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US Federal Reserve raises interest rates for first time since 2018

theguardian.com

271–280 of 693 posts

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

#271

Good thing I didn't come here for informed economic commentary. Now back to the blogosphere.

The only thing that everyone agreed on here is how equally uninformed they themselves are. Which is a breath of fresh air compared to certain places where everyone believes they are the best informed and most well thought out.

> The only thing that everyone agreed on here is how equally uninformed they themselves are.

There are a lot (if not most) of comments here where the commenter clearly doesn't hold that position.

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

#272
post #265

We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. I don't know if it's the fed or if the government pushing to win elections, but feels like we didn't take care of the house in good times and we have led ourselves into this cycle.

Hmm - I wonder who appointed the current Fed chair?

Yeah no doubt about this. But its also important to remember we've been doing this non stop since 2008 minus a few months in 2018. So this is a multi president, both parties are involved in continuing this train.

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

#273

They did the absolute minimum to appear to be able to say they are dong something. With official inflation nearing 8%, this is nowhere near enough. SO far equity markets agree this is effectively nothing

They’ll get more aggressive with it after the midterms.

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

#274

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…

Here are the first two paragraphs on the MMT Wikipedia article: > Modern Monetary Theory or Modern Money Theory (MMT) is a heterodox[1] macroeconomic theory that describes currency as a public monopoly and unemployment as evidence that a currency monopolist is overly restricting the supply of the financial assets needed to pay taxes and satisfy savings desires.[2][3] MMT is opposed to the mainstream understanding of…

> ...and that the primary risk once the economy reaches full employment is inflation, which seems to be precisely what has happened, no?

Certainly, there is inflation. There isn't full employment.

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

#275
post #270

Higher rates won’t impact US as much as they will impact emerging economies. Those countries will face food crisis in addition to rapidly rising debt costs. Keep an eye on this because we are on cusp of civil unrests across the globe.

War in Ukraine will have a much larger effect. Something like ~25% of global wheat supply comes from Ukraine and Russia. There won't be any planting to speak of in Ukraine this spring. And Russian wheat is pretty much off the world market.

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

#276
post #90

Earlier quoted context omitted.

They need to slowly hike interest rate by 25 bps every week for the next 8 months to match inflation.

That is silly. With mere speculation of interest rate increase, housing sales have already started to slow down. With every 25 bps increase, real asset interest rates will go much higher, causing much more slowdown in sales, GDP and inflation. If fed accelerates rate increases, we are very likely to see a recession. Which will automatically reduce demand for goods and services and thus inflation. But reducing inflati…

You can build houses cheaper. They don't have to be as overpriced as they are.

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

#277

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,…

It's often different subsets of users in these threads. People tend to read and comment on stories they're interested in. Any bias in this interest can become amplified. For example, most commenters on stories claiming that low-level environmental pollution causes large socioeconomic effects believe the claim. Dissesnting comments are likely to be downvoted, so people with dissenting opinions don't bother commenting. Each topic becomes its own echo chamber.

There are discentralized digital currencies that don't require insane energy consumption. But since clean energy is essentially unlimited on our planet, this isn't a reason to avoid conventional blockchains (that reason would be their abysmal scaling behavior). None of them provide any price stability at all -- or wouldn't, if more than precisely zero goods and services were priced in one of them. (Certain DeFi markets have elements of a banking system that might, concievably, offer some price stability.)

The COVID-19 helicopter drops -- which were performed by the Treasury, not the Fed -- certainly could cause inflation. But this would generally be an inflationary shock, not an ongoing inflationary regime. Instead, it's the lockdowns (or hysteria more generally), which damaged the structure of the global economy. You can think of the inflation as the cost of rebuilding these networks, of convincing people to work together again. Simply put, things become cheap when they're produced by efficient networks. If those networks decay, things become more expensive.

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

#278
post #55
post #40

Earlier quoted context omitted.

Someone posted the graph earlier: https://www.macrotrends.net/2015/fed-funds-rate-historical-c... Fed funds rate in the early 80s were at their historical peak. We are still currently at near historical lows.

How did anyone buy a house or a car with interest rates in the 20%s?

Outright, maybe? I've heard of boomers buying mustangs and paying college tuition with a summer job.

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

#279
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.

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…

This is an incredibly bigoted screed. Describing human beings who were the economic engine for 40-50 years and paid in to the system as a "parasite" and a "purely an extractive cost center" is truly appalling.

>"It really seems like a powder keg for revolution."

I would argue your entire post seems like a powder keg for some self-reflection.

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