General Discussion

ProfessorGAC

(75,645 posts)

16. That's More The First Layer

Fri Dec 12, 2025, 05:23 PM

Friday

They set the prime rate, but then banks set their lending rates as prime plus.
The Fed pushes prime rate up as a way to slow demand because it makes lending more expensive, so consumption, theoretically, goes down.
This is then considered a hedge against inflation.
However, in most things economic, it is not a simple X therefore Y relationship.
Higher interest rates reduce corporate borrowing for capital projects that will lead to productivity increases, raising supply to meet demand.
So, it's a balancing act to lightly quash demand while not inhibiting supply growth. And nobody truly knows where those 2 curves intersect across all industrial segments. So, it's at best an educated guess; at worst a wild guess with no basic in fact.

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Hugin CaliforniaPeggy

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The Sleeper Issue That Could Destroy the Economy [View all] applegrove Friday OP

rapidly rising prices due to tariffs and lack of cheap labor lapfog_1 Friday #1

For some reason popsdenver Friday #13

That's More The First Layer ProfessorGAC Friday #16

Thanks Professor popsdenver Friday #17

That's hard to understand and therefore hard to think about. bucolic_frolic Friday #2

The TRUE coup de gras popsdenver Friday #15

True bucolic_frolic Friday #19

Cash is not good either, as the dollar will be worth less. Private equity may (or may not) be more insulated lostnfound Saturday #29

Crashes are a feature of unregulated capitalism Farmer-Rick Saturday #22

Do you mean get one that *doesn't* require crashes? (Typo, I think) lostnfound Saturday #30

Yes, yes I did Farmer-Rick Saturday #31

Who benefits and how from Trump destroying the US economy for decades? Irish_Dem Friday #3

This questions is the disturbing me. Kid Berwyn Friday #4

Maybe the Trump MAGAs see AI depressing and even reducing wages applegrove Friday #5

The Nerd Reich is low enough to do that. Kid Berwyn Friday #6

Crows would see the British and French lining up against each other applegrove Friday #8

They have long prepared for that day. Kid Berwyn Friday #18

Yeah. I think it was Thiel who had plans to evacuate to New Zealand applegrove Friday #20

If I was his pilot... lonely bird Saturday #21

Back to fuedalism then..... Farmer-Rick Saturday #24

China and Russia plan to be the sole global economy. Irish_Dem Friday #7

Russia is fucked lonely bird Saturday #23

Yes. But if Trump can divert US resources to Russia, and hand over Ukraine and its resources, Irish_Dem Saturday #27

Number one popsdenver Saturday #38

Krugman has written on this, the fact that the violation of the Fed's political independence would destroy the Martin68 Friday #9

This is the entire problem in a nutshell lonely bird Saturday #25

Nailed it, and thanks for bringing up Reagan as the architect of what we are walkingman Saturday #28

Good point. They've undermined everyone's trust in the voting system, which held strong in spite of the attacks. Martin68 Saturday #35

Saw an article headline re foreigners considering selling their US bond holdings Attilatheblond Friday #10

Sleeper issue plus sleeper president, not a good mix. Sneederbunk Friday #11

Shades of Hitler's "Nero Decree" Seinan Sensei Friday #12

And to punish Germany for losing the war. nt Wednesdays Friday #14

What the heck does "... socialization of the private sector..." refer? Hugin Saturday #26

Subsidies given to corporations? applegrove Saturday #34

I suppose that's what it means in this case. Hugin Saturday #37

Donald Trump and his goons have done more to destroy the US than Osama Bin Laden ever dreamed of. Initech Saturday #32

So we had hoovervilles will the new encampments be called trumpvilles Samael13 Saturday #33

The Fed does more than set interest rates, gab13by13 Saturday #36

It's coming Dave says Saturday #39