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US Federal Reserve raises interest rates for first time since 2018

theguardian.com

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Re: US Federal Reserve raises interest rates for first time since 2018

#121

Post by duncan-donuts »

mrmuagi wrote: post #82
anonporridge wrote: post #74

Earlier quoted context omitted.

It's rough. On the one hand, retirees bring nothing of real value to the economy. We serve them because of the obligations they built up over their working careers. But, they get the focus of attention because a) they have all the money, b) they have all the time to be engaged in politics, and c) they vote. But they're purely an extractive cost center. A kind of economic parasite that keeps getting bigger and bigger…

> retirees bring nothing of real value to the economy. Sure they may not be producing anything, but is there any value to the idea they consumers still? A lot of FIRE philosophy is you work hard so you can earn retirement early too -- people aren't going to work all their lives either, there has to be a light at the end of the tunnel. It is saddening that it may not be the case for many.

Apparently retirees aren't allowed to hold investments

Re: US Federal Reserve raises interest rates for first time since 2018

#122

Post by reflexco »

jjoonathan wrote: post #46
phkahler wrote: post #29

Earlier quoted context omitted.

>> Is lowering interest rates a method to overcome a recession? It is claimed to be. The idea is that with lower interest rate, companies and people will be more likely to borrow money to spend and that will boost the economy. I for one do not really believe this to be true. I suspect it's the act of lowering rates that gives a temporary boost until things rebalance. In other words, economic activity has some depende…

> economic activity has some dependence on the derivative of interest rates If interest rates go down, it's easy to roll over old promises and make new ones besides. If interest rates go up, promises must be kept or the business will fold. At the end of every business cycle, interest rates are low and there are lots of unprofitable "zombie companies" that operate by simply rolling over their promises. In order for th…

It seems that Putin is the scapegoat for inflation and will be the scapegoat for recession as well.

Re: US Federal Reserve raises interest rates for first time since 2018

#123

Post by matheusmoreira »

mactitan wrote: post #54

The Fed is trapped: It can’t raise too much since trillions of debt rely on very low rates. If it doesn’t raise enough then inflation will cause a recession.

It is a position is of its own making. It shouldn't have allowed this massive debt to accumulate in the first place. Cheap credit and the massive debt that comes with it is the main cause of inflation. Now that the whole economy depends on credit and debt, solutions to inflation can't be applied since they negatively affect credit.

Re: US Federal Reserve raises interest rates for first time since 2018

#124

Post by tehlike »

cubano wrote: post #116

Inflation is almost 100% caused by "too much money" chasing "too few goods". "Too much money" is a condition almost always caused by the creation of too much "fiat currency" (ie a currency that is backed by nothing but the good faith and credit of the issuing government) As we all should know, in the US, on 6/5/1933 FDR took the US off gold-backed currency and started the fiat currency situation we still find ourselv…

price inflation and asset inflation.

That increased supply went to asset inflation.

Re: US Federal Reserve raises interest rates for first time since 2018

#125

Post by mywittyname »

mullingitover wrote: post #79
dragonwriter wrote: post #48

Earlier quoted context omitted.

> Most surprising part of this FOMC had to be when Powell said "we would like to slow demand" during the press conference, you don't usually hear the quiet part out loud like that from this Fed chair. That's...not really a “quiet part”, it's the widely acknowledge, overt nature of managing inflation. That the Fed’s dual mandate involves employment and price stability, and that those are in tension because controlling…

The quiet part would be "We need to put a few million people out of work to cool things off."

It's the reason that the Fed is nominally non-political.

Nobody wants the medicine, even if they need it.

Re: US Federal Reserve raises interest rates for first time since 2018

#126

Post by monktastic1 »

qwertyuiop_ wrote: post #50
pclmulqdq wrote: post #6

It's worth noting that this is actually a rate target, not the rate. Previously, the rate floated between 0% and 0.25% based on a market. Now, it is going to be between 0.25% and 0.5%.

First I have heard of this and quite interesting to learn. Could you explain the difference ? Does this mean they are going to implement the rate increase some point in future ala target ?

As another reply indicated, the Fed doesn't actually set interest rates. That's a common misconception. Instead they purchase and sell treasuries to member banks, such that those banks' balance sheets change in such a way as to make money more or less expensive to trade amongst themselves, which has knock-on effects for consumers.

On the other hand, since there's no longer a reserve requirement since the start of covid, the mechanism that causes banks to have to borrow from each other (to meet the nightly reserve requirement, historically) is much less clear to me. Hopefully an economist can chime in.

Re: US Federal Reserve raises interest rates for first time since 2018

#127

Post by pastor_bob »

sillyquiet wrote: post #91
thehappypm wrote: post #72

Earlier quoted context omitted.

Oh no! Boomers will lose 401(k) value! The horror!

What a horrific ageist and bigoted comment. This literally could mean the difference between living independently or not for a lot of people. Not to mention everybody working today with a 401k as their retirement plan will lose value no matter their age, which means they have to work longer than planned. This is a real life impact to a lot of people.

If you're in all stocks (growth particularly) and retired, you're living pretty foolishly.

Re: US Federal Reserve raises interest rates for first time since 2018

#128

Post by anonporridge »

tomc1985 wrote: post #105
anonporridge wrote: post #74

Earlier quoted context omitted.

It's rough. On the one hand, retirees bring nothing of real value to the economy. We serve them because of the obligations they built up over their working careers. But, they get the focus of attention because a) they have all the money, b) they have all the time to be engaged in politics, and c) they vote. But they're purely an extractive cost center. A kind of economic parasite that keeps getting bigger and bigger…

Jesus Christ, work til you die eh? For a lot of people, what is even the point of living if there's no retirement to enjoy? They are an extractive class insofar as their present contributions are net negative. But you are forgetting they likely spent their entire life building up that account, both in terms of an actual retirement and the broader accounting of total life's contributions. Indeed, it is something that…

> Jesus Christ, work til you die eh?

That is the normal human experience.

But also not what I'm suggesting.

Re: US Federal Reserve raises interest rates for first time since 2018

#129

Post by mikeyouse »

dc-programmer wrote: post #89
anonporridge wrote: post #74

Earlier quoted context omitted.

It's rough. On the one hand, retirees bring nothing of real value to the economy. We serve them because of the obligations they built up over their working careers. But, they get the focus of attention because a) they have all the money, b) they have all the time to be engaged in politics, and c) they vote. But they're purely an extractive cost center. A kind of economic parasite that keeps getting bigger and bigger…

Probably not. Estate taxes are low

Estate taxes don't exist for 99.7% of people. A married couple can exempt the first $24M of their estate from any Federal taxes.

https://www.kiplinger.com/taxes/601639/estate-tax-exemption-...

Mind you, this also avoids a ton of tax that would otherwise be due had they not died via the step-up in basis... it's a massive giveaway to the rich.

https://www.investopedia.com/terms/s/stepupinbasis.asp

Re: US Federal Reserve raises interest rates for first time since 2018

#130

Post by dragonwriter »

thehappypm wrote: post #96
mactitan wrote: post #54

The Fed is trapped: It can’t raise too much since trillions of debt rely on very low rates. If it doesn’t raise enough then inflation will cause a recession.

A recession may be all right. Americans have a gigantic amount saved up and so long as it’s mild enough it’ll probably strengthen the dollar.

> Americans have a gigantic amount saved up

The median household savings is about $5k. Sure, the mean is a lot higher, but that gets thrown off by a few really rich people with enormous savings.

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