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US Treasury Secretary Janet Yellen says that she does not see an inflation problem as a result of Mr. Biden's increased spending in the trillions of dollars for the Families Plan. The Families Plan is to rebuild American infrastructure after decades of underinvestment, in addition to pandemic related spending. Yellen says the additional spending for the Families Plan is small relative to the size of the US economy. The $1.8 trillion Families Plan is for workers, students and American families. It addresses needs in education, health, and wellbeing and rebuilds the roads bridges and other infrastructure at every level in the economy.

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The Bernanke Fed's low interest rates are hurting seniors and savers who are earning very little on their savings. This is taking money away from millions of savers and reducing consumption spending by seniors and savers. According to the Labor Department average annual investment income for 24.6 million American households headed by seniors over the age of 65 was $2,564 in 2009. This is down significantly from prior years. A survey by the Employee Benefit Research Institute shows that one in three retirees have had to dig deeper into their savings to cover basic necessities in 2010. With inflation at an annualized rate of 5.6% in the first quarter 2011, interest rates of 0.24% on savings accounts do little to cover inflation. There is a sense that this is hurting retirees who have lived prudently and worked hard and on savers of different ages. This actually discourages healthy savings that would protect Americans from job losses and build a safer future. American contributions to bank and 401 (k) accounts is only 4% of disposable income in 2010, according to the Fed. Another danger is that the smaller 401 (k) accounts of the average American family after losses in earlier stock market declines, will again be exposed to the fluctuations and risk in the stock market. This could happen as money is shifted to the stock market in the hope of earning better returns. Seniors are an active voting group, and voting patterns show a shift to Congressional candidates who question Fed policy....

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India's central bank governor, Raghuram Rajan, announces a interest rate reduction of the benchmark rate by one quarter percentage point to 7.75 percent on Jan. 14, 2014. He had come under criticism from business for not lowering rates at the Dec. 2, 2014 meeting, after the decline in oil prices. Rajan notes in his news release that when he left rates at the same level on Dec. 2, the policy statement said clearly- "once the monetary policy stance shifts, subsequent policy actions will be consistent with this stance." In the NYT interview with Keith Bradsher, Rajan pointed out that more information was needed to confirm that low crude oil price environment was going to last. India imports about $100 billion in crude oil and is a key beneficiary of lower oil prices, at a time when the energy infrastructure and supplies are lagging behind causing a severe bottleneck for growth. The current situation points to inflationary pressures easing. Dec. 2014 inflation was 5%. Prices have fallen for fruits and vegetables since Sept.2014, and cereal price pressures are also easing. ...

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Charles Scwab points out what is really hurting seniors. In Feb 2006 the yield on a 1 year CD was 5.4%, with the fed funds target rate at 4.5%. In 2010 the 1 year CD yields only 1.3%. The $7.5 trillion in these low interest accounts are earning so little hurting seniors.

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The hike in the interest rate by 6% by the central bank of Argentina brings interest rates up to 40%. This is part of an effort to stem the decline in the value of the Argentina peso. The peso has lost a fifth of its value against the dollar so far in 2018, with a run on the peso seen on May 4th. The problems started with the central bank loosening its inflation target to 15% from 12%, says this report in the Economist. Inflation has shot up to 25% in Argentina in the last 12 months. Raising interest rates to as high as 40% is a risky move because of the effect on economic growth. President Macri and his Cambiemos (we can change) coalition won the election in 2015 by 2 percentage points over the Peronista Kirchner led party which ran the country after the debt crisis on a policy of debt reduction (desdeudameinto). Argentina's current account deficit is at 5% and growing rapidly. A major problem is the huge dollar denominated debt issued in 2016 and 2017 by the government, local government and private sector. According to the central bank BRCA the dollarized assets in 2016-2017 are about $25 billion representing capital flight, with $8 billion going for debt interest payments, profits and dividends, and $14 billion for travel and tourism. For a total of $50 billion according to central bank BRCA going to finance debt service payments, capital flight, profit remittances abroad, and tourism as a result of the issuance of $100 billion in dollar denominated debt by Argentina's government (90%) and private sector (10%). This is the first time such a large figure of dollar denominated debt was created after the financial crisis in Argentina during the first 2 Kirchner administrations during which time the debt was substantially reduced. This has led to S&P putting Argentina on the list of 5 most fragile economies in 2017. Instead of a gradual increase in issuing debt to finance economic development and focus on limiting loss through capital flight, avoiding rapid growth in dollar denominated debt, the Macri government has repeated the mistakes of the past in managing the economy. ...

