interest rates
Does public debt cost what we think it does?
FilterEveryone, all time69 from 25 people
- BD
Brad DeLong quoted
Economics professor at the University of California
Their wordsThe Fed’s odds of threading the needle and getting inflation back down to target while avoiding a recession get much lower
↗An Inflation Report That Is Disappointingly High: CHART OF THE DAYbraddelong.substack.com
- BD
Brad DeLong quoted
Their wordsThus for the Fed not to hike interest rates at its next meeting later this October is a highly political decision.
↗An Inflation Report That Is Disappointingly High: CHART OF THE DAYbraddelong.substack.com
- BD
Brad DeLong quoted
Their wordsThat a Fed easing move is immediately followed by a sharp jump in long-term rates strongly suggests that the Federal Reserve has lost control over the narrative governing bond-market expectations.
- BD
Brad DeLong quoted
Our readingBond traders now treat the Fed as one voice among several, rather than as the best-informed one.
Their wordsBreaking that rule tells you bond traders now treat the Fed as one voice among several, not as the best-informed one.
- 2 days earlier
- NS
Noah Smith quoted
Economics writer; author of the Noahpinion newsletter
Our readingThe post-pandemic disinflation was likely driven by Fed commitment and forward-looking expectations.
Their wordsThe most likely explanation for this “immaculate disinflation” is that as soon as businesses realized that the Fed would do whatever it took to beat inflation, they stopped raising prices — and inflation simply ended.
- 5 days earlier
- BD
Brad DeLong quoted
Their wordsThe proportional response of their prices to changes in interest rates should therefore be by far the highest. Interest rates go up. Their prices should go down, proportionately, the most. And yet it hasn’t happened.
↗Katie Martin & Rob Armstrong: There Is Only One Trade: PODCAST OF THE DAYbraddelong.substack.com
- 2 days earlier
- PK
Paul Krugman quoted
Trade economist, Nobel laureate in 2008 for his work…
Their wordsIndeed, in my October 4 primer I argued that the AI boom is the main cause of soaring long-term interest rates.
- 1 day earlier
- MY
Matthew Yglesias quoted
Writes Slow Boring, a near-daily newsletter on American…
Their wordsThe federal government should not be subsidizing higher-education scams!
- 1 day earlier
- PK
Paul Krugman quoted
Their wordsYet the Iran war appears to have had a triggering effect on financial markets, leading to a reset of market narratives about the future path of Federal Reserve policy.
↗Who Dropped the Bonds? Interest Rates, Part IIpaulkrugman.substack.com
- 3 days earlier
- JC
John H. Cochrane quoted
Economist at the Hoover Institution
Their wordsCentral banks should hold inflation-protected bonds as the primary assets on their balance sheets.
- JC
John H. Cochrane quoted
Their wordsAt a basic level, holding real assets should help central banks to control inflation.
- JC
John H. Cochrane quoted
Their wordsThe general FTPL with debt on the left and surpluses on the right adapts to sticky prices by real interest rate variation.
- 4 days earlier
- BC
Ben Carlson quoted
Director of institutional asset management at Ritholtz…
Their wordsThe Fed is probably going to keep hiking interest rates because inflation is higher than they'd like and economic growth remains strong.
↗Strange Timesawealthofcommonsense.com 1st of 3 in this piece
- BC
Ben Carlson quoted
Their wordsBut raising short-term interest rates isn't going to stop the war in Iran to bring energy prices back down.
↗Strange Timesawealthofcommonsense.com 2nd of 3 in this piece
- BC
Ben Carlson quoted
Their wordsIt's possible inflation will remain high for some time even if the Fed keeps raising rates because of the war and AI capex binge.
↗Strange Timesawealthofcommonsense.com 3rd of 3 in this piece
- PK
Paul Krugman quoted
Their wordsInterest rates, by contrast, are almost always telling us something important about the economy — although exactly what they’re telling us is sometimes a matter of dispute.
↗Booms, Bombs and Bonds: Interest Rates, Part Ipaulkrugman.substack.com
- 4 days earlier
- JC
John H. Cochrane quoted
Our readingBanks oppose interest-paying stablecoins to avoid competition on checking account interest rates.
Their wordsBanks don’t want competition, which would force them to pay interest on checking deposits. Plain and simple.
