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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

#201

Post by jppittma »

throw0101a wrote: post #162
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…

> "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) Japan money supply: * https://fred.stlouisfed.org/series/MYAGM2JPM189S Japan inflation: * https://fred.stlouisfed.org/series/FPCPITOTLZGJPN Money supply ≠ inflation. > As we all should know, in the US, on 6/5/1933 FDR took…

I have no idea how anybody looks at Japan without realizing that the MMT people got it right.

Thought experiment: If the government printed money to send unemployed people to uninhabited farmland to start cultivating it (in complete isolation from the rest of the economy) would it cause inflation for the rest of us who aren't connected?

If that community was then connected to the rest of the world, would the economic benefit be positive?

You can clearly see that the limitation on printing money is unutilized resources in the economy.

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

#202

Post by dustingetz »

deutschew wrote: post #192
matheusmoreira wrote: post #123

Earlier quoted context omitted.

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.

They've printed their way out of a recession since '08 by kicking the can down the road, and we can't kick it any further without creating a large number of losers. IMHO, it's a sign that American innovation has peaked. It's also reflected by the markedly decrease in intellectualism (as if American culture wasn't anti-intellectual to begin with). When I see young students from other countries and compare them to Amer…

A lot of the problems of focusing on equality can be connected to internet media making visible a tremendous amount of previously hidden inequity, (literacy rates are highest ever right?), I don't see what it has to do with interest rates

I do see a separate parallel problem of too much dumb capital chasing returns that are in the past not the future, but that can also be connected to the maturation of internet/web platform and the rollout of 2010s web tech to legacy industries; applying web tech to healthcare and like Africa is low-risk high reward ... capital floods the low grounds first

also see "diffusion of technological revolution" installation/deployment model https://i.imgur.com/BLVTqo2.png

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

#203

Post by bogomipz »

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 ?

The FOMC(Federal Open Market Committee) is the policy arm of the Fed. They can not and do not set interest rates directly. What they do is adjust the money supply to try to influence interest rates towards a target range. One of the tools they have to do this is the the federal funds rate which is the rate that banks charge each other to borrow money overnight in order to meet their reserve requirements. The Fed Funds rate is one of the tools they have their disposal. The FOMC meets 8 times and year releases this guidance.

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

#204

Post by alliao »

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…

you're correct on the too much money, though it's not the goods that we're chasing, rather anything else that represents value. The gold backed currency was limiting because it's incredibly hard to adjust for fast moving market. So by freeing up money supply, we can exploit the full extent of the market.

When US print money, since the world values USD, whoever buys USD will pay for that inflation. Since there're not better alternatives, they just kept buying, in a sense US is just exporting capital.

So it's no surprise that inflation will be absorbed by USD hoarding entities. say here..

https://ticdata.treasury.gov/Publish/mfh.txt

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

#205

Post by mtoner23 »

paulpauper wrote: post #138

here begins the process of the fed sllowwwwly raising rates, well behind the rate of inflation. Either buy stocks or lose $ due to inflation. NO way out

Or you could use your capital to invest in a business to increase the supply of goods that this excess money is chasing. That would help fight inflation.

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

#207

Post by sfblah »

jeffalbertson wrote: post #186

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,…

The solution is to set interest rates to a historically reasonable level, say 4%. Then, accept you're going to have a recession as asset values reset to reasonable levels.

The reason you need a reasonable risk-free rate is, without that, almost any marginally profitable that you can finance with debt will get financed. This leads to malinvestment. You can see this all around you.

Asset inflation has the insidious side-effect of damaging democracy by producing oligarchy.

An alternative solution would be simply to declare a maximum net worth and set tax rates on income over, say, $1m per year to 95%.

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

#208

Post by sfblah »

dustingetz wrote: post #202
deutschew wrote: post #192

Earlier quoted context omitted.

They've printed their way out of a recession since '08 by kicking the can down the road, and we can't kick it any further without creating a large number of losers. IMHO, it's a sign that American innovation has peaked. It's also reflected by the markedly decrease in intellectualism (as if American culture wasn't anti-intellectual to begin with). When I see young students from other countries and compare them to Amer…

A lot of the problems of focusing on equality can be connected to internet media making visible a tremendous amount of previously hidden inequity, (literacy rates are highest ever right?), I don't see what it has to do with interest rates I do see a separate parallel problem of too much dumb capital chasing returns that are in the past not the future, but that can also be connected to the maturation of internet/web p…

https://i.redd.it/mfw55duw9h971.jpg

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

#209

Post by boppo1 »

jeffalbertson wrote: post #186

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?

If I misjudge a cool jump off the roof into the pool and catastrophically break both my legs, then my legs are broken.

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

#210

Post by stickfigure »

throwawayboise wrote: post #133
0xB31B1B wrote: post #114

Earlier quoted context omitted.

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 to have consumers to make production worth something. Retirees are consumers. It's basically all they do.

This is a variant of the broken windows fallacy:

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

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