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The People's Bank of China lowers the benchmark lending and deposit rates by 0.25 of a percentage point, and cuts the reserve requirement ratio by 0.5 of a percentage point. The PBOC said the move was designed to offset "the persisting downward pressures on the country's economic growth." It was also designed to offset the large volatility in China's stock markets. The PBOC also removed the upper limit on interest rates for fixed term deposits of more than one year, as part of interest rate liberalization. The move also counters the large capital outflows affecting China, as is happening for all emerging markets, of $70 billion in July. These outflows may have accelerated in August 2015 with declining investor confidence. Experts say the reserve ratio cut should inject about $100 billion into the banking system.

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After years of labor shortages executives say the shortages are easing and attrition is slowing.

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Ways in which a U.S. bond portfolio would respond to rising rates. A bond portfolio with a duration of 5 years loses 5% for every one percentage point rise in interest rates.

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Feldstein is back after his proposal that the government step in with low cost loans to families thatwould help homeowners reduce what they owed the bank by 20%, for those homeowners who are close to negative equity but not there yet. This is needed to prevent the next big wave of defaults on loans, from homeowners who see that walking away from their loans is a rational solution once they reach the point of negative equity. Feldstein hammers away at some critical points that point out that reducing rates risks more than it accomplishes. Food prices globally do not benefit from lower rates, as governments may have to raise interest rates to cool inflation in their economies. Rising food prices threatens the livelihoods of poor and working classes in the global economy, especially in developing countries of Asia and Africa. It also does little to stimulate the economy in the USA and actually helps increase inflation for commodities like oil and food products. So why is the Fed lowering rates even though the costs are more significant than the benefits. Lowering rates would be counterintuiive in this situation as Feldstein points out. Bernanke's response would be that its a temporary crisis response, lower interest rates helps financial firms restructure their debt and helps them restore health to their balance sheets in the fragile financial markets, where the financial architecture itself is being questioned. And the immediate crisis was in the financial markets, whereas some other solutions could be found for the damage this caused to the overall world economy in terms of inflation. Feldstein quotes estimates of inlation at 4% in the last 12 months and of 4.8% this year. The inflation rate in China is estimated much higher at about 8.5% and has become the focus of government efforts including relaxing the exchange rate, as the rise in prices especially of food affects the large working poor in China. Another aspect of lower interest rates is that lower rates surely would do little when there is such a large inventory of unsold homes. Significant also is the fact that lowering rates for fed funds by 3% from this time last year, has done little to lower mortgage interest rates which have come down only by 0.5%. So it does not give much relief to homeowners either. So is lowering rates a medicine that comes with a lot of side effects that you adminster only because the patient is in a critical condition, as the financial and credit markets appeared to Bernanke and Paulson that weekend only a few weeks ago? Probably so,which takes one back to Feldstein's main point. That main point is that the only way to get to solutions that strike at the core of this crisis is to help homeowners avoid default on their home mortgage loans, by reducing the loan amount by something like 20%, through government loans which can later be recouped to some extent. It cautions the Fed to use the medicine of lower rates sparingly, and urges the market participants and the public that insists that there be no "bailouts" to come to their senses, and accept that their will be tolerable losses for all if there are not to be intolerable losses for all....

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Microfinance turned into a for profit industry with interest rates upto 100%- $217 billion loans outstanding in 2026 and 140 million borrowers. It has turned into a disaster for borrowers, for women and families, with high interest rates and for profit companies using the favorable media presentation to charge high interest rates. The World Bank and the IDFC public institutions in the US have also financed these loans.

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US existing home sales were down 18% in 2022.