/biz/ - Business & Finance

>>54121151
not to be a faggot but this annoys me every time i see it. Its the fed, not the feds.

Its simple to understand if you look at this chart. https://fred.stlouisfed.org/series/FEDFUNDS Generally speaking rates have gone down since the end of the gold standard. Every time they go up their is a recession, and as time goes on a crisis and a recession. Why is this? its because total debt in the system has increased. https://fred.stlouisfed.org/series/GFDEBTN
this chart is just government debt, but its the same pattern for household and businesses too. As debt increases a smaller the economy becomes more burden by the debt and more sensitive to interest rate rises. if you have $100 in debt at 1% you have to service $1 of interest per year, if you have $10000 in debt at 1% interest you have to service $100 per year.

As the system has to keep expanding as deflation means collapse, it needs lower rates, the lower rates and stimulus etc but eventually you run into the reality of negative interest rates and inflation meaning they hit the end of the road