Does the federal reserve encourage consumer debt?

Does the federal reserve encourage consumer debt?
Sources
investopedia.com favicon
investopedia.com favicon
Answer

No, the Federal Reserve does not directly encourage consumer debt. Its primary tools are setting interest rates and influencing the supply of money and credit, which can indirectly impact consumer borrowing and debt levels. Here are some key points about how the Fed's actions relate to consumer debt:

When the Fed raises interest rates, it becomes more expensive for consumers to borrow money through credit cards, auto loans, mortgages, etc. This discourages taking on new debt.

Conversely, when the Fed lowers interest rates, it becomes cheaper for consumers to borrow, which can encourage more debt accumulation as the cost of borrowing decreases. However, the Fed's main goals in adjusting rates are to promote maximum employment and keep inflation in check, not to directly influence consumer debt levels. Changes in debt are a side effect.

Higher interest rates from the Fed can make it harder for some borrowers, especially those with lower credit scores, to get approved for loans as lenders become more cautious about extending credit.

The Fed does not control consumer spending habits or directly incentivize taking on debt. Its rate policies impact the broader economy and financial conditions that can make borrowing more or less affordable.

So in summary, while the Fed's interest rate policies can make borrowing costlier or cheaper for consumers, thereby indirectly influencing debt levels, it does not explicitly encourage or discourage consumer debt as a primary objective. Its main focus is on managing employment and inflation through monetary policy tools.

-My response

I disagree.. During the financial crisis the federal reserve was practically begging people to "spend and borrow"

Sources

Answer

You make a fair point. During the 2008 financial crisis and Great Recession, the Federal Reserve did take actions that could be viewed as encouraging consumer borrowing and spending, contrary to my previous claim. Here are some key points:

The Fed slashed interest rates to near-zero levels by the end of 2008, making it extremely cheap for consumers to borrow money through credit cards, auto loans, mortgages, etc.

This aimed to stimulate spending and economic activity.

The Fed launched large-scale asset purchase programs to drive down long-term interest rates, again making borrowing more affordable for consumers and businesses. Fed officials, including Chair Ben Bernanke, made public statements urging banks to lend more freely and for consumers to borrow and spend to help revive the economy. Programs like the Term Asset-Backed Securities Loan Facility (TALF) were created to specifically support consumer and business lending markets that had frozen up.

So while the Fed's main tools are setting interest rates and providing liquidity, you're correct that during the crisis period of 2008-2009, their extremely accommodative policies and direct lending programs were aimed at incentivizing more borrowing by consumers and businesses to counteract the severe economic contraction. This could be viewed as effectively encouraging consumers to take on more debt to boost spending and investment.

My previous response overlooked this important context around the extraordinary crisis-era measures taken by the Fed to try to stimulate borrowing and spending.

Thank you for catching that oversight.

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Maybe the real danger of AI is who it's coded to protect..

-AW

AI and Bible study

I've been ocasionally playing around with OPENAI's ChatGPT for a few weeks now and have become interested in using it as a bible study aid. Thought of this question eariler today and got the response below which I felt like is ok, ya know? ;)

User (<-- me)

write an essay explaining in detail in what way and for what purpose the book of proverbs in the bible places so much emphasis on knowledge, wisdom and understanding

ChatGPT Title: The Book of Proverbs: Emphasizing Knowledge, Wisdom, and Understanding

Introduction: The Book of Proverbs, nestled within the biblical canon, stands as a remarkable compilation of ancient wisdom literature. Proverbs is a rich tapestry of sayings, aphorisms, and teachings that places significant emphasis on the pursuit and application of knowledge, wisdom, and understanding. This essay aims to explore the reasons behind this emphasis, highlighting the role of these qualities in personal growth, communal harmony, and moral discernment.

I. The Power of Knowledge: The Book of Proverbs places great value on acquiring knowledge. Knowledge is depicted as the foundation upon which wisdom and understanding are built. Proverbs 1:7 asserts that "The fear of the Lord is the beginning of knowledge." Here, knowledge is portrayed as an essential prerequisite for a meaningful relationship with God and the world. This emphasis on knowledge serves as a catalyst for intellectual curiosity, learning, and discernment.

II. The Significance of Wisdom: Wisdom, closely related to knowledge, occupies a central position in the Book of Proverbs. Proverbs 4:7 advises, "Wisdom is the principal thing; therefore, get wisdom. And in all your getting, get understanding." Wisdom is portrayed as a precious treasure that must be diligently pursued. It encompasses practical insight, moral discernment, and the ability to make sound judgments. Wisdom provides guidance in navigating life's challenges and making decisions that align with righteousness and justice.

III. The Role of Understanding: The Book of Proverbs highlights understanding as the culmination of knowledge and wisdom. Understanding enables individuals to apply acquired knowledge and wisdom in practical ways. Proverbs 3:5 encourages readers to "Trust in the Lord with all your heart, and lean not on your own understanding." This verse acknowledges the importance of acknowledging a higher power and seeking divine guidance in conjunction with personal understanding. Understanding allows individuals to interpret life's complexities, harmonize relationships, and foster empathy and compassion.

