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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

#351

Post by zer0tonin »

Scarblac wrote: post #269
tarsinge wrote: post #242

Earlier quoted context omitted.

As I understand it taxes in MMT are just destruction of money, it's the essential counterpart of money creation used to balance supply. It's irrelevant to GDP and spending in that model, since in MMT the government doesn't need taxes to spend, it just print what it needs, that's the core idea.

I seem to recall that France used to do this -- create money for government spending, taxed money ceases to exist, no need for government debt. But I can't find anything about it, and I don't know if I'm just not using the right search terms. Has this been put into practice in large countries before?

Is France a small country now?

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

#353

Post by dang »

We changed the URL from https://www.federalreserve.gov/newsevents/pressreleases/mone..., which is a slightly obscure press release, to what looks like an ok third-party article. If there's a better third-party article (that isn't hard paywalled) we can change it again.

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

#354

Post by sbelskie »

monktastic1 wrote: post #244
bogomipz wrote: post #203

Earlier quoted context omitted.

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 Fund…

As I mentioned in a sibling comment, there hasn't been a reserve requirement for two years. I'm not sure what's primarily driving the interbank borrowing now.

But doesn’t the Fed still pay on reserves held? Even if it’s not required, the Fed increasing the rate paid on reserves would put upward pressure on other rates, otherwise banks would just take the IORB rate.

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

#355

Post by [deleted] »

thehappypm wrote: post #140
sillyquiet wrote: post #91

Earlier quoted context omitted.

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.

I don’t think I am obligated to care. Retirees who are fortunate enough to have substantial retirement assets should take precautions against risk. If they haven’t then that’s their problem. I’m retiring in 30 years, my retirement accounts are all stocks. If I was 65 I’d have my 401(k) heavily in bonds and fixed income. Anything else is just greed.

[deleted]

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

#356

Post by sbelskie »

monktastic1 wrote: post #126
qwertyuiop_ wrote: post #50

Earlier quoted context omitted.

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 cov…

“ Adjustments to the IORB rate help to move the federal funds rate into the target range set by the FOMC. Banks should be unwilling to lend to any private counterparty at a rate lower than the rate they can earn on balances maintained at the Federal Reserve. As a result, an increase in the IORB rate will put upward pressure on a range of short-term interest rates. The opposite holds for a decrease in the IORB rate. Typically, changes in the FOMC's target range are accompanied by commensurate changes in the IORB rate, thus providing incentives for the federal funds rate to adjust to a level consistent with the FOMC's target.”

https://www.federalreserve.gov/faqs/why-is-the-federal-reser...

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

#357

Post by bskap »

IncRnd wrote: post #321
drexlspivey wrote: post #294

Earlier quoted context omitted.

Unemployment unemployed work force

That's U-3. U-6 is at 7.2%. In general the claim that many people are not returning to work after COVID lockdowns is true. The reasons are up for debate, but that's not the point. The U-3 rate is an artificial rate to claim as the truth. That's moving the goal posts in order to get the win. Plus there are a record number of unfilled job openings.

U-6's 7.2% is compared to 7.0% in February 2020 and 8.1% in February 2007. So even that is similar to pre-Covid levels and better the the peak before the last recession.

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

#358

Post by alexilliamson »

IncRnd wrote: post #339
AceJohnny2 wrote: post #334

Earlier quoted context omitted.

How is "unemployment" defined in the US? Take those numbers with a grain of salt. In France, you were counted as "unemployed" if you were registered with the national employment agency and actively looking for employment according to their criteria . If you didn't find anything (for example because the opportunities on offer were too far away, or various other reasonably human reasons) after a certain time, the agenc…

That's very astute of you. The GP was talking about a rate called U-3, but the U-6 rate is far more descriptive. U-3 is what is generally used as the quoted rate, because it severely minimizes actual unemployment, allowing the Federal Government to use false statistics. [1] [1] https://www.bls.gov/news.release/pdf/empsit.pdf

I'm glad someone else got on this soap box today. Folks will bend over backwards to justify the U-3 rate when it's not that meaningful at all.

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

#359

Post by kregasaurusrex »

travisgriggs wrote: post #289
throwaway894345 wrote: post #260

Earlier quoted context omitted.

Irrespective of its economic merits, any policy which depends on a competent and upright Congress does not inspire confidence. It feels like it's bound to be one of those "True MMT Hasn't Ever Been Tried (TM)" things.

Let’s rebrand it as Critical Fiscal Theory. I’ve got my popcorn already.

Not-quite Fiscal Theory: the fed mints a $1 trillion dollar platinum coin and lends it to congress to allocate the year's budget. The coin may not have any value beyond spot, but everyone can see that congress has a rare piece of metal!

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

#360

Post by IncRnd »

hn_throwaway_99 wrote: post #340
IncRnd wrote: post #321

Earlier quoted context omitted.

That's U-3. U-6 is at 7.2%. In general the claim that many people are not returning to work after COVID lockdowns is true. The reasons are up for debate, but that's not the point. The U-3 rate is an artificial rate to claim as the truth. That's moving the goal posts in order to get the win. Plus there are a record number of unfilled job openings.

Your argument is a non sequitur to me: > Plus there are a record number of unfilled job openings. Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one.

> Your argument is a non sequitur to me:

For something to be a non sequitur, it must be a non sequitur to everyone, not just to one. This is not a non sequitur for two reasons.

  1) The sentence you quoted was not intended to be a
     consequence of the earlier statement.  Unemployment rate
     and number of job openings are connected, but not as you
     believe.  Correlation is not causation.  You are drawing
     inferences without cause.
  2) Full employment depends upon the number of job openings as
     well as the unemployment rate, which you ignored from
     my comment.
> Yes, which would basically imply that it's incredibly easy for anyone who wants a job to get one.

No. That is your inference but is clearly not implied.

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