I dunno. Yes, any particular Fed meeting might not cause interest rates to jump much, for all the reasons you suspect.
But if mortgage lenders (commercial banks) charge higher interest rates, that will tend to depress construction and property-sale transactions.
M2 growth largely happens when commercial banks finance property deals. (Most loans require collateral, and that is property). Commercial banks (fractional reserves in action) print money and lend it out to property buyers, who give it to property sellers.
Who gets the new money (M2)? The sellers of real estate, and maybe construction companies.
Lately, this picture may have changed, with QE. Now, some argue (I think I agree) that new money can enter the economic system directly, through QE aka money-financed fiscal programs.
That is, the federal government is financing outlays by having the Fed buy US Treasuries bonds, with printed (digitized) money. Michael Woodford says this is the case, and I am just a wag, so I will agree.
For me, the question is, "Why would the Fed ever sell its bonds?" and, "The Bank of Japan has financed half of that nation's huge national debt. 50% about, and Japan national debt somewhere about 240% of GDP. They have only mild inflation, and usually deflation. Why not copy Japan?"
Obviously interest rates also respond to other factors, such as inflation, flight-to-safety, capital gluts, and so on. Maybe even perceived opportunity costs.
----
There is another question that if we have globalized capital markets (we do), and money is fungible, then maybe you need the bulk of the world's major central banks working in the same direction....
It also might be this topic is too complicated to understand....
Well....
I dunno. Yes, any particular Fed meeting might not cause interest rates to jump much, for all the reasons you suspect.
But if mortgage lenders (commercial banks) charge higher interest rates, that will tend to depress construction and property-sale transactions.
M2 growth largely happens when commercial banks finance property deals. (Most loans require collateral, and that is property). Commercial banks (fractional reserves in action) print money and lend it out to property buyers, who give it to property sellers.
Who gets the new money (M2)? The sellers of real estate, and maybe construction companies.
Lately, this picture may have changed, with QE. Now, some argue (I think I agree) that new money can enter the economic system directly, through QE aka money-financed fiscal programs.
That is, the federal government is financing outlays by having the Fed buy US Treasuries bonds, with printed (digitized) money. Michael Woodford says this is the case, and I am just a wag, so I will agree.
For me, the question is, "Why would the Fed ever sell its bonds?" and, "The Bank of Japan has financed half of that nation's huge national debt. 50% about, and Japan national debt somewhere about 240% of GDP. They have only mild inflation, and usually deflation. Why not copy Japan?"
Obviously interest rates also respond to other factors, such as inflation, flight-to-safety, capital gluts, and so on. Maybe even perceived opportunity costs.
----
There is another question that if we have globalized capital markets (we do), and money is fungible, then maybe you need the bulk of the world's major central banks working in the same direction....
It also might be this topic is too complicated to understand....