Not being rhetorical, but shouldn't lowering rates be good for the economy, or, at least, good to keep money moving around? Money that otherwise is making 5pct doing nothing in the bank will need to go be invested somewhere else.

[–] Kaplya@hexbear.net 4 points 9 months ago* (last edited 9 months ago) (1 children)

Yes, except that US treasuries are such a behemoth that raising the interest rates ended up creating more money into the economy as interest payments (for example, in 2023 alone the interest income payment was more than $1 trillion! mostly to the rich people though, it’s just that the trickle down from such huge quantity of money has still, so far, been able to keep the economy afloat). It is the most regressive way to keep the economy moving.

The problem here, as you’d have noticed, is that the interest payments comprised quite a substantial portion of the budget deficit, so when the rates start to go down, the budget deficit will go down as well. That means less money are being injected into the economy, and you actually ended up with less money to move around.

So, yes, it is true, on conventional terms, that lower interest rates is better. In fact, it should be 0%. But if they want to lower the rates without breaking the economy, they will have to offset it by pumping more money into the economy, but that’s socialism so it’s not allowed!

[–] RonPaulyShore@hexbear.net 1 points 9 months ago* (last edited 9 months ago)

I see, very interesting, thanks very much for the color.