Yesterday, 15 March 2022, the Federal Reserve Board of Governors announced its first hike in the interbank lending rate since December of 2018.
The Federal Reserve intends to raise the target range for the federal funds rate by 25 basis points from 0.25 of one percent to 0.5 of one percent.
Effectively, the Federal Reserve governors have signaled that orderly rate rises will begin with this first rise. This is not because the economy is booming. Rather, the Federal Reserve seeks to end their forever quantitative easing program that began in 2008 and only briefly stopped between the short-lived Trump Recovery of 2017 to 2019.
A History of the Fed Funds Rate
In spite of the hype about the USA economy, the economy never has advanced when the FFR was this low, even with the announced rise.
In spite of the establishment media Fake News, there was never a recovery during the Obama presidency. Americans experienced tremendous reckoning, i.e., deflation, after the greatest inflation of all-time, the Greenspan-Bernanke Great Inflation of 1994-2007, the biggest credit bubble in the history of mankind.
Inflation always is a credit phenomenon. Today's rampant inflation is owing to a massive rise in dollars in circulation from the American Rescue Plan in the face of a restricted supply of goods. Dollars are merely cash. All cash evidences bank deposits. All bank deposits are credit.
During the Greenspan-Bernanke Great Inflation, bank loans fueled the inflation. The credit went into Dot Com stocks first and afterward, residential reality new construction and flipped houses.
During the Obama years, the Federal Reserve kept rates betwen zero and 0.25% to paper over the massive decline in credit that needed to offset the massive growth in bank credit under Greenspan-Bernanke.
Gab It
