Interest Rates

The Birth of the Fed. In 1907, crowds headed to NYSE to withdraw the money. The street was blocked and banks couldn’t deal with all of them. This bank run was especially painful due to none of the ‘reserve payment system’ and ‘monetary control.’ It was the Panic of 1907…

Interest rates have been hiked at the fastest pace to decade high levels. Despite the pace and the steepness inflation persists — in every G7 economy and elsewhere — and is between two and five times the sacrosanct 2 per cent target. Questions about the credibility of central banks are…

May 2023 and inflation is still the center of attention for all major news outlets. Inflation, my friend, is a beast that prowls through the economic landscape, it impacts both businesses and individuals. It’s this fickle indicator that has everyone on edge, constantly checking and reacting to every minute piece…

As we continue to grapple with sticky inflation, central banks worldwide have turned to increasing interest rates to quell the problem. Much like the diminishing supply of oxygen as we ascend to greater heights in the mountains, the rise in interest rates brings along a unique set of challenges, making…

Your mortgage is memory-less and so is the exponential distribution — Euler’s number, the exponential distribution and compound interest There are many interesting events that happen at points in time. For example, the arriavals of busses at a bus stop, accidents on a highway, goals scored in a soccer (football) game. The processes that model such point in time events are called “point processes”. An important consideration in these…

The cheap cost of money is one reason why markets discount negative news and continue to rise despite any short-term negativity. Once we remove zero cost of money from the equation, the 50% global wealth, blowing off its top, calmly, the global real estate which is not a real asset…

Fed officials leave room for debate, but the evidence suggests that the cycle may be nearing its end. Introduction The Federal Reserve has been raising interest rates in an effort to combat inflation. The Fed has raised rates seven times since March 2022, and the federal funds rate is now…

The United States government is poised to embark on a massive borrowing spree, totalling approximately $1 trillion. This influx of borrowing could potentially drain liquidity from the banking system, causing interest rates to rise to a level where the federal government may struggle to meet its interest payment obligations. In…

Why Life is Like the Stock Market — Interest rates are an essential factor in the economy and a crucial tool used by central banks to achieve their monetary policy objectives. The central bank’s primary role is to maintain stable prices while keeping inflation in check, which is why interest rates play a significant role in the economy…