381–390 of 693 posts
Not only that they increased the rate, but also they'll reduce the buying of securities: "In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting." Which may have a bigger effect.
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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…
> 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? First, this never happens, and certainly is not what's been happening for decades now in the US with the Fed printing money, so it's not a very relevant thought experiment. Second, taking your…
>The vast majority of the money the Fed prints goes to financial institutions
You maybe thinking of Quantitative Easing. In which case financial institutions are just incentivized to cash in their Government Bonds, whereby they need to look for some place else to put the money, hence perhaps asset inflation. The Government doesn't just print a whole lot of money and give it away to someone.
I think it was / is stress test of how much and for how long other countries are willing to finance the US and let it abuse status of the dollar.
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.
>We did waste the 3 yrs before Covid hit by not increasing interest rates and not reducing Fed's money printing. Most of the money printing happened in 2020 and after. https://fred.stlouisfed.org/series/M1SL
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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…
All value is explanatory, that is, even if it has "intrinsic value" like carbohydrates in ATP in a cell, it is still knowledge instantiated for a resilient purpose (eg to power a cell to replicate its knowledge). As explanations change, value changes, so anything can be a currency at the level of the individual--in this way, at least for conscious minds, a public monopoly on money is, while possible, morally wrong. I…
So I really do not understand logic here: how can bank give me money at rate 2x times lower than inflation.
Seems like free money (and it is no surprise that home prices are going thru the roof).
But I’m probably naiive here and do not understand how banking works.
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Sure if you define 'household' as home owners, of course their assets are well above $100k because of the hyper inflated housing market in the country. I would _love_ to see how someone renting an apartment and working minimum wage with less than $1k in their checking account can get a $10k loan. What are they going to do, go to the check cashing place around the corner and walk out with 10 grand? (that's saracasm bt…
>Sure if you define 'household' as home owners I don't. All households. Majority of households have > 100k wealth. Your claim is patently wrong, when taken against your citation which shows nearly everyone found _some_ way to pay the expense. Personally I would just pay with a credit card so I can let inflation shred away ~0.5% of the real cost, but I'd be tossed away with those who 'cant afford' it by your interpret…
I don't think we're looking at the same ~50% of people here...
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What do you think is going to happen to your home price is interest rates go up to 5% and then people can’t afford huge mortgages anymore?
We'll see. we didn't have inflation like this during the last big downturn in 2008. I also don't think the Fed is going to be able to raise rates as high as they did back in the early 80s.
The federal government is $30t in debt. Even a small rise in interest rates would quickly make the entire federal budget servicing the debt.
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…
On 6/5/1933 the USA was also dealing with massive DEFLATION. Deflation is also a very bad thing. In fact periods of deflation correlate with periods of large economic slowdown. Now I know people who are against fiat currency enjoy deflationary fixed currencies like most cryptocurrencies, but the inability to control money supply leads to hoarding of money, and compounding economic problems due to the lack of money su…