The government can indefinitely control both short-term and long-term interest rates.
The Fed's ability to raise and lower short-term interest rates is its primary control over the economy.
One component of the leading economic indicators is the yield curve. Bond investors keep a close eye on this, as it illustrates the spread or difference between long-term interest rates and short-term ones.
Right now the long-term investors are telling us that they're not as concerned about inflation and so we're seeing these rates now move into the marketplace and out to the street - rates that individuals can get.
I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.
For too long, the world has been focused on short-term growth and development at the expense of our long-term survival as we have depleted our natural resources at historically reckless rates.
To investors, job creation is a second-order effect. Market participants care first about interest rates, exchange rates, bond prices and the one great factor that affects all three: the long-term solvency of a bond company called the U.S. government.
The most important thing that a company can do in the midst of this economic turmoil is to not lose sight of the long-term perspective. Don't confuse the short-term crises with the long-term trends. Amidst all of these short-term change are some fundamental structural transformations happening in the economy, and the best way to stay in business is to not allow the short-term distractions to cause you to ignore what is happening in the long term.
Paying interest on reserve balances enables the Fed to break the strong link between the quantity of reserves and the level of the federal funds rate and, in turn, allows the Federal Reserve to control short-term interest rates when reserves are plentiful.
The insurance companies do not refer to the key policy rate when they send their statements. We can only control that rate. Long-term interest rates are determined largely by global financial markets.
By purchasing and holding large amounts of Treasury securities and MBS, we put additional downward pressure on term premiums and so on long-term rates.
Investors that do the best, and have done the best, are those that stay and compound at above-average rates over the long term.
Anyway, maybe there weren't any solutions. Human society, corpses and rubble. It never learned, it made the same cretinous mistakes over and over, trading short-term gain for long-term pain.
The central banks cannot control interest rates. That's a mistake. They can control a particular rate, such as the Federal Funds rate, if they want to, but they can't control interest rates.
The investor should be aware that even though safety of its principal and interest may be unquestioned, a long term bond could vary widely in market price in response to changes in interest rates.
What's true for New York is true for most of the country: We are a long way removed from the double-digit interest rates and unemployment rates, and the soaring crime rates, of the early 1980s.