Apr

18

cf Sidney Homers' classic book, A History of Interest Rates:

Sooner or later every generation is shocked by the behaviour of interest rates.

!! (first ! is for me to figure out what it means, 2nd ! is one for everyone else)

Big Al adds:

What If Fed Rate Hikes Are Actually Sparking US Economic Boom?
A radical theory is spreading as economy defies expectations
‘The reality is people have more money,’ one convert says

One of the more bullish points is that a large block of homeowners are shielded by the effect of higher mortgage rates because they locked in low rates during zirp. In other countries (much of Euroland) with only variable-rate mortgages, the effect is very different. Something else that doesn't get mentioned is the covid stimulus. That money doesn't get spent just once. I asked Bard/Gemini:

Disaggregating the exact total for stimulus checks vs. business support is a bit difficult, but here's what we can find:

Stimulus checks: There were three rounds of Economic Impact Payments totaling $814 billion distributed to individuals and households. Pandemic Oversight
Business support: The CARES Act alone allocated $500 billion for various business relief programs, including loans, grants, and other assistance. This number doesn't include other legislation passed to aid businesses. The COVID-19 pandemic: The US economic stimulus program for businesses: The legislative response
Since some business support involved grants (essentially free money), it's impossible to give a perfectly precise combined total. However, you can be confident that the federal government provided well over $1.3 trillion in total aid through stimulus checks and business support programs.

H. Humbert reminds us:

Larry Williams stated quite some time ago that all the money being paid out in interest to savers is beneficial for the economy.


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  1. Jeff Watson on April 20, 2024 9:42 pm

    Here’s a pdf copy of Homer’s book. http://vnn1.online.fr/Cafeteria/Financial_Accounting_Banking/A.History.of.Interest.Rates.Wiley.Finance.Series.4th.Ed.eBook-YYePG.pdf

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