Election seen as possible factor in Fed thinking

[UpInArms]

http://www.forbes.com/markets/newswire/2004/01/30/rtr1236309.html

WASHINGTON, Jan 30 (Reuters) - The approaching U.S. presidential election won't stop the Federal Reserve from raising interest rates if it thinks that best for the economy, but it could impact the timing of a move, analysts say.

Fed watchers, who are split over whether rates will head up in 2004 from their current 1958 lows, say the U.S. central bank has in the past shown a willingness to take unpopular steps in election years. Still, they believe the Fed would prefer not to raise rates too close to the November vote if at all possible.

<snip>

In comparing six-month intervals ahead of elections to all other six month periods dating to November 1959, Hufbauer and his IIE colleague Paul Grieco found the Fed was much less likely to change interest rates in the pre-election periods.

...more...

and just for the record:

http://www.money-rates.com/fed0.htm

February 2, 2000

The Federal Reserve raised the discount rate a quarter point to 5.25% and the federal funds rate a quarter point to 5.75% in an effort to stymie inflation.

March 6, 2000

U.S. interest rates will have to rise further to keep the economy from overheating, said Federal Reserve Chairman Alan Greenspan. ``The full benefits of innovative productivity acceleration are at risk of being undermined by financial and economic instability'' caused by an excess of demand over supply, Greenspan said in a speech to a conference on the ``New Economy'' at Boston Colleges.

March 16, 2000

The Federal Funds rate, the benchmark overnight lending rate was raised a quarter point to 6.00%. The Fed statement indicated future rate increase were expected in the effort to combat inflationary pressures on the economy.

May 16, 2000

The Fed raised rates a half point, both the Fed funds rate and the discount rate, for the first time since 1997.

November 15, 2000

Maintained bias towards higher rates in future.

[displacedtexan]

1. The fed NEVER lowered interest rates during the Clinton years.

At least, I don't think they did, and I paid very close attention.

[jpak]

2. The Fed did not hesitate to raise interest rates during the Clinton years

Election cycle or no election cycle.

More evidence that Greenspan has a political agenda.

[UpInArms]

4. with the last statement of Nov 2000

being that interest rates would go higher -

here is what actually happened in 2001

http://www.money-rates.com/fed1.htm

January 3, 2001

In surprise announcement lowered short term rates half point.

January 30, 2001

Lowered federal funds rate to 5.50%. First full point movement by Fed in less than 30 days under Greenspan's leadership.

March 20, 2001

Lowered federal funds rate to 5.00% citing worsening global economic conditions. Indicated bias was towards further rate cuts in face of weakening economy.

April 18, 2001

In a surprise move, the Federal Open Market Committee cut the Fed funds rate by 50 basis points to 4.5 percent and the discount rate by 50 basis points to 4 percent. This marked the second time in 2001 the Fed cut rates outside of a scheduled meeting.

May 15, 2001

Citing continued economic weakness the Federal Open Market Committee cut the Fed funds rate by 50 basis points to 4.00 percent and the discount rate by 50 basis points to 3.50 percent. The federal funds rate is now at its lowest level in 9 years.

June 28 , 2001

The sixth rate cut of the year was a quarter point lowering the federal funds rate to 3.75%.

August 21 , 2001

The seventh rate cut of the year was a quarter point lowering the federal funds rate to 3.50%.

September 17, 2001

The Fed announced a half point rate cut one hour before the first opening of the market since the terrorist attack on New York City and Washington DC..

October 2, 2001

The Fed announced a half point rate cut citing continued economic weakness.

November 6, 2001

The tenth Fed rate cut of 2001 lowered the federal funds rate to 2.00%. The Fed signaled that further rate cuts might be needed.

December, 2001

The eleventh Fed rate cut of 2001 lowered the federal funds rate to a historic low of 1.75%. The Fed again signaled that further rate cuts might be needed.

[Pax Argent]

5. Thanks UIA

I've heard this allegation before, but I was too lazy to check it out. My god but they have been proping this jackass up, haven't they.

I wonder what Clinton's growth rates might have been like with the discounts the Boy-King has been getting?

[Beetwasher]

6. Yeah, something's fishy alright

It's pretty fucking clear to anyone when you see it all laid out like that...

[gulfcoastliberal]

14. Agreed

Greenspan is one slimy pol-induced mofo. He never ever gave Clinton an inch; but he gave Bush every coporate and plutocratic tax cuts his heart desired, publicly lying his crusty ass off to support them. Nauseating.

[htuttle]

3. Paging Captain Renault...

"I'm shocked, simply shocked!"

[Jackpine Radical]

7. No politics to it.

They just didn't want the rapidly growing economy to overheat while Clinton was in office. And they needed to keep jumpstarting the moribund economy that started dying the minute Shrub took office.

[camero]

13. No, it's called how to create a recession. Before the election.

Just tighten credit. And lower the supply of money.

Edit: before I forget, raise the price of gas to get inflation to cover your tracks.

[Lostnote03]

16. add OPEC...

.....if I recall correctly didn't the crusty ole Poppy visit with his partners in international crime just before the fuel price increase that added to the inflation woes that Greenspan was waving his magic wand over to prevent, for the sake of the country of course....it had nothing to do with the Jr CIA presidents 2000 election bid of course....

