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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

#181

Post by Qub3d »

thehappypm wrote: post #156
Qub3d wrote: post #83

Earlier quoted context omitted.

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.

Generally 401(k) plan ratios are not managed individually. Most will have target date funds[0] that automatically transition in to progressively less-risky investments as you get closer to retirement.

The problem is... almost no financial instruments outside of stocks can provide a meaningful return any more, so even the target date funds are almost all stock.

I noted your other "time in the market beats timing the market" comment, which suggests you are an active investor. That's great! But very few Americans are active investors, and expecting them to become so is unrealistic.

Its a problem of realpolitik, which is why, going back to my original comment, you should still care, if only for how it will affect you.

[0]: Here is an example prospectus of a 2055 target date fund. Note the graph showing the changing allocation of stocks/bonds/money-market funds (or CDs). By retirement, nearly half the portfolio is still stocks. https://prospectus-express.broadridge.com/summary.asp?client...

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

#182

Post by jjoonathan »

reflexco wrote: post #122
jjoonathan wrote: post #46

Earlier quoted context omitted.

> 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.

This isn't a rate-hike recession, it's stimulus withdrawal.

Rates are at 0.25%. Last time it took 20.00% to stop inflation. We haven't even started. We haven't soft-defaulted on the national debt, so we can't even think about starting. The Ukraine conflict will be dusty history by the time actual rate hikes and an actual rate hike recession come around.

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

#183

Post by unyttigfjelltol »

paulpauper wrote: post #165
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…

has MMT worked. it remains to be seen

Says the man midway through a 40-story fall from a skyscraper: "So far so good!"

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

#184

Post by jldugger »

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…

> Inflation is almost 100% caused by "too much money" chasing "too few goods".

I find it baffling that the "always and everywhere a monetary phenomenon" crowd never inspects velocity.

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

#185

Post by mywittyname »

Ericson2314 wrote: post #51
civilized wrote: post #41

Earlier quoted context omitted.

> you don't usually hear the quiet part out loud like that from this Fed chair Is it implying / could be construed in some negative way? Like, "slow demand" means "poor people need to buy less", or something?

Yes, the only way raising these rates could reduce demand is by increasing unemployment. Powell is much more honest than his predecessors in this regard. I commend him for it. The obsession with this single policy lever is bad, and I hope it changes. But there being little political will to raise rates is a good first step. Eventually we can leave them at zero, and manage the economy by other means.

> Powell is much more honest than his predecessors in this regard.

I disagree pretty heavily here. Yellen was always honest about the need for monetary policy which would be politically unsavory (which is why her term wasn't renewed). Her delivery was very much designed not to "spook the markets" but I think part of the reason she scared the markets was that she favored long-term stability.

Her words as Treasury Secretary aren't exactly sugar coating things. She's been saying that the impact of the Russian sanctions are going to hurt American as well, and that inflation is probably here to stay in the medium term at least (she's long held the belief that high inflation is an acceptable tradeoff for low unemployment). Granted, those statements are followed up with "we are working on a solution"-type statements, but I don't see many promises.

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

#186

Post by jeffalbertson »

so many people in this thread will play the common HN intellectual and exclaim how the fed is obviously trapped, or what they did wrong to do get us here.

And in a different thread will trash bitcoin only focusing on its energy consumption and not its potential sound money properties.

If Bitcoin is bad, and the Fed (and every government ever) created a situation which will only lead to poverty & widening wealth gap, whats the solution?

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

#187

Post by tomc1985 »

tonguez wrote: post #158
tomc1985 wrote: post #105

Earlier quoted context omitted.

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. Consideri…

> 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 own the house, which they bought and paid for. It is their property to rent or not rent as they see fit. You pay money for said privilege. They are not squatting on communal property, and short of returning it to the market the property would otherwise sit unused and wasted.

Are you saying that young "functional" people should have free housing? Most of you had some for 18, 20, maybe even 25+ years with your parents. Is it that you want that to last forever? Do you guys think you are Peter Pan or somethign?

> Considering that now everything is ruined, it's hard not to look at them and imagine they share some small part of the blame.

Don't let generational nihilism color your vision so much. There is a world of opportunity out there, especially here in the US, but young people think said opportunity looks like Twitch streaming or professional influencing or pretending that are innovating, but it's not. If those kids would pull their heads out of their asses and start learning how to be boring they will find there is lots of ways to get ahead in life, and that there aren't a lot of easy answers on YouTube.

"Everything is ruined"... like, c'mon, if that's really what you think then you've barely even lived

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

#188

Post by jcranberry »

0xB31B1B wrote: post #114
jcranberry wrote: post #97

Earlier quoted context omitted.

You think retirees are keeping all their savings in cash in their mattresses or something?

The point is, the things that make the economy work and grow is the production of things. Regardless of how many investments a retired person has, they by definition do not produce things.

You need investment to produce things and consumers to buy produced things.

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

#189

Post by mpalczewski »

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…

In the us we printed a bunch of money, and now the dollar is strong, but we have world wide inflation.

I don't think it helps to look at US charts for a worldwide phenomenon.

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

#190

Post by pkulak »

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…

How is it a test? MMT doesn't say you can increase monetary supply forever without consequence. It says that you can increase monetary supply until you see consequences, at which point you need to start reducing it, mostly through taxation. Raising interest rates does reduce monetary supply, but I don't think nearly to the degree that MMT would call for.

Now, if congress immediately votes in a bunch of new taxes, it'll be a wonderful test. :D

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