BS in Macro class

[snaFU]

I was just told in my macroeconomics class that the fed doesn't lower interest rates.

Now thats what I call indoctrination!

[forsmant]

I suppose technically they lower the rate at which they lend money to other banks. It is true that the other banks will usually follow.

[danberkeley]

i'm taking micro this semester. my professor admitted that rent control can directly bankrupt
landlords, cause the rent for new tenants rise, negatively affect the local economy by causing inflation, make house prices rise, create disincentives for the new housing, et cetera. but according to him, this is all fine because it gives 'security' to current tenants.

[forsmant]

It is fine for current tenants as they directly benefit at the expense of others at the hand of government. You will be hard pressed to find anyone to denounce something that directly benefits them.

[snaFU]

I got him to say the American Govt is a corporation though.

[JordanQ72]

I was just told in my macroeconomics class that the fed doesn't lower interest rates.

Now thats what I call indoctrination!

Depends, your teacher might be right. There's a lot of different rates, some which the FED has direct control over, some it can exert considerable indirect pressure over, and some it doesn't have control over, but only if he said that they don't raise & lower rates. If he just said they don't lower, that's a highly suspect statement even without a specific rate qualifier.

[AceNZ]

Rent control is legalized theft. Renters are stealing from their landlords.

The Fed doesn't set all interest rates, just two: Fed Funds and the Discount Rate. However, those rates are used by most banks as the base onto which they add their margin, so prime lending rates and credit card rates usually follow after some delay.

The Fed can also influence (but not set) rates through FOMC actions in the open market -- such as buying and selling bonds.

[PetersburgPanic]

I was just told in my macroeconomics class that the fed doesn't lower interest rates.

Now thats what I call indoctrination!

The Fed doesn't "lower" anything when they "lower" interest rates. The Fed conducts an Open Market Operation to buy/sell securities to increase/decrease the money supply to affect the desired change on the interest rate.

http://en.wikipedia.org/wiki/Open_market_operation

[AceNZ]

The Fed doesn't "lower" anything when they "lower" interest rates. The Fed conducts an Open Market Operation to buy/sell securities to increase/decrease the money supply to affect the desired change on the interest rate.

That's true for the Fed Funds rate. The Discount Rate is is set directly by the Fed.

[danberkeley]

I got him to say the American Govt is a corporation though.

if it is and acted like one, then the government wouldnt employ as many people as it does, or it would be bankrupt and sold to another firm.