By now you probably know that the Federal Reserve raised interest rates on December 17th, 2015, to try to rein in the economy.
At the time, it was one of the largest ever hikes in US monetary policy.
So, what were the consequences of the move?
First of all, the economy lost a whopping $9.7 trillion in value.
Secondly, the US economy shrank by 1.8% last year.
The first is bad news, but the second is the bigger concern.
According to the Congressional Budget Office, if you cut interest rates by 0.25% to 0.5%, it would cost the US GDP about $1.6 trillion.
That’s the equivalent of $9,000 for every American.
As we all know, if interest rates are too low, companies won’t invest, and businesses can’t get credit.
If interest rates rise too much, businesses can lose their money, and the economy can get stuck in recession.
But the Fed raised rates because the economy was slowing down.
Now, that’s good news, and it might even help the economy get back on track.
The economy has been growing faster than ever in the US in recent years, thanks to a combination of rising productivity and falling unemployment.
What this means is that we could have an even more favorable economic situation than we currently have.
For example, if we cut interest rate by 0% and had an unemployment rate of 5%, it could create enough jobs for everyone.
But if the unemployment rate is 6%, that means that a whopping 15.4 million jobs would have been created, and that would mean that the US could have had more than 4 million jobs if we’d raised interest rate from 0%.
It would be a huge economic boost to the economy, and would be an example of what a strong economy can do.
And as the Fed said in its press release announcing the move, if it was to increase rates even further, that would add another $4.7tn to the national debt.
What about the economy?
The Fed also said that it’s now ready to raise rates another time.
In its December 16th statement, the Fed noted that its current stance on interest rates is consistent with its approach to monetary policy for the last several years.
It’s expected that interest rates will remain at near zero for the next several years, so it’s possible that we will be able to raise interest rate again soon.
However, if the Fed’s approach is to keep interest rates at zero forever, it would need to raise the rates at least every six months, which is far from easy.
For example: if the Federal Open Market Committee were to raise its key interest rate for the third time since 2015, it’d need to cut the rate for at least six months to avoid the possibility of a recession.
This is because the Fed wants to keep inflation close to its 2% target, and keeps a key interest-rate target in the range of 0% to 2% (or 3% to 4%).
So even if we could keep interest rate at zero, we wouldn’t have enough to stimulate the economy to the level that we want it to be.
How could we do that?
It’s easy to say that we need to do a little bit more to stimulate our economy.
But that would take money from people’s pockets and give it to corporations and rich people.
If we cut the interest rates, we would still be doing something very helpful for our economy, because if we did that, our economy would be able grow.
So, there’s no need to worry about whether or not you should buy things, or save or invest, or retire.
It might be time to go back to your own money, but it’s important to know that there’s money in the bank for all of us.