US Federal Reserve raises interest rates for first time since 2018 • Hacker News Board

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

#481

Post by CPLX » Thu, Mar 17, 2022, 12:26 AM UTC

e4e78a06 wrote: post #476

CPLX wrote: post #469

Earlier quoted context omitted.

I mean it did make everyone better. The COVID pandemic could have really wiped out a lot of people and we printed money and it helped. It’s the austerity people that have never cared about anything but their ideology. Austerity for austerity’s sake has caused unfathomable human misery in the globalization era. Right now the labor market is good for workers. That is good. Getting there has always opposed by the ruling…

> Right now the labor market is good for workers It is good _nominally_. Real wages are basically flat. Meanwhile, for everyone who didn't get a raise or can't currently find a new job for whatever reason, they're losing purchasing power. On top of that, the housing market has been completely destroyed by the Fed printing money and shoving it into mortgage backed securities. In many nicer areas of Southern California…

Seems to me if real wages are flat or mildly increasing and it’s WAY easier to get a job that’s a way better world to live in for the kind of people who apply for jobs.

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

#482

Post by cduzz » Thu, Mar 17, 2022, 12:26 AM UTC

People look at the monetary policy side of things, but I think shortages have just as much to do with inflation.

If I see there are no eggs in the grocery store, I'm happy to pay whatever they cost next time I see them. If I can only get gasoline 3 days out of the week and I need gasoline, I'll pay whatever the asking price is for that gasoline.

Sure, maybe they flooded the zone with billions of dollars, but that's been going on for a long time. The difference now is that lots of stuff just isn't available.

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

#483

Post by lazide » Thu, Mar 17, 2022, 12:28 AM UTC

e4e78a06 wrote: post #476

CPLX wrote: post #469

Earlier quoted context omitted.

I mean it did make everyone better. The COVID pandemic could have really wiped out a lot of people and we printed money and it helped. It’s the austerity people that have never cared about anything but their ideology. Austerity for austerity’s sake has caused unfathomable human misery in the globalization era. Right now the labor market is good for workers. That is good. Getting there has always opposed by the ruling…

> Right now the labor market is good for workers It is good _nominally_. Real wages are basically flat. Meanwhile, for everyone who didn't get a raise or can't currently find a new job for whatever reason, they're losing purchasing power. On top of that, the housing market has been completely destroyed by the Fed printing money and shoving it into mortgage backed securities. In many nicer areas of Southern California…

Compared to a Great Depression type cycle in the middle of the pandemic, what is the other alternative?

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

#484

Post by hfourm » Thu, Mar 17, 2022, 12:34 AM UTC

eigenvalue wrote: post #462

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…

"Conceptually the answer in the theory is to suck up the excess money with taxes" Huh, why is that the answer? Why wouldn't the conceptual answer be "do the opposite", i.e. sop up the excess liquidity by removing money from the money supply, by doing things like raising interest rates, increasing bank reserve ratios, and selling some of the trillions of dollars of securities already on the Fed's balance sheet? The la…

I would love more "foolish" infrastructure projects in my area. In my state/city, We are dealing with increasing flooding, overcrowded roads, and could always use more green space.

I get your sentiment, but the government could be using that money in positive ways that don't involve spinning up whole new organizations

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

#485

Post by nly » Thu, Mar 17, 2022, 12:37 AM UTC

notch656a wrote: post #369

Sohcahtoa82 wrote: post #362

Earlier quoted context omitted.

You are living in a bubble. This may be true for you and the people you associate with, but for the majority of Americans, it's not true in the slightest.

Median household wealth is over $100k. Not only is it true far more than the slightest, it's true of the majority of American households.

This _includes_ property.

The following source does indeed show a 50th percentile (median) household wealth of $100K, but if you read the damn thing it shows the median contribution from property is $120K, which presumably means, if you were to exclude property owners, the average would be MUCH closer to 0.

It also shows that 30% is contributed overall from property and another 30% from retirement accounts... Which can't be accessed until late in life and don't help you cover unexpected expenses.

Link: https://www.census.gov/content/dam/Census/library/publicatio...

> The assets with the highest median values are primary home equity and rental property equity. The median value for home equity and the median equity in rental prop- erties, which are not statistically different from each other, were $118,000 and $120,000, respec- tively

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

#486

Post by dtwest » Thu, Mar 17, 2022, 12:40 AM UTC

dragonwriter wrote: post #216

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…

Yeah, MMT basically asserts that the separation between fiscal and monetary policy is artificial, and that the only real constraint on “fiscal” policy (tax and spending) is monetary effects, not the metaphorical limited purse (“fisc”) that must be filled with revenue and borrowing to allow spending. It is not “Congress can spend willy-nilly” but “Congress needs to stop thinking about fiscal balance and start thinking…

An issue with using fiscal policy this way is that many of the things that are worth spending money on aren't easily movable levers, they are long term projects.

