Dr. Riedy's Random Thoughts

On September 26 the Federal Reserve raised a "key interest rate", continuing a string of eight rate increases since 2015.  Media coverage indicated some consumer and business loans use this "key" rate as a benchmark and might also lead to increases in other interest rates. On the premise most adults have only a vague idea of what's happening other than  interest rates are rising, and the Fed has something to do with it, let me try to explain what's going on. And why I wrote in the headline The Federal Reserve is Becoming Relevant Again. I'll use two  or three more blog postings to put the Fed's actions into context. From the mid-point of the housing and mortgage market collapse in about 2008 until 2015, short-term interest rates--including this "key" rate supposedly "raised" this week by the Fed--fell dramatically and stayed at zero or near zero until 2015.  During that period, from a monetary policy point of view the Fed became...

America is blessed with organizations and individuals involved in “causes” that appeal to donors who have the option of supporting those causes, or not.   Philanthropy is a major industry. Donors are exceedingly generous to thousands of “causes” both domestically and internationally.   In-kind and cash donations are voluntary. Donors and philanthropists decide where to direct their gifts. In contrast, City, County, State and Federal governments impose substantial non-voluntary financial burdens on taxpayers: Fees, sales and income taxes, gas taxes, taxes to pay off special purpose bonds whose interest and principal payments are spread over many years. Also, the Federal government   has supported social programs (whose advocates are effective in gaining government support) for years, sometimes for decades, by increasing Federal borrowing.   Which means current taxes also cover the costs of past government-funded social programs, not just current ones. The mi...

As I was reading yet another article proposing additional taxpayer funding of affordable housing, it got me to thinking about why it is that this cause gets such great exposure and has such tremendous momentum as a funding engine.   In contrast, t he next thought that came to mind was why there is so little public discourse about America's middle class other than as a funding mechanism for causes other than preservation of the middle class. As a trained economist I also thought about the critically important role America's middle class has played historically as a major source of socio-political and economic stability in this country.   Those roles for the middle class are under attack, in my view.  In terms of anyone supporting and defending the middle class  I was reminded of lines from the Broadway play, 1776: “Is anybody there?   Does anybody care? My last stint of 14 years working in Washington, D.C. involved 11 years during which I was chief execut...