look all punch drinking aside.. i understand everyone has opinions.. and S2007S is a off.. yet you attack him for having opposing views.. it does seem ridiculous to think that his next prediction is going to be right.. Nine_ender i'm sure i'm as well read on you on the subject
Completely agree... blind faith "just because" is ridiculous. And yes, I would like to think negative outcomes are not deliberate. With all that, your example using personal tax rates, a.k.a. the US tax code doesn't make your point. The tax code is about behavior modification. But we don't need to discuss that. Why aren't people comfortable with higher taxes? Sure there is the obvious, less money for ME! But the intersect for most, I believe, is what's in it for ME? For main street, the financial engineering of the last 8 years or so has not worked, just as spending of tax receipts is done imprudently and somewhat arrogantly. Tax rates, like interest rates, are cornerstones to a thriving and robust US economy. Both are financially engineered for benefit. However, only on the surface level are the outcomes positive for we the people. The current state of the world is anything but operating on the surface level. History has shown interest rates, and taxes, are about Power... over the masses, and marketplaces. Thanks for the civil discussion. PS. YAY! I succeeded in keeping my response non-political!
How would an increase in rates impact the reserve ratio for banks? A lot of banks are sitting right on the margin for liquidity. I seem to recall that it will influence banks and lending ratios but it's been a while since I took Money, Banking and Public Policy in college and I don't remember the consequences.
@DallasCowboysFan normally it would lower excess reserves, because it's getting more interesting to lend with a higher rate. I would say a normalisation/move away from zero is better in long run for anything finance related.