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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

#151

Post by danielmarkbruce »

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…

Credit spends too.

US Household debt to GDP steadily went down over that period.

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

#152

Post by godmode2019 »

SamuelAdams wrote: post #106
MR4D wrote: post #65

Earlier quoted context omitted.

It’s even worse - if the Fed actions tank the markets, then millions of retirees who have been enjoying high market values are screwed and have no other source of wealth or income. I do not envy the position the Fed is in.

I’m surprised this is top comment. Everyone ought to rebalance their assets as they get closer to retirement. If you are retired you should have a minimum of 3-10% of your portfolio in bonds, which typically fluctuate less than stocks. Then you draw from your bond assets to actually get money. As long as your stock assets aren’t touched for 3-5 years it doesn’t matter what the market does in the next few months.

You should have 60% bonds and 40% stocks

As you get older 80% bonds 20% stocks.

Source: The intelligent investor (famous finance book)

People these days have 80% house, 15% crypto and 5% stocks

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

#153

Post by GoodJokes »

andreyk wrote: post #137

An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what's happening now seems to at least be related - https://www.nytimes.com/2022/02/06/business/economy/modern-m... Conceptually the…

No post body was provided.

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

#154

Post by paulpauper »

MR4D wrote: post #65
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’s even worse - if the Fed actions tank the markets, then millions of retirees who have been enjoying high market values are screwed and have no other source of wealth or income. I do not envy the position the Fed is in.

Not once in my lifetime have I seen the fed tank the markets. It's more like the fed being tailwind. Since 2008 the pattern has been for the fed to be way behind the curve by keeping real interest rates negative and raising rates very slowly and with tons of advance warning even as the stock market and economy rips higher.

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

#155

Post by colinmhayes »

mindslight wrote: post #73
colinmhayes wrote: post #60

Earlier quoted context omitted.

It certainly does not have everything to do with it. The answer is somewhere in the middle. Cheap money absolutely causes inflation, but so do global supply chain breakdowns.

IMO rather than talking about ambiguous "inflation", one should be specific about what exactly is being inflated - "monetary inflation", "asset inflation", "price inflation", etc. Monetary inflation occurred when the Fed printed several trillions of dollars back in 2020, asset inflation occurred soon thereafter, and then price inflation took hold throughout 2021 as that new money trickled into consumers' hands. It do…

Unless I know I'm talking to an economist I use inflation to mean price inflation, because that's what every non economist thinks it means. You are certainly right that it's ambiguous in a technical sense though.

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

#156

Post by thehappypm »

Qub3d wrote: post #83
thehappypm wrote: post #72

Earlier quoted context omitted.

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

That's a bit callous of you, not to mention shortsighted. If the Baby Boomer generation loses financial security, they will as a group A) tighten their spending habits and B) not retire. Either of these effects on their own would hurt the younger generations, and together would make the already slow wealth building hit a brick wall. (I'm 25, for the record, and I don't expect to be debt-free or a homeowner until well…

It’s really not callous. If a boomer’s 401(k) is still heavy on stocks they’re being greedy! De-risk, people. I don’t want to let inflation tank my economy to protect a generation of greedy grandparents.

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

#157

Post by chiefalchemist »

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.

The problem is, The Fed* is the sole creator of this situation. Again and again.

* An entitity with unprecedented powpower, unelected, and is effectively - due to a lazy and incompotent Congress - unregulated. What could go wrong.

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

#158

Post by tonguez »

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…

"For a lot of people, what is even the point of living if there's no retirement to enjoy?"

The point is you are supposed to be helping other people in some way. Not just being a useless turd and forcing young functional people pay rent to you so that you can do nothing but sit on your fat ass and shit in your diaper. They also lived in a society that was much more prosperous than any young person ever will. Considering that now everything is ruined, it's hard not to look at them and imagine they share some small part of the blame.

Maybe if people cared less about saving up a big sum for themselves to "enjoy their retirement", aka being a self-centered moron, then the world wouldn't be such a shithole today.

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

#159

Post by simpthrown8id »

andreyk wrote: post #137

An interesting aspect of this is that the endless printing of money in the last few years was a sort of stress test of modern monetary theory, which has been seeing lots of discussion in those same years. I never quite understood how this theory would work while avoiding inflation, and what's happening now seems to at least be related - https://www.nytimes.com/2022/02/06/business/economy/modern-m... Conceptually the…

>>Conceptually the answer in the theory is to suck up the excess money with taxes

Govt spending is already 45% of GDP, so there's not much room to increase it more.

As for MMT, I think what the MMT crowd doesn't realize is that there's a lot of latent inflation coming. Asset prices and CPI do not go up in tandem. First Asset prices are inflated, then later for the next decade or so, as people slowly make withdrawals from those inflated asset prices, it begins to affect the CPI. And that's where we are right now, at the beginning of the CPI impact.

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

#160

Post by anonporridge »

duncan-donuts wrote: post #107
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…

You're talking about living breathing humans. "extractive cost center" is a weird way to describe "person who paid social security their entire working life". You're not wrong about what you're saying but fuck can you act like there's real people involved here and not just numbers? Are retirees _really_ economic parasites? Let's not forget that consumption is bringing in revenue to _someone_ which does provide value…

If you want to work on and solve big hairy problems, you can't get caught up in the weeds.

We can acknowledge the humanity of the humans who make up the constituent parts of the colossus while also saying that the colossus, the sum of those humans, is a potentially negative force on the stability and sustainability of the system.

And I speak as one of these retirees.

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