Does anyone have a chart to show what the Federal interest rates were

[Baitball Blogger]

under each president? I remember Alan Greenspan really socking it to Democratic presidents.

[Louis1895]

1. Chart

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

Federal Funds Rate - 62 Year Historical Chart

[Baitball Blogger]

2. Hmmm. High during Democratic presidencies, low for Republican presidencies.

Looks suspicious.

[Yavin4]

6. Yep. Greenspan did everything within his power to throw the economy into recession...

when Gore was running for president. I had intense arguments with folks about this.

Look at the rate at May 2000 for proof. The 2nd highest peak since Volker spiked rates to kill inflation under Reagan. The big difference was that there was no inflation in 2000. We were running surpluses, not deficits, and the economy was doing great. He intentionally spiked rates to fuck over Gore and get W elected.

We've been paying for his bullshit ever since. Fuck Greenspan.

[Roland99]

10. A point I'd never considered. Thanks for that

[mathematic]

3. You're mixing cause and effect a bit

Republicans cause recessions, this leads to rate cuts. Democrates cause expansions, this leads to rate raises. Nothing suspicious about that.

The practice of central banking has evolved and improved considerably over time so looking at a historical chart doesn't really tell you much about policy making decisions. For example, many people consider Greenspan's rate cut in the late 90s in response to the collapse of LTCM to be a mistake that helped propel the internet bubble, but you can barely see that rate cut on the historical chart!

Btw, there was only one democratic president when greenspan was in charge.

[Baitball Blogger]

4. Great information.

Would love to hear more, since these connections are hard for many of us to parse. What I do remember is paying high interest rates during Jimmy Carter's time, at a time when I was just out of college and I remember Clinton claiming that Greenspan could cut the rates even more.

Can you expand on what you know about the internet bubble? I assume you mean the e-era. Yes, it was ridiculous. Whoever sold their start-up companies before that bubble broke made out like bandits. Millions of dollars for a box of air.

[mathematic]

5. Sure, I can explain a some more

One thing to understand is that the Fed sets a very short term rate and all the other interest rates, including the consumer rates you paid back in the 70s are set by the market, by people with money agreeing to loan that money to people that want money.

The federal funds rate has a big influence on short term rates but less and less of an influence on longer term rates, like the 10 year treasury bond rate. (10 year treasury bond rates are sold at auction by the US treasury and this determines the interest rate on these bonds.)

The conventional approach to central banking is that during a recession, you lower short term rates to make sure the banks can keep lending money and the economy doesn't seize up (This is "monetary stimulus&quot . During a recovery, you raise the rates as the banks begin to function normally. Contrast this with fiscal stimulus, which can be either tax cuts or increased spending.

Democrats generally prefer increased welfare spending and tax cuts to the middle class as fiscal stimulus. Republicans generally favor tax cuts to the businesses and the rich and (if they HAVE to spend more money to get the cuts passed) business subsidies as fiscal stimulus.

Right populists have traditionally hated the fed and have been vehemently opposed to monetary stimulus. Left populists have traditionally hated the fed and have been vehemently opposed to interest rates existing. Non-populists of both the left and right recognize the value of central banking and are mostly content to let the experts at the Fed handle the day-to-day of monetary policy. It's ironic that trump has gotten his right populist base to oppose the fed as being too restrictive on monetary policy. (It just goes to show you that even the most core of right populist ideology is merely cover for the true non-negotiable value of right populism, white supremacy.)

As for the internet bubble of the late 90s, the conventional view is that greenspan lowered the federal funds rate during the fall of '98 despite the economy and the financial markets being healthy and this led to a belief in the capital markets that greenspan would support stock prices via monetary policy. This, in turn, helped lead to the excesses of the internet bubble where people with a webpage and an idea could IPO for millions of dollars.

[Yavin4]

7. Question for you.

Please explain a 6.44% interest rate in May 2000 under Clinton and ahead of the presidential election which saw W steal it over Gore.

Please explain that decision when there was little to no inflation, and the federal deficit was in surplus.

[mathematic]

9. It was anticipatory

The economy was super hot and the general idea was to turn down the burners a bit. I think nowadays people realize that the aggressive rate increases of the greenspan fed are not a good idea. The recent increases have been much slower.

Here are the meeting notes from 2000:
https://www.federalreserve.gov/monetarypolicy/fomchistorical2000.htm

[Yavin4]

12. 6.44% with very little inflation year over year?!

I gotta call bullshit on that. He was throwing the election to W over Gore, and he knew. Asshole Greenspan sold Clinton on the idea that if he cut the deficit, he would keep interest rates low. Clinton went along with it, and it cost him the House.

Clinton kept his end of the deal, but Greenspan screwed him.

[Baitball Blogger]

8. Okay, thank you. I have a few more questions.

I think you already answered one. Most Republican presidents allowed the fed's to control interest rates, but Trump is actively trying to influence a decrease?

I was thinking along a tangent, Republicans only seem to be a one trick pony. Deficit spending. In other words, tax breaks and tax rebates that increase the U.S. deficit. Or, the sugar high policies. If these policies also have the effect of lowering the interest rates, isn't this a huge boon-dongle for those who were never in need to begin with? They not only keep what they have, but can expand their investments, while everybody else is hanging on for their lives?

Thank you for the explanations, especially the internet bubble. What a mess. It's like we have one pile on after the other with policies that create pyramid concepts and the expected crashing results.

[mathematic]

11. When we get to analyzing trump it's mostly speculation

Deficit spending and the short term interest rate that the fed sets have nothing to do with each other. They can both be economic stimulus though. I've speculated that trump wants lower rates because he wants to juice the economy for his re-election. However his trade policy has been disastrous and Janet Yellen (the former leader of the Fed and somebody I trust on this) endorsed the last rate cut so I'm willing to believe that cutting rates might be a good idea, even if trump wants them for his own selfish reasons.

Deficit spending and long term rates:
Deficit spending (via either more tax cuts or increased spending) means the gov needs to borrow more money. This means more bonds must be sold, which is a market pressure for HIGHER interest rates. However, long term rates are set in a market and just because there are more bonds to sell doesn't mean there aren't more people willing to buy them (ie, lone the gov money). Deficit spending can help or harm the economy, depending on the type of spending and the timing of the spending during business cycle. Like deficit spending during a recession, which is a key aspect of Keynesian economics and covers both tax cuts and increased spending, is helpful to the economy. During an expansion deficit spending is considered harmful, which is one of the reasons why democrats talk about raising taxes on the rich to pay for increased social spending. Economists are still learning a lot about the relative costs and benefits of the types and timings of government spending.

Interest rates and asset prices:
Lower interest rates mean higher asset prices, all other things being equal. That's essentially a "fact about the universe" kind of relationship. All other things are not usually equal though, so it gets very complicated and idiosyncratic to analyze what changes to current policy will have on asset prices.

[Baitball Blogger]

13. You've given me a great deal of info to digest, but your explanation

was wonderful. Thank you for your patience.

[mnhtnbb]

14. I remember having a mortgage for 16% under Ronnie

Reagan.

[Recursion]

15. That's not necessarily a bad thing

Given that the economy does well under Democrats and tanks under Republicans, you'd expect even from a neutral Fed that correlation since the rates are supposed to be countercyclical.

[mnhtnbb]

16. Here's a view of interest rate cycles since the '70's

with some explanation.

https://amp.businessinsider.com/every-interest-rate-cycle-since-1970s-2015-12