Great Depression II: Fed Funds Rate Moves Inversely to the Umemployment Rate

Fed Funds Rate Moves Inversely to the Umemployment Rate

December 10, 2003

Take a look at this chart: (click to enlarge)

The implication of this is that the Fed can decide how much unemployment our economy is going to endure.

Posted by manystrom at December 10, 2003 09:13 PM

Comments

The rate of short-term interest (fed feds rate) is inversely correlated with the unemployment rate as indicated by the chart. However, it would be erroneous to assume that FF rate is causal to the rate of unemployment.
It has much more to do with the correlation of levels of demand over all in the economy for both money (lower ff rate) and workers (higher unemployment). When the demand for money is high the demand for workers in also high and vice-versa.

Posted by: dan hanley at December 14, 2003 03:52 PM


	« Inflation v. Deflation \| Main \| Who's Pulling the Strings? » Fed Funds Rate Moves Inversely to the Umemployment Rate December 10, 2003 Take a look at this chart: (click to enlarge) The implication of this is that the Fed can decide how much unemployment our economy is going to endure. Posted by manystrom at December 10, 2003 09:13 PM Comments The rate of short-term interest (fed feds rate) is inversely correlated with the unemployment rate as indicated by the chart. However, it would be erroneous to assume that FF rate is causal to the rate of unemployment. It has much more to do with the correlation of levels of demand over all in the economy for both money (lower ff rate) and workers (higher unemployment). When the demand for money is high the demand for workers in also high and vice-versa. Posted by: dan hanley at December 14, 2003 03:52 PM	Recent Entries This Week’s News 5-17 – 5-21 Open Thread: Cancelled Elections, 2004? Global economy set for best years in decade, IMF says My Life as a Deadbeat American Kudlow & Cramer - The Show Stinks Wars are Fought to Keep Oil Under Dollars Control Taiwan Elections, etc. Open Thread - The Coming Draft Meltdown Near? Open Thread Dow Drops Tranny Rembering Ike Masters of War Dreamers Censure Bush for Misleading Us How Will You Vote This November? The Facts! The True Unemployment Rate - 10.9% Full Moon - February 6th Remembering Mao Lancaster Predictions 2004 - The Lull Before the Storm Nystrom - Unsustainable Illusions - 2004 Predictions Real Estate 21st Century Style Full Moon - January 7th Gold All Comers Invitational Nystrom - 2003 Predictions Recap Lancaster 2003 Predictions Recap Who's Pulling the Strings? Fed Funds Rate Moves Inversely to the Umemployment Rate Inflation v. Deflation What Would You Do? Tipping Point for Gold Archives by Date May 2004 April 2004 March 2004 February 2004 January 2004 December 2003 November 2003 October 2003 Syndicate this site (XML) Powered by Movable Type 2.64