IV. Purpose and Benefits: The emphasis on knowledge, wisdom, and understanding in the Book of Proverbs serves several important purposes and offers numerous benefits. Firstly, the acquisition of knowledge, wisdom, and understanding leads to personal growth and maturity. It equips individuals with the tools necessary to make informed decisions, avoid pitfalls, and pursue a virtuous life.
Secondly, these qualities contribute to communal harmony. Proverbs 14:34 asserts, "Righteousness exalts a nation, but sin is a reproach to any people." The pursuit of knowledge, wisdom, and understanding fosters ethical behavior, promotes justice, and strengthens the social fabric of communities.

Thirdly, the emphasis on knowledge, wisdom, and understanding serves as a safeguard against deception and manipulation. Proverbs 14:15 warns, "The simple believes every word, but the prudent considers well his steps." By valuing these qualities, individuals are empowered to discern truth from falsehood, recognize deceitful tactics, and safeguard themselves from harm.

Conclusion: The Book of Proverbs places immense emphasis on knowledge, wisdom, and understanding for a myriad of reasons. These qualities not only facilitate personal growth and maturity but also contribute to communal harmony and moral discernment. Knowledge forms the foundation, wisdom acts as a guiding light, and understanding allows for practical application. By incorporating these principles into their lives, individuals can navigate the complexities of existence with integrity, make wise choices, and cultivate harmonious relationships within society. The Book of Proverbs remains a timeless source of wisdom that encourages the pursuit of knowledge, wisdom, and understanding for the betterment of individuals and communities alike.

Eye doc

Ok.. I'll try to do this short (you know me lol).. Wife has eye coverage on her insurance and went to eye doc this afternoon When it came time to the billing she questioned why it was so much (bc our handicapped uninsured son had been there recently and she knew kinda what to expect on the high end) To make a long story short turns out if you have insurance the eye doc business tacks on all sorts of extra expenses, insurance on the glasses and this and that, apparently to squeeze as much fiat as possible out of the insurance company.. She had all the extra stuff removed from the bill, told them she didn't want it billed to her insurance company and got all sorts of breaks on the bill Like if you have insurance they charge for the eye exam, if you're self pay they don't and they charge the insurance company nearly twice as much for the frames as they charge self pay! The point of the whole story is how everything is taking place between the insurance companies and the providers both of whom are constantly try to squeeze each other.. As self pay the portion of the bill she had to pay out of pocket was almost exactly 50% (50 PERCENT!) less ! I mean how is that crap not considered out right theft or fraud or something, come on? Everyone have a great weekend ;) Greg

FREE TOS Scan code (FWIW)

The following is code for the Think or Swim scan page. You can just copy here and paste in there and it should work..

Today's scan on daily returned 22 symbols

I have it paired with standard RSI & MACD for reference

What it does..

Close of last two candles must be > the 62 EMA

Current close (price) must be within 2% of the 62 EMA
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How I use it..

Look over the results in search of the best setup
(ie; PA above most resistance, RSI pointing up, MACD showing improvement)

When / if you find a good entry (breaking to new recent high?) after entry stop loss should be placed
a little below the 62 EMA & or the low of two candles back (See example)

-----------------------------------------------------------------------

# When / if a trade is taken stop should be placed below the low _
# of candle 2 back from current and / or below the 62 EMA

def MovAvg_62 = MovingAverage(averageType.exponential, HLC3, 62);

def low_price = low;

def EMA_Break_62 = close is greater than MovAvg_62 and close from 1 bar ago is greater than MovAvg_62;

def ma62 = MovAvgExponential(close,62,0,no);
def s = ma62*0.02;


def ThirdCandleBreak = close is greater than high from 1 bar ago and close > Lowest(low_price);


def condition = EMA_Break_62 <> 0 and ThirdCandleBreak <> 0 and absvalue(close - ma62) is less than or equal to s;

plot scan = condition;
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$SPX Update - Will it or won't it?!

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Watching this quarterly chart with a great deal of interest.. IF it pans out along the same lines as the last two major crashes next quarter should retrace "some amount" and then.. well.. who the fuck knows? LMAO

You only have 3 months to get in ;)

Good luck traders

Click for larger image

-Greg

Top or no top? #SPX quarterly

Eerie similarities to the last two major tops on the quarterly..

Click for larger image

Just saying..

Greg

The wasp that kills tarantulas Tarantula hawk wasps turn the tables on fearsome spiders

To some this is proof of #evolution / scientific discovery. To others the same is irrifutable evidence of #God. That these terrifying creatures exist, nature's own version of terrorism, is astonishing.

Think about all of the creatures that live on the earth. From the smallest insect

Fairyflies are very tiny insects, like most chalcid wasps. They average at only 0.5 to 1.0 mm (0.020 to 0.039 in) long. They include the world's smallest known insect, with a body length of only 0.139 mm (0.0055 in), and the smallest known flying insect, only 0.15 mm (0.0059 in) long.

To the world's largest creature..

Blue Whale
The Largest Animal Ever: The Blue Whale. The blue whale (Balaenoptera musculus) is a marine mammal belonging to the suborder of baleen whales. At 30 metres (98 ft) in length and 180 metric tons (200 short tons) or more in weight, it is the largest known animal to have ever existed.Apr 4, 2012

And how each instinctively contains the knowledge necessary to survive, regardless of how bizarre the behaviour might seem to #humans.

Personally I find a wasp killing a tarantula to provide food for it's "babies" to be pretty damned #miraculous..

What do you think?

Here's the link (on BBC.COM)

The wasp that kills tarantulas
Tarantula hawk wasps turn the tables on fearsome spiders