Will the US federal-funds rate be increased before the end of 2015?


My take on the question:

  1. Ukraine still trades with Russia even though they are at war.  This was used as an argument for why the United Space Alliance should be allowed to do US National Security launches with Russian engines, against John McCain.  I don’t know if it’s true, but it makes a great talking point!
  2. The economic consequences of the ISIS fight are great but not that great. Europe, with a declining population rate, actually gains from an influx of skilled and talented Syrian labor. France is one of the largest Muslim countries in the world by population and has been for a long time. Germany is working on it!
  3. China can’t go to war with the US without seeing a $1T treasury bond portfolio decline in value. It’s concerns and force projection are more local.
  4. KJU/NK nukes is a 똥 교반기 but it’s mostly theater
  5. I could go on.

What I’m trying to say is that we are not on the verge of World War 3. We are on the verge of self-driving cars, watch/phone/GPS locators for 8 year olds, and possible obsolescence of human forecasters in the face of Bayesian One-Shot Neural Networks. In short, a mix of prosperity and aimlessness. The aimlessness factor is giving you Donald Trump and Bernie Sanders and some traction for Joseph McCarthy reincarnations like Ted Cruz.

So what I’m saying is that we are living in uneasy, queasy, uncertain, unsolid times. But we’re not looking at a remake of The Road. It’s not like that. It’s kind of pretty good with a serious dose of spiritual angst.

In which case, given that things are kind of OK, it is not OK to make people pay to keep their money in banks (negative interest rates). That would just be socially destabilizing. And it’s not OK to have 0 interest rates which is where we are now. There’s moral hazard in that, combined with the fact that it’s hard to buy a house for many people with house prices too damn high and income too damn low. There has to be an interest rate, and not one which is a complex or negative number. Having an interest rate is like saying “Hey, we’re really kind of OK. We think we are we think we are we think we are. So they’ve got to do it.”


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