If inflation is accelerating and we need to cut spending to fix things it may be difficult or inefficient to cut the budget of a 10 year infrastructure project. If we need to spend more one year, do we just flood the healthcare system or military with money temporarily?

Changing tax policy frequently creates uncertainty for people investing in long term projects, which increases risk and cost associated with funding them.

I like that there is an academic debate going on about MMT, but there are practical challenges in implementing it. While far from perfect, the current monetary policy approach is easier to implement and change, while outsourcing capital allocation decisions to the banking system.

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

#487

Post by listenallyall » Thu, Mar 17, 2022, 12:47 AM UTC

odonnellryan wrote: post #449

seizethecheese wrote: post #305

Earlier quoted context omitted.

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?

Probably not much. The only time the US had a major home price adjustment was 2008 and that was because the housing market was the problem. Currently the housing market is up but not a problem. There aren't crazy foreclosures and there aren't any expected. Tho that can change if we have a big recession absolutely. Also home prices did not take a very long time to recover all things considered.

It's always different this time, until it's not. Foreclosure rates aren't high today, but the people who bought extremely expensive houses did so just this year and last. Demand for homes is very high, in large part because hedge funds are buying lots of them... if rates rise, or if prices stabilize, they will pull out, decreasing demand significantly. And will migration to smaller cities/towns continue unabated, (if you haven't moved to Austin/Vegas/Idaho/Montana yet, when do you plan to??) or will that reverse as companies want a physical presence again?

I will agree that last time, the recovery was speedier than anticipated, which only shows that irresponsible economic policy to avoid "economy will crash!!!" is overblown.

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

#488

Post by lotsofpulp » Thu, Mar 17, 2022, 12:50 AM UTC

nebula8804 wrote: post #461

lotsofpulp wrote: post #440

Earlier quoted context omitted.

If the federal US government is borrowing in a currency they control, I do not see why US leaders would choose to go bankrupt over simply issuing new money to meet debt obligations? And Social Security and other government benefits/services are continuously cut, at least where I live as far as I am concerned since they never keep up with price increases for the things I buy.

>If the federal US government is borrowing in a currency they control, I do not see why US leaders would choose to go bankrupt over simply issuing new money to meet debt obligations? To be clear I do not expect a bankruptcy to be a likely outcome. I just consider it a non-impossible possibility. The only scenario I can think of is if some event moves so quickly that the government cannot respond in time before its to…

> (ie. You now have to pay an additional tax on more than 600$ worth of ebay sales. This was snuck into the relief bill.)

No, that is not a recent addition to tax liabilities. You have always had to pay tax on income. The only difference is eBay (and other facilitators) are required to report it now.

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

#489

Post by e4e78a06 » Thu, Mar 17, 2022, 12:52 AM UTC

lazide wrote: post #483

e4e78a06 wrote: post #476

Earlier quoted context omitted.

> Right now the labor market is good for workers It is good _nominally_. Real wages are basically flat. Meanwhile, for everyone who didn't get a raise or can't currently find a new job for whatever reason, they're losing purchasing power. On top of that, the housing market has been completely destroyed by the Fed printing money and shoving it into mortgage backed securities. In many nicer areas of Southern California…

Compared to a Great Depression type cycle in the middle of the pandemic, what is the other alternative?

Well I think a big contributor to the current inflation problem was the last round of stimulus passed right as the pandemic was starting to wind down. At that point unemployment numbers had almost gotten back to normal and most revenue numbers for things like restaurants, travel, etc. had recovered to at least 70% of pre-pandemic levels. And then some states like California dumped even more money into the economy through multi-round state funded stimulus checks over a year after the pandemic started. The unemployment programs also should have started winding down the moment vaccines were widely available rather than 6 months after the fact.

I personally know a lot of people that just dumped their stimulus checks on memecoins or wasted it buying spurious goods. I'm sure the used car and electronics market also was greatly affected by stimulus as well.

The Fed also should have limited its stimulus to buying Treasuries rather than MBS. It makes no sense for the government to buy mortgage backed securities (basically a freebie to homeowners/homebuyers who are already wealthy).

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

#490

Post by dv_dt » Thu, Mar 17, 2022, 12:58 AM UTC

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…

Most prices haven't inflated on supply constraints, they've risen on opportunism of profit margin increases by companies who were allowed to merge and grow with insufficient anti-monopoly regulation.