↗Political economy in financial regulationgrumpy-economist.com
- 2 days earlier
- PK
Paul Krugman quoted
Our readingRising diesel prices are even more likely than rising gasoline prices to drive up interest rates.
Their wordsFurthermore, rising diesel prices are even more likely than rising gasoline prices to drive up interest rates. Why? The Federal Reserve, which sets short-term interest rates, normally focuses on “core” inflation, which excludes volatile food and energy prices.
- 2 days earlier
- JC
John H. Cochrane quoted
Their wordsThe tradeoff between cost of borrowing and how much interest rate risk taxpayers shoulder should be squarely on the shoulders of the politically-accountable Treasury not the independent Fed.
- JC
John H. Cochrane quoted
Their wordsIn QE, the Treasury issued long-term bonds. The Fed bought up the long bonds, issued overnight debt, and passed the interest difference back to the Treasury. In the end, it is just as if the Treasury issued overnight debt in the first place.
- 5 days earlier
- SS
Scott Sumner quoted
Monetary economist known for NGDP-level targeting
Our readingThe real interest rate in the long run is determined by market forces, not by monetary policy.
Their wordsIn fact, the real interest rate is almost entirely determined by market forces in the long run, not by monetary policy.
↗Don't mix fiscal and monetary policyscottsumner.substack.com 2nd of 3 in this piece
- 2 days earlier
- BH
Byrne Hobart quoted
Writes The Diff, a newsletter on inflections in finance…
Our readingHigher real interest rates reflect a more optimistic collective view of future economic abundance.
Their wordsHigher real rates mean that the average view of the future is more abundant, and that it's worth sacrificing more to get to that future sooner.
- 2 days earlier
- DD
Daniel W. Drezner quoted
Political scientist writing Drezner’s World on international relations
Their wordsa hard-earned lesson of the past few months is that mobilizing collective action against the federal government is hard.
↗That’s Not How Academic Freedom Works, Vanderbilt Trustees!!danieldrezner.substack.com 1st of 3 in this piece
- PK
Paul Krugman quoted
Their wordsThe simplest story consistent with the facts is that we’re seeing a surge in demand for funds as a result of the AI boom.
- PK
Paul Krugman quoted
Their wordsI don’t think it’s responsible for high long-term rates, any more than Bill Clinton was responsible for high rates in the late 1990s. This looks like the natural market response to the rush to invest in AI.
- 13 days earlier
- CN
Casey Newton quoted
Founder of Platformer, a newsletter on tech platforms…
Their wordsBut I think there have been enough studies now isolating those variables that show that AI is directly responsible for a lot of this job loss.
↗How AI agents "radicalized" a top Meta exec into quitting her jobplatformer.news 1st of 3 in this piece
- 7 days earlier
- RD
Ray Dalio quoted
Founder of Bridgewater Associates
Their wordsThe debt dynamics work the same for a central government as they do for a person or a company, except that a central government has a central bank that can print money (which devalues it) and it can take money away from people via taxes.
↗How Countries Go Broke: The Dynamic Behind What is Happening Nowraydalio.substack.com
- RD
Ray Dalio quoted
Their wordsEarly in the final stage of the Big Debt Cycle, the market action reflects this dynamic via interest rates rising led by long-term rates, the currency declining especially relative to gold, and the central government’s treasury department shortening the maturities of its debt offerings because of a shortage of the demand for long-term debt.
↗How Countries Go Broke: The Dynamic Behind What is Happening Nowraydalio.substack.com
- 3 days earlier
- MK
Michael Kratsios quoted
US science and technology adviser to the president
Their wordsOver time that has sort of inverted completely. The private sector plus philanthropy now do about 70% of R&D and the and the government only does about 30.
↗Michael Kratsios: Inside the White House's AI Strategyyoutube.com 14th of 20 in this recording
- 3 weeks earlier
- HW
Hillel Wayne quoted
Writer and consultant on formal methods
Their wordsSo, it's hard to tell how much of like the loss of the past few years was AI versus the end of like zero interest rate policy and like the post-COVID crash. And I think it's more the latter, but like again, LLMs are still getting better.
↗Formal methods with Hillel Wayneyoutube.com 21st of 24 in this recording