,000 dollars

16. Well that was a very disapointing article on a subject that has so many nuances. For example with the high interest rates taking the money out of th,e 'mum and dad" pockets , leaving the ' no money to spend' symdrome, where does the money go!
    Does it vanish in the revers order to the method it was created, MAGIC, or does it pile up in a corner somewhere, for the priviliaged to help them selves to?
    I'm giving you a thumbs down for what you left out.
    Be the profesionals that I expect that you should be, please.

17. Don’t vote democrat. It’s a money trap. Never take anything from them. They’ll own you and your wallet for the rest of your life

18. A sound economy requires a secure, predictable, and acceptable monetary system at its foundation. The world is not using it today.

19. Monetary policy must restrict inflation and then government fiscal policy does the opposite.
    Silly

20. In light of the impending recession and the fact that inflation remains above the federal reserve 2% target in this time of conflicts and war, several leading market analysts have expressed their views on how dire they believe the economy will be, next recession and how far stocks may go. I need advice on what investment to make because i want to build a portfolio for my children that will be worth at least 800,000 dollars

21. Because the governments are manipulating the data to make it look like the economy is doing great.

22. cool

23. It takes 12-18 months to change with interest rates. Look at the time period printing all that extra money during Covid. People used that inflated money to buy from closed factories which lead to backlogged supply chain issue. People paying way over market values. . The Fed started to pull back those overcorrected dollars by increasing interest rates. Still have not seen a real change as still low unemployment but cooling economy means layoffs. Higher interest rates means companies starting to pay more for past debt with less dollars for future expansion/innovation. More heavily debt ladened companies feeling the squeeze. With the USA 33 trillion in debt difficult to print more money as inflationary. 2000 and 2008 lowering interest rates helped but high inflation not present. We have had extremely high inflation past 3 years which has compounded every year during those years. Time to pay the Piper. USA took in some 4.7 trillion in taxes last year, I believe. But spent way over 5 trillion. USA keeps borrowing debt. Taxpayers keep subsidizing their income also with credit. Credit card debt historically 1 trillion dollars. People raiding retirement funds early and taking out home equity loans. These are red flags. More car repo’s, Give it back car crisis, and dealerships overstocked with cars, LOT ROT. Homes and Cars too expensive for majority of people. USA use to supersizing but new norm, downsizing. USA becoming expensive similar other countries. We had cheap money for too long. It even started with Bernanke keeping rates too low for too long.

24. The Federal Reserve and the Economy: A Balancing Act

    The Federal Reserve, America's central bank, plays a crucial role in shaping the economic landscape. Its primary tool is setting interest rates, which directly impact the cost of borrowing and spending across the economy. However, navigating this influence is far from straightforward.

    Lags and Uncertainties: Unlike a simple on-off switch, monetary policy operates with variable lags. Policy decisions can take months, even years, to fully materialize in the real economy. This complexity arises from several factors:

    Globalization and Service-Based Economy: International trade and the shift towards service-driven industries introduce intricate feedback loops that prolong the impact of monetary policy.

    Consumer and Business Responses: Businesses and individuals react to rate changes with varying degrees of speed and resilience, depending on their financial health and risk tolerance.

    Long-Term Debts: The economy carries the weight of past borrowing, making the full effects of rate hikes a long-term game, potentially spanning a decade or more.
    
    Financial Markets vs. Real Economy: While financial markets react swiftly to interest rate announcements, their movements don't always translate directly to real-world activity. The lag between financial signals and economic impact can be significant, as evidenced by the 2023 layoffs and bankruptcies potentially reflecting the Fed's earlier rate hikes.

    Dilemma and Consequences: The Fed's challenge lies in striking a delicate balance. Its primary mandate is to control inflation, even if it means delivering "bad news" like rate increases. However, these actions can have unintended consequences:

    Productivity Impacts: Higher borrowing costs can dampen investment and productivity, potentially hindering long-term economic growth.

    Balance Sheet Reduction: The Fed's recent reduction of its balance sheet, another tool in its arsenal, might further tighten credit and slow economic activity.

    Conclusion: The Federal Reserve's influence on the economy is a complex dance with nuanced lags and uncertainties. Understanding these dynamics is crucial for businesses, policymakers, and individuals alike to navigate the evolving economic landscape and make informed decisions.

25. Inflation wasn't as bad until we started this incredible spending spree. The more money we print the less valuable it becomes. You can bs this situation all you want but this is the issue. Until we get rid of naive spending on every county but our own we will continue this dramatic downslide. How much money is our government using for our own good? How much do they profit from lining other leaders pockets? 🤔

26. Stocks are falling and bond yields are rising, but markets still don't seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $150,000 stock portfolio, what's the best way to take advantage of this bear market?

27. I'm going to be using this in my macroeconomics class next semester! A great explainer for monetary policy lags~!

28. In every crisis, there is an opportunity," as the saying goes. The 2024 recession, while challenging, presents unique avenues to amass wealth. First, it's essential to remember Warren Buffet's advice: "Be fearful when others are greedy, and greedy when others are fearful." During recessions, assets often undervalue. By investing wisely in stocks, real estate, or businesses during this downturn, you position yourself for significant returns during the economic recovery.
    
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29. please

30. Economists aka capitalists don’t have any other formulaic ideas.

31. Yeah inflation is just not affected by the service industry like restaurants you go to the grocery store and the prices are still sky high

32. Not they used old stock footage of Lenox mall.😅

33. Propaganda….
    Its because the rich are allowed to move thier money to not lose but never you! You are forced by your government and your bankers who own you as property. FTFY

34. The Fed, All is Known, ALWAYS Absolutely ALWAYS Today….

35. You want lies? Come to CNBC. The facts: record deficits create additional fiscal flows that cause inflation. These flows enter stocks, real estate, and other assets. Get educated!

36. Long and variable lag…. My a**… The Fed and US Presidents and politicians are all crooks just looking to make money at the expense of the average Joe while appearing to work for them…. There was no need to give away those covid checks with the idiot president's signature while reducing interest rates to zero and then calling the resulting inflation as transitional… Now they are swinging to the other extreme and making life difficult for the average person by making it next to impossible even get a mortgage 🙄🙄

37. Poorly explained. They didn’t even explained the mechanisms of the Federal rates and how increased rates makes people use their own money instead of borrowing more. Businesses borrow less and thus expand less and thus employ less people. Consumer then buy less and the economy shrinks. All the above take time.

38. In conclusion, no one has no idea what's going on and how to solve the issue.

39. Keep keep interest rate high Rise it more PEOPLE NEED TO START SAVING AND STOP BUYING HIGH PRICE BOATS CARS HOMES OTHER HIGH PRISE THINGS. RISE THE RATES FED

40. Its like Walmart when they raise the prices of the resse cups cause they know some mom pop business will buy them up to resell

41. I don't think people going out for a drink has driven my car insurance up, my electric bill up and my food bill up. Maybe corporate greed plays a part. But these parasites won't admit it.

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