[camero]

18. I think he did

Killed two birds with one stone so to speak. Give his boy campaign dough and a pocketbook issue to run on. Course most of the price increases were blamed on "accidents" at the refineries.

[Yavin4]

8. If Anyone Needs A Link To Show Greenspan's Bias, Here's One

This is straight from the Fed itself. Scroll down the page a bit until you get to a green chart which shows interest rate moves since 1990:

http://www.federalreserve.gov/fomc/fundsrate.htm

[daleo]

9. That is a very revealing chart

It is well worth the time to have a look.

[UpInArms]

10. I especially liked this part

since '92 was an "election cycle"

April 9 - a reduction in interest of .25% to 3.75

July 2 - a reduction in interest of .50% to 3.25

September 4 - a reduction in interest of .25% to 3.00

and 'ole Poppy had the balls to complain?

hahahahahahahaha!

[daleo]

11. I noticed that too

Amazing, the nerve these reptiles have.

[Rainbows]

22. Great points one and all , Thank You UIA, n/t

[jamesinca]

21. Interesting chart

During the Clinton years there were
14 rate increases for a total of 5%
6 rate decreases for a total of 1.5%

Yes people it took a 3.5% increase in the interest rate to put the brakes on the economy during the Clinton years. You know the one that Bush blames for the recession that he inherited. The weak economy that we have now that is Clintons fault.

Having read the book by Ron Suskind about Paul O'Neil " The price of Loyalty" Greenspan said that Clinton and his fiscal policies were a great relief. He said that it took almost 2 decades to get out from under the Reagan wreck and it proved beyond a doubt that Reaganomics and that trickle down policy do not work. He also stated, along with Paul O'Neil, that Bush is not driven by intelligence or common sense, he is driven by a blinding ideology. Bush would have no part of a reduction of his tax cuts, even if it was obviously going to sink the economy. Greenspan and O'Neil were pushing for caution but Bush would have nothing to do with it. Greenspan also stated that Clinton had to be very strong against the likes of Gingrich and that group of republicans in order to have a healthy economy, because they were working day and night to kill off any fiscal responsibility. He stated that Clinton knew that they would be reckless in congress and try to blame it on him. Very telling book, I recommend it.

[stevebreeze]

12. their is a lag time between fed action and effect on the economy

It is normally seen to be 6 to 12 months. This fits nicely within the time frame of the 2000 election year rate increases to fight phantom inflation.

His partisanship is only ONE reason Greenspan should be gone. His treatment of working Americans is reason enough in and of itself. By way of explanation he kept unemployment rate at or over 6% for years on the theory (since proved completely wrong by history) that an unemployment rate below that would fuel inflation. Greenspan let interest rates drop in the late 90's only due to the Asian debt crises. It was first then we had a real recovery and rising wages (though not at an inflationary pace) for most middle and working class Americans.
:kick:

[UpInArms]

15. Greenspin is disgusting

http://www.findarticles.com/cf_dls/m1295/9_65/77811456/p1/article.jhtml

At a House Financial Services Committee hearing on July 18, Federal Reserve Board Chairman Alan Greenspan said he was in favor of eliminating the minimum wage. Under direct questioning from Bernie Sanders, the socialist and independent from Vermont, Greenspan owned up.

Sanders: My understanding is, unless you have changed your view, that you are opposed to raising the minimum wage, which is today at a disastrously low $5.15 an hour. So I'd like you to tell us if you think that a working person or a family can live on $5.15 an hour. ... Can you tell the American people why you think not raising the minimum wage, maintaining a disastrous trade policy, and giving huge tax breaks for the rich works for the benefit of the average American?

Greenspan: Certainly.

Sanders: I and millions would love to hear it.

Greenspan: ... With respect to the minimum wage, the reason I object to the minimum wage is I think it destroys jobs. And I think the evidence on that, in my judgment, is overwhelming. Consequently, I am not in favor of cutting anybody's earnings or preventing them from rising, but I am against them losing their jobs because of artificial government intervention, which is essentially what the minimum wage is. So it is not an issue of whether, in fact, I'm for or against people getting more money. I am strongly in favor of real incomes rising, and, indeed, that's the central focus of where I would come out.

Sanders: Are you for abolishing the minimum wage?

Greenspan: I would say that if I had my choice, the answer is, of course.

Sanders: You would abolish the minimum wage?

Greenspan: Well, I would, yes. Because if what I say is accurate, then the minimum wage does no good to the level of ...

Sanders: And you would allow employers to pay workers today $2 an hour if the circumstances provided that?

Greenspan: The problem is that they will not be paying $2 an hour because they won't be able to get people.

[gulfcoastliberal]

17. Barf!

How fucking loathsome can you get? Gee, those illegal immigrants sure didn't mind working for $2/hr at wal-mart (evil empire). They are reptiles, every one of them. :mad:

[UpInArms]

19. welcome to DU gulfcoastliberal!

:hi:

glad to have you amongst us!

[dbt]

20. The Bill-Clinton-Couldn't-BUY-A-Break-From-Greenspan Kick!

:grr:
dbt