Fed Hike

padington

I called it this time and I'll call it again. No rate rises this year.

Generali

padington wrote: »

I called it this time and I'll call it again. No rate rises this year.

Yeah but you're just guessing though. FWIW, the Fed has two further scheduled FOMC meetings scheduled for this year, in October and December.

Generali

cells wrote: »

well i would hope the world and humanity will be around in a few million years.

it takes 2777 years to turn $1 into $1 trillion at a rate of 1% a year

2777 years is a long time but its not that long a timeframe, some trees are nearly twice as old.

I can't think of a single asset that has been held by a single family for that long. Even the very oldest family firms in the world are not that much over 1,000 years old and there's a very short list of those.

IIRC the oldest company is a Japanese Temple builder that is a bit over 1500 years old. The oldest in Europe I think is an Italian gun maker.

padington

Generali wrote: »

Yeah but you're just guessing though. FWIW, the Fed has two further scheduled FOMC meetings scheduled for this year, in October and December.

Cant see why they would want to even consider it. Oil cheap as chips and getting cheaper. Everything China makes, cheaper to buy. Technological tipping point as the digital revolution meets the robotic revolution on course. USA leading the pack economically.

That's if they keep money cheap.

The moment they signal it's the end of cheap money all those are in jeopardy. Why would you want to risk it?

cells

wotsthat wrote: »

It may as well be forever when trying to consider the future value of investments made today.

all that says is that in the short term you might make a positive return but in some other short term someone will have to lose some

this also probably applies to economic growth it must be unsustainable in the long run as at a poor 1% a year growth for 3000 years sees a single persons single hours output worth as much as the total worlds yearly output now

And if growth falls to zero so must investment return else a single dollar in time grows to become bigger than the worlds GDP

cells

Generali wrote: »

I can't think of a single asset that has been held by a single family for that long. Even the very oldest family firms in the world are not that much over 1,000 years old and there's a very short list of those.

IIRC the oldest company is a Japanese Temple builder that is a bit over 1500 years old. The oldest in Europe I think is an Italian gun maker.

what does it matter how old the oldest person or company is? yes modern history is relatively young.

you can look at an investment over multiple generations of people. and i am just guessing that given a longer time frame it seems 1% isn't sustainable and most likely any figure above 0 might not be

there are those who suggest that the economy cannot grow indefinitely that it meets physical limits. if that is true then investments also cannot grow indefinitely which means on a long time frame returns much above 0 might be unachievable


we are not there yet as there is clearly a lot of productivity and growth over the next few decades to be had but we might be getting close to that point before the end of this century

Generali

cells wrote: »

what does it matter how old the oldest person or company is? yes modern history is relatively young.

you can look at an investment over multiple generations of people. and i am just guessing that given a longer time frame it seems 1% isn't sustainable and most likely any figure above 0 might not be

there are those who suggest that the economy cannot grow indefinitely that it meets physical limits. if that is true then investments also cannot grow indefinitely which means on a long time frame returns much above 0 might be unachievable


we are not there yet as there is clearly a lot of productivity and growth over the next few decades to be had but we might be getting close to that point before the end of this century

If we look at very long time cycles then anything increasing at > GDP growth is unsustainable as anything that attempts to do that will at some point end up as being 101% of GDP!

Remember that GDP/capita didn't really grow at all between about 10,000 BC and 1750AD and since then has grown at a rate of about 1.5-2%pa so the maximum reasonable rate of growth should be the same on average. It remains to be seen whether GDP can continue to grow at that same rate for a longer period than 265 years.

Any look at asset prices in the extremely long term needs to recognise the fact that there was a 'this time it's different moment' in 1750 when the world's economy was changed, probably forever.

worldtraveller

The Fed is poised to raise short-term interest rates for the first time in nearly a decade. A rate hike will be a sign that top Fed officials think the U.S. economy is now strong enough to be weaned from the extraordinary level of support provided by the central bank.

Fed officials wrap up their December meeting on Wednesday. Markets expect them to hike the Federal Funds Rate, which is what banks charge to lend to each other overnight, by 0.25 percentage point to a range of 0.25 to 0.5 percent.

When the Fed slashed rates to near zero in December 2008, few anticipated that they would stay there for seven years. Past surveys show that many economists expected the first hike to be in 2010.

But the recovery from the worst economic downturn since the 1930s has been a long haul.

AP

IMHO, if they do, as I've stated before, they are wrong to do it now, as it's surely now largely a case of credibility, rather than prudence, since, as we all know, due to all the "noise" from the Fed over the past few months, there is now almost universal market expectation for a rise in rates.

I believe they will come to regret it, as the global economy continues to slow, as I see it, over the next few months.

Generali

It's not largely a case of credibility at all. The Fed is raising rates because the FOMC thinks that the time is right to do so.

It's not going to change anything to move the Fed funds rate up a fraction.

worldtraveller

Generali wrote: »

It's not largely a case of credibility at all. The Fed is raising rates because the FOMC thinks that the time is right to do so.

It's not going to change anything to move the Fed funds rate up a fraction.

I just have to disagree and, if they do today, as we go into next year, I think that we'll see reality sinking in that that they were imprudent in raising rates at this time.